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U.S. calls for more antipiracy action from China

Government officials applaud China's PC and optical disc factory crackdown but say more action is needed.

WASHINGTON--China has been increasing its clampdown on piracy but isn't off the hook yet, U.S. government officials said Tuesday.

Commerce Secretary Carlos Gutierrez said he applauded the nation, which boasts the world's second-largest technology market, for making a handful of moves indicating that piracy is being taken more seriously. But, he added, "As in everything else, numbers will ultimately tell the story."

"Would we like to see even more? Yes, we would," said U.S. Trade Representative Rob Portman. "But we think the steps today will help reduce piracy...particularly with regard to new computers."

Top pirates

By one estimate, China ranked third on a list of the seven countries with the highest piracy rates in 2004.

Piracy rate
(percentage of software used in that country that is not legally purchased or acquired)

Vietnam 92%
Ukraine 91%
China 90%
Indonesia 87%
Russia 87%
Kazakhstan 85%
Serbia-Montenegro 81%

Source: BSA-IDC study, released Dec. 2005

The cautious assessments came at a bilingual press conference here after the close of the 17th annual meeting of the Joint Commission on Commerce and Trade, a group made up of U.S. and Chinese representatives that weighed in on trade issues from technology to pharmaceuticals to beef.

But much of Tuesday's press conference focused on piracy, a practice for which China has acquired a particularly bad reputation. According to the most recent numbers commissioned by the Business Software Association, the estimated business-software sales losses due to illegal copying numbered $3.5 billion in 2004, with approximately 90 percent of the nation's business software fitting the pirated designation.

Chinese Vice Premier Wu Yi said her government has already issued rules requiring all manufacturers to preload legal operating systems on all computers sold in China--a change from sales of what the software industry decries as "naked" PCs, lacking legitimate operating systems or applications. The government has also put out regulations intended to "accelerate" the transfer of piracy cases from administrative to criminal enforcement bodies, a move intended to satisfy those clamoring for stiffer penalties. (It wasn't clear whether Linux would qualify--Wu said only that "legal operating systems must be preloaded on all machines.")

The Chinese government also has shut down seven optical disc plants engaged in piracy, bringing the total number of production lines closed up to 224 as of this March, Wu said. The U.S. government lauded that step as a particular accomplishment.

Wu said her country has also issued an "action plan" for intellectual-property rights enforcement, though she did not give details on that document during her remarks.

Chinese business executives plan to sign more than a hundred contracts for American goods totaling $16.21 billion, including nearly $1.7 billion worth of software alone, Wu said.

The moves drew encouragement from BSA President Robert Holleyman, who said in a statement that the new rules for preloading software "should help inspire a culture of legal software use."

One recent hot-button issue involving China didn't get a mention at Tuesday's event. Scarcely two months ago, the idea of American technology companies complying with China's censorship regime had ignited congressional tempers and prompted the formation of a special State Department task force.

That issue also didn't surface during BSA meetings with Chinese officials in Beijing last week, Holleyman told reporters at a roundtable discussion Tuesday morning. "I know it's something that matters as an issue and matters to the companies, but BSA's agenda has been legal software sales by BSA members," he said.

The dialogue may continue next week, when President Bush is scheduled to host Chinese President Hu Jintao at the White House.