Going Global, Part 12: Trade Wars Abrewin'?

After weeks of hinting, the White House took its intellectual property beef with China to the World Trade Organization. U.S. Trade Representative Susan C. Schwab announced yesterday that the United States is filing two requests today for dispute consultation.

The first case accuses China of establishing an excessively high threshold for prosecuting manufacturers and distributors of pirated goods. The second takes issue with China's policy of handling books, movies, music, and computer software exclusively through state-owned importers, a trade barrier that can delay distribution of legitimate goods.

These filings are the latest in a string of attempts from the Bush adminstration to reverse the U.S. trade deficit with China, which has risen to a record $232.5 billion. Less than two weeks earlier, the White House retaliated against Chinese government subsidies to its paper manufacturing industry by imposing steep tariffs on imports of glossy paper from China. According to the People's Daily, China's foreign trade has risen at an average annual rate of more than 30 percent since its accession to the WTO in 2001.

Analysts peg the timing of these moves as a response to mounting pressure from Democrats in Congress who have threatened further sanctions against China if the deficit isn't reduced. But regardless of the hoopla surrounding the filings, the scope of the cases is narrow, focusing on media and books, ignoring industries with similar complaints like pharmaceuticals and auto parts. Lobbyists from The China Copyright Alliance, an industry coalition of big budget studios, independents producers, and the recording industry, have been pushing officials to file a case for months.

During the announcement Schwab was careful to stress that the U.S. was open to "a comprehensive settlement" at any time during the arbitration process, characterizing the filings as par for the course between international trading partners. Despite the diplomatic rhetoric, officials in Beijing have already registered their anger with the Bush administration's decision to go to the WTO.

In our global issue, I talked to Ted C. Fishman, best-selling author of China Inc., about ways that entrepreneurs can protect their intellectual property rights in China. Read more of Fishman's take on IP theft in China here.

Is the WTO capable of curtailing piracy and counterfeiting in China? Do you think China will strike back against American imports or withdraw cooperation on diplomatic issues? Has your company done business in China? What difficulties did you find in securing your intellectual property rights for your products and services?

Reporter Nitasha Tiku covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff’s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York. @nitashatiku