Would you like to know more about the issue of Chinese intellectual property enforcement and piracy?

The protection of cultural diversity is a central issue within the European Union. European audiovisual industries are supported by screen quotas and subsidies. Such practice is due to maintain trade barriers to stem the inflow of media products from the United States. As a consequence, the United States has objected to these practices. The chapter by Professor Sanders deals with an analysis on how trade in cultural works has led to discussions on Non-Trade Concerns in the context of free trade agreements and World Trade Organization (WTO) obligations. The WTO Appellate Body has declared some of the measures enacted by China regarding audio-visuals to be in breach of the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS). After that, it seems China has made the effort to retain control over the domestic media. The US considered some issues to be in breach of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The claim concerning minimum copyright standards focused on Article 4 of the Copyright Law of the People’s Republic of China, which denies copyright protection to works not approved for circulation in the Chinese market. The approval process, conducted by the State Administration for Radio, Film and Television (SARFT) not only results in frequent censorship but, furthermore, results in a quota of 20 foreign films allowed on the market per annum. This practice of creating scarcity fosters a demand for pirated products. In this dispute, the Panel upheld the complaint because the Chinese legislation could be construed as denying copyright protection to a large class of works. This decision reaffirmed China’s right to suppress the distribution of copyright works on the basis of the Berne Convention. Thus recognizing the right of states to censor in general. As such, the panel made clear that the denial of copyright protection is something entirely different from suppressing the distribution (censoring) of copyrighted works. The case China – Publications and Audiovisual Products mainly covered market access for media products. The primary issue raised by the US dealt with trading rights that confer the right to import foreign films upon certain Chinese companies only. The second issue at stake was that, according to the US, certain measures affecting distribution services for media publications present an unfair trade barrier for American service providers wishing to enter the Chinese market. Considering the low number of foreign works admitted to the Chinese market annually, it can be argued that the restricted inflow artificially creates a demand for pirated products. Whether distributed by physical carriers or through online platforms, the dissemination of foreign audiovisual content often transpires through an intimate marriage of activities of professional pirates and fans who provide the subtitles for such foreign works. The widespread practice of online distribution of “fan-subs” that can be superimposed on the digital file of an audiovisual work makes foreign movie content legible and accessible for the Chinese domestic market. On the one hand the US stressed that only a limited number of state-approved enterprises may engage in the importation, clearance, and distribution of films in China. On the other hand, China argued that its regulatory regime for films for theatrical release was akin to regulating services: “films for theatrical release are not goods because they are exploited through a series of services; because the commercial value of films for theatrical release lies in the revenue generated by these services; and because the delivery materials containing the content of films are mere accessories of such services and have no commercial value of their own.” The Appellate Body rejected this position, concluding that, although services are involved, a physical carrier will ultimately and inevitably engage in import activities. Consequently, this dispute has both GATS and GATT components, and the measures must be tested cumulatively regarding their compliance. It seems clear in China there is a convergence of measures that are all subservient to the desire to exercise full political and cultural control over the media market. It is, however, questionable whether the moral exception argument raised successfully by China to defend its policies will be sustainable in the long run. What emerges from the study of Chinese cases is that there is a lack of intellectual property enforcement with a consequent increase of piracy and favoring the unauthorized domestic production. Domestic standards cut out foreign manufacturers, and screen quotas, even though permissible, do nothing to stem the Chinese people’s desire to access a culturally diverse media offering. New disputes in relation to the control exercised over imports and distribution services, or even the technical fabric of dissemination of media that is favoring domestic players, are expected for the future.