HONG KONG — TheWorld Trade Organizationgave the United States a victory on Wednesday in its trade battle with China, ruling that Beijing had violated international rules by limiting imports of books, songs and movies.
TheW.T.O. panel decision in Genevabuttresses growing complaints from the United States and Europe that China is becoming increasingly nationalistic in its trade policies. It also offers some hope that China will remove its restrictions on media and reduce rampant piracy of intellectual property, though the country can appeal.
But even if China changes its policy in light of the decision, Western companies could struggle to increase their sales anytime soon. The ruling does not affect a quota that caps at 20 the number of foreign films that can be released in Chinese movie theaters each year.
Also, because of piracy, Chinese consumers are so accustomed to paying very little for DVDs, or downloading movies or songs free on the Internet, that American movie companies already sell authorized DVDs of their movies for much less in China than in the United States — and still struggle to find buyers.
Still, Ron Kirk, the United States trade representative,praised the panel's legal finding. "This decision promises to level the playing field for American companies working to distribute high-quality entertainment products in China," Mr. Kirk said, "so that legitimate American products can get to market and beat out the pirates."
China's commerce ministry said in a statement on Thursday morning that it regretted the panel's decision and that it "does not preclude the possibility of an appeal." W.T.O. rules allow appeals to a panel of senior trade experts; if a country loses its appeal and fails to negotiate settlement with the complaining country, the complainant can impose retaliatory trade sanctions.
For the American media industry, the ruling essentially means that the W.T.O. supports demands by United States movie studios, book and newspaper publishers, and record labels that they be allowed to sell more directly to the Chinese consumer, rather than first going through a middleman, often a state-owned enterprise, as China has required. It does not necessarily mean the Chinese consumer will have access to a broader array of American films, books and music — although those industries hope that may eventually occur.
"American companies now have the right to trade without going through a Chinese intermediary at the border," said James Bacchus, a lawyer at Greenberg Traurig in Washington who represented the China Copyright Alliance, a consortium of media companies, in the case.
"I wouldn't say it will have a night-and-day, revolutionary impact right away," he said. However, he added, "It's hard for me to believe that the import quota, which has been in effect for 10 years, will be there in perpetuity with this decision."
Either side may appeal the panel's ruling. It is difficult, although not impossible, for a panel decision like this one to clear the way for the petitioning country to impose trade sanctions on the country that broke the rules.
The ruling goes to the heart of one of the biggest trade issues pending between China and the West: whether intellectual property, like copyrighted songs, books and movies, should be granted the same kind of protection from discriminatory trade practices as manufactured goods.
China has enjoyed double-digit economic growth through most of the last three decades in part because of rapid expansion of exports, virtually all of which have been manufactured goods. But Chinese imports have grown much more slowly, particularly if imports of goods for export are excluded, like computer chips from Japan that are assembled in China into consumer electronics for shipment to the United States.
One reason for the slow growth in imports has been China's restrictions on imported books and other content. Demand is met by pirated copies made in China; the latest Hollywood movies are on DVDs on street corners across China within days of their release, for $1 or less.
In its petition to the W.T.O., the United States criticized China's requirement that most copyrighted material be imported through a few government-designated companies, which tend to be wholly owned or majority-owned by the government. The restrictions also required foreign financial news services to operate through a government-designated distributor.
The panel condemned this, saying in its report that "it also appears that foreign individuals and enterprises, including those not invested or registered in China, are accorded treatment less favorable than that accorded to enterprises in China with respect to the right to trade."
Many of these restrictions, like limiting the number of foreign movies that can be shown each year in Chinese theaters, have been aimed partly at limiting foreign influence in China but also at sheltering domestic industries.
The panel stopped short of endorsing an American requests for a ruling on whether Chinese censorship had unfairly restricted imports. The panel said that this question was outside its purview; for the same reason, the panel also declined to rule on whether China's approval processes were too onerous for would-be distributors of imported entertainment.
Like theUnited Nations, the W.T.O. has limited power to enforce decisions. But criticism from the W.T.O. can shame countries, and panel rulings against other countries have frequently become the basis for bilateral or multilateral negotiations that result in policy changes.
The Bush administration filed the original complaint in 2007, partly to head off possible legislation requiring a more confrontational trade policy toward China. The Obama administration now faces pressure from the Democratic majority in Congress to take more assertive action in response to China's trade surplus during therecession, and could use the ruling as evidence that the issue is being addressed. It may also use the victory as a precedent to take more cases against China to the W.T.O., said Gary Clyde Hufbauer, a trade expert at the Peterson Institute for International Economics.
But while China has lost two other W.T.O. panel rulings in the last 13 months, regarding high taxes on imported auto parts and lax enforcement of counterfeiting laws, China has not changed its policies in either case.
"They've got a poor record of compliance. They keep filing appeals," said Lyle Vander Schaaf, a partner in Washington at the law firm Bryan Cave who specializes in W.T.O. dispute panels and has not advised either side in any of the three panel decisions against China.