GENEVA – The United States is seeking consultations with China over rules on music downloading and cinema rights that appear to discriminate against foreign sound recordings and films, a U.S. trade official said Wednesday.
Hollywood studios and U.S. Internet music providers such as Apple Inc.'s (AAPL) iTunes store could be among the groups that suffer from "less favorable distribution opportunities" for imported films and foreign suppliers of music recordings in China, which the U.S. cited in a World Trade Organization request earlier this week.
Stephen Norton, a spokesman for the Office of the U.S. Trade Representative, said the issues would be addressed as part of an ongoing WTO complaint over restrictions on the sale of American movies, music and books.
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"Music from foreign sources needs to undergo content review before being distributed in China. Chinese music doesn't have to face that process," Norton told The Associated Press. "The review delays Chinese Internet providers and Chinese consumers from accessing foreign music."
The same discrimination exists when Chinese consumers seek to download music onto mobile phones, he said.
The problem for American music providers is compounded by rules that prevent foreign companies from owning or investing in businesses that distribute music over the Internet in China.
"That is another concern," Norton said.
In its written statement to the WTO, the U.S. said "various measures in China appear to impose market access restriction or discriminatory requirements on foreign service suppliers seeking to engage in the digital distribution of sound recordings."
China's mission to the WTO was unavailable to comment.
Beijing, the U.S. said, also employs various means to give an advantage to Chinese films over foreign ones in the country's cinemas.
"Imported films can be distributed within China only by two entities and only on a nationwide basis," the statement said.
Chinese films, by contrast, are not limited to two distribution companies and can also release their films nationally, provincially or locally, it added.
"The measures at issue appear to be inconsistent with China's obligations," the U.S. said.
The U.S. request triggers a 60-day consultation period during which trade negotiators from both countries will try to resolve their disagreements. If that fails, the U.S. will include the issues in its overall complaint on media distribution rules, Norton said.
The U.S. has yet to decide on whether it will ask the WTO to establish an investigative panel to rule on the complaint, Norton said.
It alleges that Beijing has failed to remove import and distribution restrictions on copyrighted U.S. goods including newspapers, magazines, CDs, DVDs and video games.
A WTO panel would likely take years to authorize retaliatory sanctions.
The U.S. announcement of new cases in April was the latest move at the WTO against China by the Bush administration, which is trying to deal with rising political anger over America's soaring trade deficit, which set a record for the fifth consecutive year in 2006 at $765.3 billion.
The U.S. imbalance with China grew to $232.5 billion, the highest ever with a single country.