China - potential WTO dispute over news service

U.S. and Europe Protest a Chinese News Regulation

In a new escalation of trade disputes with China, the Bush administration joined with the European Union on Monday in filing a suit at the World Trade Organization to protest China’s requirement that foreign financial news services operate through a government-designated distributor.

The action, which would affect Dow Jones, Reuters, Bloomberg and other foreign suppliers of stock prices and other financial information, followed months of negotiations by the United States to get China to lift its requirement that these suppliers distribute their data and news reports through Xinhua, the Chinese government news agency.

“China’s restrictive treatment of outside suppliers of financial information services places U.S. and other foreign suppliers at a serious competitive disadvantage,” said Susan C. Schwab, the United States trade envoy.

Ms. Schwab said that since Chinese regulations bar foreign suppliers of financial information from directly soliciting customers for their services, they are in effect required to develop new customers only by going through a major Chinese competitor.

The European and American action was in the form of an official request for “dispute settlement consultations” with China under the auspices of the W.T.O. in Geneva, a step that without a resolution would eventually lead to asking the organization to rule on the matter.

The filing of this petition with the W.T.O. continued a trend of the Bush administration’s taking a more confrontational approach toward China on trade issues.

While Republicans and Democrats in Congress have increasingly denounced Chinese practices, particularly on the safety of food and toys and China’s steps to keep the value of its currency low in relation to the dollar, the administration has increased its demands on several fronts.

Since mid-2005, under American pressure, China has allowed the value of the yuan to appreciate more than 16 percent, which many economists say has caused the trade deficit with China to narrow somewhat. The appreciation has made exports to China cheaper and imports from China more expensive.

Beyond the currency dispute, the administration has charged that China has used other tactics to keep out American products, in some cases adopting regulations that put foreign producers of goods at a disadvantage.

The Commerce Department also changed its policy in 2006 and widened the number of cases in which it would impose duties on Chinese goods — like paper, steel and tires — on the ground that China was dumping them in the United States at below cost or engaging in illegal subsidies.

In another action, the United States in 2006 challenged what it said were restrictions on the sale of American-made auto parts in China. An initial finding in favor of the United States position was issued by the W.T.O. last month.

The Bush administration has also gone to the W.T.O. arguing that China has unfairly and illegally curbed market access of American and other foreign films, music and software programs, while at the same time failing to enforce laws against piracy of these products.

The Chinese, in what appeared to be their own protest against the American action on films and music, acted in December to suspend imports of American movies for Chinese consumers.

The issue became so bitter that in December, while they were in China for high-level economic talks, Ms. Schwab joined with the Treasury secretary, Henry M. Paulson Jr., and the commerce secretary, Carlos M. Gutierrez, to protest to President Hu Jintao.

Since then, administration officials say that China has begun opening its market to American movies, at least somewhat. China, however, restricts foreign films distributed in China to only 20 a year, out of hundreds that Europeans and Americans say could find audiences in China.

The United States argues that these restrictions have the effect of encouraging piracy.

On financial information, according to the United States trade representative’s office, China has since 2006 required foreign financial information suppliers to go through an entity designated by its regulators. The same regulation bars users of such services from directly purchasing them from foreign suppliers, the United States charges.

These restrictions, the Bush administration asserts, are more severe than the ones in place when China acceded to the W.T.O. in 2001.

In 1997, the United States won an agreement with China to ease restrictions on the distribution of financial news from foreign sources, but the administration says China has imposed new curbs.