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Commerce head tells China to control piracy or risk protectionism

BEIJING—U.S. Commerce Secretary Carlos Gutierrez warned China on Thursday to crack down hard on piracy or risk "an outbreak of protectionism" in the United States.

He lashed out at the wave of counterfeit products that Chinese companies produce, equating it with criminal efforts to counterfeit cash.

Unless China's leaders move from promises to strong action on issues such as piracy, Gutierrez said, the Bush administration may find itself hammered by protectionist forces on Capitol Hill irate over currency and trade issues with China.

"Unfortunately, the slow pace of progress risks an outbreak of protectionism," Gutierrez told a group of American business executives. "The absence of results only empowers those within the U.S. political system who are pushing an American retreat from the global economy."

The temperature on the U.S.-China trade front is feverish, with charges flying in Washington that Beijing undervalues its currency. A bipartisan group of American lawmakers is pushing for across-the-board tariffs on Chinese products. For its part, China is livid at the Bush administration for moving last month to restrict imports of low-cost Chinese textiles.

Piracy is rampant in China, of everything from Italian designer handbags and Swiss watches to the latest Hollywood thrillers on DVD, software and auto parts. Beijing permits a huge emporium filled with counterfeit goods behind the U.S. Embassy here.

American companies lose $250 billion a year from pirated goods, much of it produced in China, according to the U.S. Chamber of Commerce.

Noting that China is the third-largest American trading partner and its fastest-growing export market, Gutierrez said long-term progress in building the trade relationship over the past quarter-century could collapse.

"Unless the U.S. and China show results, everything we have worked for ... could be in jeopardy," he said. "Opponents of free trade could get their way. So we need some help here. I'm asking the Chinese for some help here because if not, we're both going to be at risk."

Gutierrez, a Cuban-born immigrant and one of the highest-ranking Hispanics in the Bush administration, is making his first trip to China since he was sworn into office Feb. 7.

Before he leaves Saturday, Gutierrez is to meet with Commerce Minister Bo Xilai and Vice Premier Wu Yi. Disputes over surging Chinese textile exports will top the discussion list. Exports of some Chinese textile categories have risen more than tenfold since Jan. 1, when a decades-old system of quotas on textile commerce ended.

Gutierrez defended the American decision to restrict seven kinds of Chinese clothing categories, saying "we do have the right to do that" under global rules regarding abrupt changes in trade patterns.

Later in the day, business students who met with Gutierrez at prestigious Tsinghua University queried him repeatedly about whether textile restrictions amount to protectionism. Several noted that U.S. textile manufacturers had a decade to prepare for the lifting of quotas and shouldn't have been surprised by the surge of products from China.

"It's a difficult question, and it's what makes world trade complex and difficult," Gutierrez said, looking a little weary and urging students to focus on how to fight piracy.

Asked what he would say to Chinese textile workers who might lose their jobs, Gutierrez said the American restrictions would last only a year, and noted that safeguards allow a 7 percent increase in Chinese exports to U.S. markets this year.

At one point, Gutierrez reminded the students that clothing composes only one part of a booming trade relationship that has helped lift China economically.

"You have access to the greatest market in the world," he said. "You should be thankful for what you have."

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(c) 2005, Knight Ridder/Tribune Information Services.

ARCHIVE PHOTOS on KRT Direct (from KRT Photo Service, 202-383-6099): Carlos Gutierrez

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