Piracy worries still a thorn in Sino-U.S. relations

U.S. Commerce Secretary Carlos Gutierrez will meet with senior Chinese government officials Tuesday as part of a two-day visit to Beijing focussed largely on protecting intellectual property (IP) rights in China and preparations for upcoming trade talks between the two countries, the U.S. embassy said.

Gutierrez, who visited the city of Chongqing before arriving in Beijing, was scheduled to meet Tuesday with several Chinese officials, including Premier Wen Jiabao, Vice Premier Wu Yi and China's minister of commerce, Bo Xilai.

IP protection has been a perennial source of friction between the U.S. and China, where a range of pirated goods, including DVDs, software, and designer clothes, are widely available.

Gutierrez stressed the importance of IP protection during a speech Monday to university students in Chongqing, where he highlighted the benefits that China would receive by cracking down on software piracy.

"One study projects that if China cut its software piracy rate down from 90 percent to 80 percent by 2009, it would generate the equivalent of $6.5 billion in taxes, in tax revenues that could be reinvested back in society," Gutierrez said, according to a transcript.

"And it would create over 2.5 million new jobs," he said.

From the U.S. perspective, IP protection is one of the most pressing problems between the two countries.

"China has not lived up to its responsibility to effectively enforce intellectual property rights," said Chris Israel, the Department of Commerce's coordinator for international intellectual property enforcement, in testimony before a U.S. Senate committee on March 8. He estimated that U.S. losses to piracy in China totalled $2.3 billion in 2005.

Israel attributed China's failure to crack down on IP violations to several factors, including a lack of political will, official corruption, and local protectionism.

Chinese officials claim to be doing the best they can to fight piracy, noting that the problem won't be solved overnight.

The sale of pirated goods in China means lost revenue for U.S. companies. For example, the Motion Picture Association, which represents major Hollywood movie studios, estimated that 2005 losses to Chinese movie piracy totalled $2.7 billion.

The piracy rate for movies in China was an "unacceptably high" 93 percent, it said.

DVDs aren't the only problem area. China has the third-highest rate of software piracy in the world, according to the Business Software Alliance (BSA), a software industry group formed to fight piracy. Ninety percent of all software used in China is pirated, a figure exceeded only by Vietnam (92 percent) and Ukraine (91 percent), it said.

The BSA claims that Chinese software piracy cost the industry nearly $3.6 billion in lost sales during 2004.