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As its name suggests, the World Trade Organization is a global body that sets the rules for free trade, and when China joined the WTO in late 2001, it agreed to follow the rules.

It hasn't. And nowhere is China's failure to completely abide by the rules of free trade illustrated more dramatically than in its piracy of intellectual property rights. Given its power and its huge stake in curbing this banditry, the United States ought to take the lead in convincing China to live up to its WTO obligations.

This 21st-century piracy was documented in a recent series of articles by Journal Sentinel reporter John Schmid.

In just one town in rural China, more than 60 factories turn out millions of counterfeit Montblanc pens. And that's just one fake signature. In every big city in China, merchants peddle fake Harley-Davidson jackets, illegal DVD versions of new movies, fake Ralph Lauren sweaters and other knockoffs - all at prices dramatically lower than the original items bring on the legitimate market.

Barry Grossman, a partner at Foley & Lardner who works on patent and intellectual property issues, is among those who believes the Chinese government is making a good-faith effort to curb this piracy as part of its modernization efforts. Among other things, the government is trying to develop a justice system that can effectively enforce rules of commerce and other laws.

Last month in Washington, at a meeting of the Joint Commission on Commerce and Trade, Chinese trade officials agreed to help solve the problem of piracy and counterfeiting by increasing the range of violations of intellectual property that are subject to criminal penalties.

But China is a big country, and it's hard to bring the rule of law to every village and town, especially when, in an attempt to modernize, the government is dispersing more power from Beijing.

This devolution of power is confounding attempts by companies like Harley-Davidson to sell motorcycles in China. About 100 large Chinese cities have imposed licensing restrictions and even outright bans on motorcycle riding, all in a misguided attempt to reduce congestion and air pollution. These local ordinances, Harley argues, are "de facto trade barriers."

Harley is right.

Authentic as the Chinese government's reform efforts may be, complaints about unfair trade practices have entered the political debate in this presidential election year.

This is where the U.S. government comes in; U.S. officials need to keep stressing to their Chinese interlocutors that, if China doesn't take meaningful steps to right some of these unpopular and illegal wrongs, Congress will come under increasing pressure to retaliate in ways that will ultimately harm both countries.

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''On the Waterfront – Still''

John Fund, Wall Street Journal, 09/17/06