The World Trade Organization backed the United States Wednesday in a major trade battle with China, issuing a ruling that could ease tight controls and open markets for U.S. makers of everything from DVDs to books and music downloads.
The decision came down decisively against Beijing's policy of forcing American media producers to route their business through state-owned companies. It will not yield immediate revenues in Hollywood or Silicon Valley, and it may take sanctions — or the threat of them — to force China to ease access for U.S. companies to the world's largest marketplace.
Still, U.S. Trade Representative Ron Kirk said the decision will help "level the playing field for American companies working to distribute high-quality entertainment products in China."
"To me, that is a clear win," he said. "We believe that this report will help pave the way toward more open trade between China and America."
China, on its side, said Thursday it might appeal the WTO decision.
"The Chinese side feels regret at the ruling by the experts group," Commerce Ministry spokesman Yao Jian said in a written statement. "The Chinese side will conscientiously assess the expert group's ruling and does not rule out the possibility of an appeal."
Yao's statement said "the channels for China's import market for published materials, movies and music are completely unimpeded."
The case could have worldwide ramifications as it appears to set a precedent for how China is allowed to manage and control foreign manufacturers and service providers.
The country's rigid restrictions have been a key gripe of Western powers, who have complained that China's rapid rise as a trade power has been in part aided by unfair policies that boost sales of Chinese goods abroad while limiting the amount of foreign products entering its own market.
While the ruling was seen as an important first step, U.S. content companies say it will take a renewed push to clamp down on piracy to have a meaningful impact.
The WTO decision comes as President Obama is being pressed to get tough on trade rules with China, which many Democrats in the U.S. Congress blame for America's soaring trade deficit and lost manufacturing jobs. The case is sensitive for the Chinese government because it asserts the right to keep out content it finds objectionable in products including video games to computer software.
The Associated Press reported the main findings of the then-confidential ruling last month, but the public release of the 464-page document on Wednesday revealed dozens of smaller decisions that support the complaints of trade associations representing record labels such as EMI and Sony Music Entertainment; publishers including McGraw Hill and Simon & Schuster; and, to a lesser extent, the major Hollywood studios of Warner Bros., Disney, Paramount, Universal and 20th Century Fox.
These associations say discriminatory Chinese rules are costing them millions each year in lost business opportunities.
"The Chinese system for distributing U.S. films to Chinese audiences is among the most restrictive and burdensome in the world," said Dan Glickman, chairman of the Motion Picture Association of America.
Up to now, state-owned China Film Corp. decided which movies could make it into the country legally. But its tastes can differ from the Chinese public.