One Last Time: US-China WTO AV Products Case

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I’ve been sitting on this story waiting for something to happen, and it never did. Kind of fizzled out. So I need to comment on what’s out there (and what isn’t). As you might recall, the U.S. brought a dispute to the WTO against China in 2008 in the area of audio/visual products. The U.S. won, China appealed, and the U.S. won the appeal.

News broke about a week or so ago that the two sides had come to an agreement about how China would amend its law to conform with the panel decision. This news was carried first by Reuters, citing a letter posted on the WTO web site.

Probably because of a suspicious lack of information, the press mangled this story, starting with Reuters and continued with other outlets that repeated mistakes and misinterpreted the original panel decision. Some journalists simply had no idea what the case was all about but felt perfectly fine with throwing their guesswork out there for everyone to see.

{sigh}

Global Voices, in a post on this strange incident, summarized things nicely (albeit with mistakes repeated):

Big news last week from Reuters—”China accepts WTO ruling on entertainment goods” ; “WTO: China cannot use censorship to justify trade barrier”—didn’t get as much coverage as one would expect, and some media that did run the story ended up taking it down.

The Reuters story refers to a letter signed by ambassadors to the WTO from both China and the USA in which an agreement was struck that would see China remove all barriers on imports of books, music, films and other entertainment products by March next year.

While not immediately obvious, as the Reuters report suggests, where on the WTO website the letter in question was published, a document which closely resembles it can currently be found on the website for the WTO Center of the Chung-Hua Institution for Economic Research:

“…China and the United States have agreed that the reasonable period of time for China to implement the recommendations and rulings of the Dispute Settlement Body (”DSB”) in the dispute China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (WT/DS363) shall be 14 months from the 19 January 2010 date…”

I’m not going to review the entire case. It took me three posts to do it the first time (Part I; Part II; Part III). However, just for fun, I will quote myself (love doing that) summarizing the panel’s findings (ignore the numbering, it’s an excerpt):

4. Will this have an effect on content censorship? It might effect the process, but not the government’s ability to censor. That’s the whole point of the US argument against the public morals defense. “China, keep censoring, just let us sell into the market. We’ll follow all the censorship rules you want us to.”

5. Will this mean the entertainment industry is finally going to crack open the China market? Not much change from this case. Remember that there is still a quota of foreign films allowed into China every year — this case did not deal with that.

Let me reiterate, since I’ve already seen one news article talk about issues that are not really relevant to this case. This was not about film quotas!

Quotas are still here, censorship is still here. Distribution rights will open up some new opportunities, I suppose. The horrible licensing deals that, for example, foreign book publishers had to swallow, might change over time. That would be welcome.

The reason I wrote that to begin with is that some reporters and commentators, at the outset, were already mangling their writeups of the case. When some folks see the word “censorship” they tend to froth at the mouth and stop paying attention to the actual argument. When asked about what they read later, the answer will be “it was about discontinuing censorship.”

Similarly, if the words “movie” and “import” are in the same document, the assumption is that quotas are being discussed. Reading the actual document would have disabused folks of that notion, but after all, it was a 500 page panel decision that was full of a lot of legal jargon. Barf.

So to reiterate. U.S. and China may have agreed on a timetable for implementation of the decision. This magic letter vanished, as with Chinese press reports on the story, so your guess is as good as mine as to whether the news is true or not.

If it is true, then it means that China will have to allow foreign firms into the import and distribution business. That means breaking up the China Film Group monopoly, which is certainly a big deal for a lot of people I know.

But let’s be clear: this does not mean that quotas will be discontinued, and this does not mean that China will stop censorship of A/V products. If this was a podcast, at this point I would say “Repeat after me,” and then we would all repeat that last sentence. Since this is a blog, the whole “repeat after me” thing looks a bit foolish.

Please don’t make me post on this topic again, for heaven’s sake.