This article was first published in Asian Counsels'
country files, www.pbpress.com
On 12 August 2009, a WTO Panel issued a decision on
"Measures Affecting Trading Rights and Distribution Services
for Certain Publications and Audiovisual Entertainment
Products", a WTO complaint filed by the United States against
China, in which the US claims that China unfairly restricts the
import of films, music, books and other works that are
copyright-protected. In its decision, the Panel focused on three
main market access concerns:
import restrictions on foreign media products;
discriminatory operating requirements imposed on
discriminatory treatment of imported reading material.
The Panel found that China's restrictions on the importation
and distribution of publications and audiovisual products by
foreign suppliers does indeed violate its commitment under the WTO
Accession Protocol and decided in favour of the US in all three
aforementioned items. The Panel's recommendation that China
should "bring the relevant measures into conformity with its
obligations" is aimed to remove market access barriers, but
some experts interpreted it as a step in the fight against music
and film copyright piracy.
According to the current legal framework, foreign companies are
required to submit their sound and video recordings for content
review and can only import them into China through two wholly
state-owned Chinese enterprises designated by the government.
Moreover, only about twenty foreign films are allowed for screening
each year. These restrictions have helped to make Chinese voracious
consumers of illegally copied and purchased foreign movies and
music. Copyright infringement in this area is extremely high and,
due to consumer demand, very difficult to curb.
Liberalising imports would give copyright owners a greater share
of the market and a better position for implementing a suitable
anti-counterfeiting strategy. However, the WTO Panel did not rule
on certain areas of the complaint filed by the US, partly due to
insufficient evidence and partly arguing that such areas were
outside the scope the Panel's mandate. For example, the Panel
did not criticise China for censorship, for limiting the number of
imported films or for the approval processes for distributors,
restrictions on subscription systems and electronic reading
materials. The Panel further agreed that China may ban foreign
films and publications.
Although the decision indicates that China should allow
audiovisual products to be imported by entities other than through
the two currently appointed state-owned enterprises, the various
limitations, such as the importing of only twenty movies per year
remains. The WTO Panel decision therefore does not resolve the
problem of a growing market that can only satisfy its demand for a
wide variety of international music and films by illegal means, and
will do little to reduce copyright piracy in the music and film
Despite the relatively narrow scope of the decision, China has
filed an appeal against the decision of the WTO Panel. The PRC
government appears determined to deny greater market access to
foreign entertainment companies. It appears that this opposition is
related to the difficulty of controlling content in a more liberal
distribution regime. The WTO decision on the appeal filed by China
is due at the beginning of next year 2010. It is generally expected
that the WTO will uphold its previous decision and that China will
then have to bring its legal framework in line with its WTO
obligations. However, copyright infringement in the film and music
industry will remain rampant for some time thereafter.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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