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China regrets WTO appeal ruling on cultural imports

BEIJING, Dec 22 (Reuters) - China’s Ministry of Commerce on Tuesday said it regretted the loss of Beijing’s appeal against a World Trade Organisation ruling that its import monopolies violated trade commitments.

China had appealed the WTO ruling against import monopolies on books, film and audio entertainment, saying that it should have the right to control imports that might harm public morals.

A panel of trade judges turned down China’s appeal on Monday, saying that while it could have cultural controls, it could not impose unfair monopolies on imports. The panel did not make a recommendation on how China should now handle the issue. Its decision cannot be appealed.

The United States, which brought the original complaint, had argued that China should not impose monopolies on imports of products that are authorized for sale, or are widely available in pirated form. [ID:n21245676].

“After China entered the WTO, market entrance for published material has been in compliance with its WTO commitment,” read the online statement from commerce ministry spokesman Yao Jian. “Foreign published materials, films and audiovisual equipment have flowed smoothly into the Chinese market.

“China regrets the appeal panel ruling. China believes that cultural goods combine commercial and cultural value, and should be managed in a different way than other products.”

On Monday, U.S. Trade Representative Ron Kirk called the panel’s ruling a “big win” for the United States and U.S. filmmakers, recording companies and book publishers frustrated by widespread piracy in China and their difficulty selling legitimate products.

“We expect China to respond promptly to these findings and bring its measures into compliance,” he said.

Some industry executives regarded China’s appeal as a way to gain experience with the WTO appeal process, in line with its increased use of WTO complaints to keep foreign markets open to Chinese goods. China on Monday made an initial effort to bring a WTO case against U.S. safeguard duties on Chinese tyre exports, but was blocked by the U.S. [ID:nTOE5BK0AB].

Currently, legal cultural or entertainment imports into China are limited to a few state-owned firms. If China opens import rights, that would benefit private Chinese distributors and independent retailers, as well as foreign firms hoping to gain access to the Chinese market.

China is expected to set up a more formal import approval system for cultural products, to replace its current practice of informally communicating bans to the monopoly importers, before allowing new entrants to import.

The WTO ruling did not address China’s quota of 20 foreign films per year, one of Hollywood’s main gripes.

The WTO had previously ruled, in a separate but related case this year, that China had failed to adequately curb piracy of books, music and DVDs].

Editing by Ken Wills