Hollywood’s dream factory is sleeping a bit easier. The WTO on August 12 ruled against China in a case launched two years ago by the US over restrictions on market access for foreign films, books and music on the mainland. At the heart of the ruling was the decision that the Chinese practice of distributing imported films exclusively through state-run companies was in violation of international law.
The Motion Picture Association of America lauded the ruling, declaring it "a major victory in [a] years-long battle to open the Chinese movie market." Analysts said that the ruling may prove to be a cornerstone in the battle against piracy in China.
"It is a very important step," said Douglas Clark, a partner with law firm Lovell’s in Shanghai. He believes that improving market access for American audio/visual products is one critical prong in a long-term strategy against pirates. The hope is that the presence of competitively priced legitimate copies of films and music in China will convince some consumers to pay for genuine products, thus reducing the overall demand for pirated media.
"This doesn’t mean tomorrow that there’s going to be a flood of American films into China," said Nick Redfearn, a partner with law firm Rouse in Hong Kong. It remains up to China to change its existing laws – and he doesn’t expect Beijing to move quickly in this regard.
Furthermore, comments by the Ministry of Commerce issued after the ruling indicate that Beijing will appeal the WTO decision. Such a move may be attractive to China: The country has been increasingly aggressive in raising trade disputes with both the US and EU over products as diverse as steel, tires and metal fasteners. Nonetheless, analysts say it is unlikely that China would prevail in an appeal.