U.S. may slap China with suit in intellectual-property dispute

In a move that would have broad implications for software, movies, music and pharmaceuticals, the U.S. said Thursday it may sue China as early as this fall for failing to protect intellectual property as required by trade agreements.

The U.S. would bring a trade case against China at the World Trade Organization for violating intellectual-property rights [IPR] protections, a U.S. trade official said at a Seattle conference. If China failed to comply, the U.S. could be allowed to put tariffs on goods it imports from China.

"We are discussing some WTO-related IPR concerns" with Chinese officials, said Timothy Stratford, assistant U.S. trade representative for China. "If those are not resolved by fall, it's quite possible that we would have an IPR case."

Discussions with China are focused on "very discrete issues," regarding enforcement, Stratford said, declining to elaborate. "But they would have a broad impact" across the spectrum of intellectual property, from movies and music to software and patented drugs.

Stratford spoke on the sidelines of the 11th annual trade conference hosted by the Washington Council on International Trade, which focused on how business and political leaders can work with China.

Earlier, Stratford told more than 200 attendees that trade cases, far from being hostile, often keep trade relationships healthy. He said Chinese leaders are starting to see the benefits.

"What better way to help them understand this than to start suing them?" Stratford said.

This would be the third such case the United States has brought against China at the WTO. In March, the U.S. and European Union sought WTO consultations regarding China's failure to end restrictions on imported auto parts. In the WTO, nations first seek consultations on a dispute. If that fails, they can put the case to a dispute settlement panel.

A previous U.S. case against China, based on tax rebates on semiconductors, was resolved during consultations.

Talk of a trade case appears to reflect a hardening attitude in Congress about trade agreements. On Wednesday, the House approved a bill that would give the U.S. Trade Representative close to $50 million in funding, in part to step up monitoring of China's compliance with trade agreements.

Congress' frosty attitude contrasts sharply with the warm climate in Washington state, which does more than $20 billion a year in two-way trade with China — more per capita than any other state.

Military relations with China also are tough, said U.S. Navy Admiral William Fallon, commander of the U.S. Pacific Command. He said he called Chinese counterparts to discuss North Korea's missile tests, for example, and got a written response that said, in essence, "Thanks, but no thanks."

Sen. Patty Murray, who co-chaired the conference, said she's alarmed that influential voices in Congress are making China a symbol of fears about globalization.

"China has become what Japan was in the 1980s," the Washington Democrat said. "The foreign scapegoat for our economic fears."

Instead of demonizing China, Murray said, the U.S. needs to keep an open door, stay engaged, hold it accountable for trade violations and strengthen U.S. competitiveness.

"When two elephants fight, the grass loses," and Washington state is the grass, she said. "We'll pay the price in lost trade and jobs."

Alwyn Scott: 206-464-3329 or ascott@seattletimes.com