Talking tough to China

WASHINGTON – Commerce Secretary Carlos Gutierrez says he knows from personal experience as a Kellogg’s executive the adverse impact of China’s lax enforcement of copyright laws.

In an Associated Press interview, Gutierrez said Wednesday that flagrant theft of U.S. copyrighted material by China was “absolutely unacceptable” and must be halted, starting with the Chinese government’s widespread use of pirated computer software programs.

“It doesn’t reconcile with a country that is going to host the Olympics and have that kind of worldwide recognition to be procuring government software that is pirated,” Gutierrez said in the interview.

Gutierrez said the Chinese government’s use of counterfeit software would be one of the top issues the Bush administration would raise in a series of mid-April meetings with the Chinese including the visit of Chinese President Hu Jintao to Washington on April 24.

“If China wants to be a legitimate player at the table, and they do, and they want the legitimacy that comes with being a large economy in a global environment, they need to play by these rules” involving the protection of copyrighted material, Gutierrez said.

His comments come a week after the administration pledged tougher enforcement of unfair trade laws governing China with creation of a China enforcement task force in the office of U.S. trade representative Rob Portman.

The tougher approach is viewed as an effort to head off growing protectionist sentiment in Congress. Lawmakers have filed a number of bills that would impose economic sanctions on the country unless greater efforts are made to narrow a U.S. trade deficit with China that hit $202 billion last year, the largest imbalance ever recorded with a single country.

Pending legislation in Congress includes a proposal to impose 27.5 percent penalty tariffs on Chinese products unless China stops artificially depressing the value of its currency to gain trade advantages. Another bill would make China’s normal trading privileges with the United States subject to annual review.

Critics of those bills contend they would drive up the cost of clothing, toys and appliances for American consumers without doing much to lower the trade deficit.

Gutierrez cautioned that the United States must ensure that whatever actions are taken with regard to China don’t backfire.

“We don’t want to do something that hurts our economy and hurts our workers because we are getting emotional,” he said.

Gutierrez, who headed cereal giant Kellogg’s before he joined President Bush’s Cabinet last year, said he learned firsthand about the problems of protecting copyrights and patents in China when he lost a court case in 1996. The Chinese court ruled that Kellogg’s did not have the right to keep competitors from using the famous rooster on rival corn flakes boxes.

“I think today that wouldn’t happen,” he said, noting that Starbucks just won a case against a competitor using their logo in China.

U.S. companies contend that copyright piracy in China is costing them billions of dollars a year in sales, and that in some areas, 90 percent of the goods sold are counterfeit products.

Gutierrez indicated that unless improvements are made, the administration would consider bringing a copyright issue case against China before the World Trade Organization.

Portman suggested last week that the United States could soon bring WTO cases against China in the area of copyright piracy and China’s high tariffs on U.S. auto parts. Treasury Secretary John Snow, meanwhile, indicated China could be branded a “currency manipulator” in a report to Congress in April unless the country does more to let its currency rise in value against the dollar.