Deadline Looms in US-China Talks

Beijing expected to make last-minute concessions on copyright issue to avert trade sanctions

THE United States and China are expected to avert a trade war by hammering out a last-minute resolution to a dispute over intellectual property rights in talks next month, US analysts say.Negotiators have agreed to meet for a final round of talks just one week before the Jan. 16 deadline set by Washington for resolving the dispute. The fifth round of talks ended in an impasse in Beijing Dec. 22. Without an agreement, the US will impose punitive tariffs of up to 100 percent on a wide range of Chinese exports worth as much as $1.5 billion. Beijing has vowed to retaliate with unspecified "corresponding measures." The resort to sanctions would worsen prospects for resolving a more important trade dispute: the upcoming battle over US access to China's market. Washington has demanded that Beijing open its markets to more US goods by next October to reduce China's estimated $13 billion trade surplus with the US. China claims to buy more than it sells to the US. Despite a current deadlock in the talks, US analysts say China is likely to move closer to meeting US demands that it act to halt the pirating of an estimated $400 million worth of US copyrighted and patented materials each year. "The Chinese negotiating style is to wait until the 12th hour to make concessions," says Warren Williams, president of the American Chamber of Commerce in Hong Kong. Beijing, he says, "will have to do what the United States is asking it to do," if China is serious about playing a more active role in world trade and joining GATT (the General Agreement on Tariffs and Trade). Mr. Williams, a businessman, recently discussed the dispute with Chinese Trade Minister Li Lanqing and high-ranking US officials. A Chinese trade ministry spokesman hinted in an official statement this week that Beijing would be flexible, saying the talks could succeed through "mutual accommodation and discussion." US Assistant Trade Representative Joseph Massey says Chinese negotiators during the talks retracted concessions proposed earlier. Calling China the world's largest "pirate" of US copyrighted and patented materials, Mr. Massey says Beijing is under heavy pressure to protect the interests of those who gain from sales of intellectual property. The US wants China to modify its 1984 patent law and 1991 copyright law to offer greater protection for intellectual property such as computer software, pharmaceuticals, and chemicals, and to adopt laws that require compliance, instead of relying on "administrative guidance." "The focus for these negotiations is getting the laws as a first step," says a US official. "With these in place, the Chinese can be held accountable." But Beijing argues that US demands are "excessive" and go beyond international norms. It notes, for example, that China has bowed to US pressure and agreed to join the Berne Convention on copyrights. South Korea, which has refused to join the convention, has not faced similar US criticism, Beijing says. US analysts acknowledge that Washington's demands are rigorous and criticize what they call its combative posture. "Trying to publicly pressure the Chinese to do something doesn't get you very far," says a US businessman in Hong Kong. "The US could be a little less legalistic. The Chinese don't operate that way," says Frank Martin, executive director of the American Chamber of Commerce in Hong Kong. Nevertheless, China's trade status would benefit in the long term from complying with the US demands to protect intellectual property, the analysts add. The US has published a 20-page list of Chinese products it may target for punitive tariffs after Jan. 16. Officials say a final list will be drawn up after public hearings end next month.

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