No trade war with China Mutual interests prevail: Dispute over theft of U.S. intellectual property resolved.

June 28, 1996

NEITHER CHINA nor the United States can afford a trade war. These two giant powers may resort to bluster and brinksmanship, as they did in the run-up to a predictable agreement curbing China's massive piracy of U.S. film, recording and software copyrights. But their relationship is too important to permit a full-scale trade war.

Much the same can be said about Washington's annual threats -- abandoned again yesterday in the House -- to China's access to the U.S. market by denying it "most-favored nation" (MFN) trade status. Or China's periodic agitation over Taiwan, a "renegade province" that in fact is a major commercial and financial entrepot for China.

This is no argument for indifference toward the real conflicts of interests that are bound to afflict nations of continental size. But it is an argument that the mutual interests of China and the U.S. -- and there are many -- should not be overshadowed by manageable frictions.

During the negotiations that led to the accord on intellectual property safeguards, a cause enthusiastically promoted by the powerful American entertainment industry, U.S. business interests ranging from toy and textile importers to auto and aircraft exporters put pressure on Washington not to allow the dispute to get out of hand. (Indeed, McDonnell Douglas is threatened with billion-dollar losses to European competitors.) No doubt similar tensions were prevalent Chinese-style in China, a country that sends 40 percent of its exports to the U.S. and runs up a huge trade surplus.

Fifteen months ago, China and the U.S. crafted a landmark agreement to stop the theft of U.S. intellectual property. Little happened. So this latest pact is really just an attempt at enforcement. Will pirate factories operating under military protection and paying off local authorities docilely submit? Don't count on it. Perhaps a year from now another pact will be needed to enforce the pact just drawn up to enforce the unenforced 1995 pact.

This is not said to belittle a necessary process. On the contrary. Both China and the United States need constant adjustment of their absolutely vital relationship. Examples: Less Chinese obstreperousness and belligerency. More U.S. accommodation on permanent MFN status and Beijing's admission to the World Trade Organization.

Nothing will ever be easy or cozy, Nixon-era romanticism notwithstanding. But tough-minded leadership in both countries, with a firm grip on a global perspective, should see to it that mutual interests prevail.

Pub Date: 6/28/96

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