On Dec 21, 2009, World Trade Organization judges rejected a Chinese appeal of a ruling that held its restrictions on the sale of books, films and music from the U.S. illegal. The decision may force China to liberalize imports or face possible sanctions.
It followed an Aug. 12 finding by a WTO panel that China violated free-trade commitments by requiring importers to channel foreign publications and audiovisual products through state-run companies. The panel urged China to allow foreign companies to sell music over the Internet, which would be a boon for Apple Inc., with its iTunes software.
The ruling might have some effect in the book industry. Imports now have to go through the China Publishing Group, another government monopoly that runs bookstores in China. If that monopoly were broken, foreign publishers such as Pearson PLCs Penguin or Bertelsmann AGs Random House could export directly to booksellers.
Because these publications are mostly in foreign languages, the market is limited but it could result in more competition and variety. Currently Beijing, a city of 17 million, has just a handful of small, mostly poorly stocked foreign-language bookstores.
"If this means there is a change in the distribution system, that would allow buyers access to better retail outlets," said Jo Lusby of Penguin in China. "This would change the outlook of the market."
Longer-term, the ruling could mean that China has to more strictly enforce intellectual-property-rights laws. One of Chinas arguments was that it needs to limit imports of cultural products in order to protect public morals. The counterargument, however, is that almost any pornographic book or movie is already openly available in China in pirated form and the government does little to prevent this.
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