China, U.S. Avoid Trade War After Dispute Pushes Issue To The Brink

For the second time in 15 months, China and the United States went to the brink of a trade war Monday before agreeing to stamp out piracy of American movies, compact discs and computer software.

U.S. Trade Representative Charlene Barshefsky said Washington dropped plans for punitive tariffs after China committed to extensive, detailed steps to end illicit copying.

Barshefsky said U.S. officials would be closely involved in monitoring Chinese enforcement.

“We certainly will be back,” she said.

The deal closed five days of negotiations that ran past a Monday deadline for Washington to impose punitive tariffs on $2 billion in Chinese goods.

China had threatened to retaliate with trade sanctions and canceled business contracts. While China acknowledges that piracy has continued, it maintains it has complied with its commitments.

Unlike a February 1995 agreement signed by China that included only broad promises to combat piracy, the new deal lays out specific regulations and enforcement provisions, Barshefsky said.

She said that after failing to act on its promises for more than a year, China in the past several weeks launched a crackdown that closed 15 of 30 pirate CD factories with a total capacity of 50 million copies a year.

The recording, film and software industries claim copying of their products by Chinese pirate factories cost them $2.3 billion last year in lost sales.

Industry officials at a late-night news conference at the U.S. Embassy applauded the agreement, but said they would be watching closely to ensure that China complied.

“What we have achieved is an important first step,” said Jason Berman of the Recording Industry Association of America.

“These measures and the level of commitment to enforce them continuously will be the true test,” he said, “but what we have seen recently and for the first time in 15 months are encouraging signs.”

In Washington, President Clinton welcomed the end to a trade dispute that he said “cost a lot of money and jobs to the United States.”

“I am pleased that a good agreement has been reached with the Chinese,” Clinton said.

Industry representatives emerged from a White House briefing saying they were satisfied with the administration’s efforts.

“It’s the promise of a new future between China and the United States,” said Jack Valenti, chairman of the Motion Picture Association.