China to appeal WTO ruling

Country insists channels for media products are 'unimpeded'

BEIJING -- China will appeal a World Trade Organization ruling that orders an end to state control of movie, book and music imports.

"We are actively preparing the documents to appeal," Ministry of Commerce spokesman Yao Jian said Monday at a news conference, giving no details about the grounds for appeal against the case brought by the U.S.

Yao reiterated the ministry's view expressed after the Aug. 12 ruling, that China's import channels for media products "are completely unimpeded."

China must file its appeal within two months or the ruling will go to a vote with WTO member countries.

In the ruling, a WTO panel concluded that China violates free-trade commitments it made upon joining the organization in 2001, by forcing imported media products to be routed through Chinese state-owned companies.

The WTO said Beijing should allow foreign content publishers to import and distribute master copies of books, magazines and newspapers on the same terms as domestic firms distributing reading materials.

The WTO dispute is just the latest between the U.S. and China, the world's No. 1 and No. 3 economies, respectively, over mutual market access for a wide range of goods and violation of intellectual property rights.

The U.S. is the world's top exporter of movies, pop music and other cultural goods, many copies of which are found pirated on the Internet for free or for about $1 on the streets of China where enforcement is lax against a sophisticated network of pirates.

Hollywood is keen to get a piece of China's growing movie market, which hit $635 million at the boxoffice in 2008 after five straight years of double digit growth. An increase in the sales of movies into China would be just a small step toward further reduction of the $103 billion U.S.-China trade deficit recorded in the first six months of 2009. The deficit shrank 13% from the same period last year.

The WTO ruling did not reject China's cap on imported films at 20 revenue-sharing titles per year and accepted that censors had the right to bar foreign films and publications that government censors find objectionable.

The panel said, however, that state-run film company "China Film can no longer be the monopoly importer."

Last week, Chinese independent film companies celebrated the possibility that soon they might have a chance at entering a segment of the market from which they previously were barred.

The ruling is politically sensitive for China's one-party government, which celebrates its 60th anniversary on Oct. 1. To protect its political power, the Chinese Communist Party is moving to ensure that all media is strictly on message in the weeks up to and around the national holiday.

Foreign social networking Web sites such as Facebook and Twitter have been blocked and a prominent civil rights lawyer has been detained without charges.

Reuters and the Associated Press contributed to this report.