Rutchik Quoted: U.S. Expects `Incremental' Progress in Trade Summit With China

U.S. Expects `Incremental' Progress in Trade Summit With China

April 10 (Bloomberg) -- The Bush administration said it expects China to agree at a summit tomorrow to extend a crackdown on makers of pirated movies and enforce a ban on the use of illegally obtained software by businesses and government.

Other topic for the meeting in Washington with Chinese Vice Premier Wu Yi, U.S. Trade Representative Rob Portman and U.S. Commerce Secretary Carlos Gutierrez include China's ban on U.S. beef imports, standards for telecommunications investment and regulatory transparency, two senior U.S. officials told a group of reporters today on condition of anonymity.

The meeting is an opportunity for China and the U.S. to dampen tensions over the record $202 billion trade gap between the two countries before Chinese President Hu Jintao visits U.S. President George W. Bush next week.

``They want to get some items delivered and out of the way so that the Hu visit goes smoothly,'' said Patrick Mulloy, a former Commerce Department official who is now a member of the U.S.-China Economic and Security Review Commission.

China is offering a series of ``incremental'' concessions now, with more likely to be announced when Hu is in Washington, the U.S. officials said. One item not on the agenda is China's currency policies, which U.S. lawmakers and some businesses blame for helping to subsidize low-cost exports of cheap Chinese toys, computers, auto parts and other goods to the U.S.

The $285 billion trade relationship between the U.S. and China has grown contentious because of China's currency and market access policies. The need to resolve those and other differences has become more important as China is now the second-largest foreign holder of U.S. debt and is likely to pass Mexico this year as the second-largest U.S. trading partner.

``We have a tenuous relationship with China,'' said Gregory Rutchik, a senior counsel at the law firm of Liner Yankelevitz Sunshine & Regenstreif LLP in San Francisco. ``We rely on them as a manufacturer and they buy our debt.''

U.S. Lawmakers

U.S. lawmakers have been pressuring the Bush administration to work harder to open the Chinese market to more U.S. exports and convince the Chinese government to cut-down on what the U.S. says are illegal subsidies to companies.

``Our economic relationship is now at a critical point, and failure by China to address key outstanding trade concerns and fulfill longstanding commitments creates the risk of serious damage,'' U.S. Senator Max Baucus, a Montana Democrat, and 16 of his colleagues wrote in a letter to Wu on April 7.

They called on China to lift its ban on U.S. beef, cut government intervention in markets, revalue its currency and achieve ``significant'' reductions in movie and music piracy.

Bush shares in that last concern, saying today he wants Hu to ``make a declaration'' on intellectual property protection.

``It's difficult for a nation that likes to trade, like ours, to go into a country uncertain as to whether or not patents will be protected or product will be protected from copy,'' Bush said at Johns Hopkins University in Washington.

The U.S. is preparing to file a lawsuit with the World Trade Organization alleging Chinese intellectual property laws fall short of the global requirements China agreed to when it joined the WTO in 2001, people familiar with the case said last week. The administration has been discussing the legal strategy with the film, music and software industries and Congress.

Administration officials have said in those strategy meetings that they intend to file the suit if the summits in Washington fail to resolve the issue, the people said.