In October 2006, the United States gave China more time to reduce widespread piracy and counterfeiting of U.S. goods, but five months later the superpower is again considering whether to take legal action at the World Trade Organization. In prepared testimony for the hearing, Deputy U.S. Trade Representative Karan Bhatia stated that "No settlement has been reached. If it becomes clear that negotiations will not be successful, then we will proceed with WTO dispute settlement." It has been at least a year since the United States began threatening a WTO complaint against China for failing to enforce U.S. intellectual property rights.
U.S. software, music and book publishers estimate they lose billion of dollars of sales annually in China because of piracy while other American companies are hurt by Chinese sales of counterfeit drugs, auto parts and other goods. The Bush administration is consulting with Congress and industry before deciding its next move. "The Chinese government ... [has] laws and regulations. The problem that we"re seeing is not very much improvement in terms of piracy and counterfeiting levels. Our preference, and I think this is supported by industry, is to obtain real results that resolve problems. And if that is possible through dialogue, that"s worth pursuing as a first option," Bhatia told reporters.