GAPP Official Claims China's Publishing Regulations Fulfill WTO Commitments
Liu Binjie, a deputy director of the General Administration of Press and Publication (GAPP), told a reporter that the Chinese government has honored its World Trade Organization (WTO) commitments with respect to reforming and opening up its publishing sector, according to a September 19, 2006, article (in Chinese) posted on the State Intellectual Property Office Web site. Liu said that in compliance with its WTO obligations, the Chinese government has opened up both its retail and print production markets.
Liu Binjie, a deputy director of the General Administration of Press and Publication (GAPP), told a reporter that the Chinese government has honored its World Trade Organization (WTO) commitments with respect to reforming and opening up its publishing sector, according to a September 19, 2006, article (in Chinese) posted on the State Intellectual Property Office Web site. Liu said that in compliance with its WTO obligations, the Chinese government has opened up both its retail and print production markets. Liu cited the following developments as evidence:
- Thirty-eight foreign-invested retail service enterprises have been approved, and 14 of these have rights to engage in wholesale distribution.
- Foreigners may invest in printing enterprises, with the exception that a Chinese party must be the controlling shareholder in all "publication printing enterprises." To date, the Chinese government has approved 2,000 Sino-foreign joint ventures and wholly foreign-owned printing enterprises, and some are very large in scope.
Liu said that, while China's policies do not permit foreign investment in "editorial" areas, cooperation on individual book projects is open to foreign participation. He also said that the areas of "book cooperative publishing" and "copyright trade" are completely open, and 51 newspaper and periodical Sino-foreign copyright cooperative ventures have been approved.
China's WTO Commitments on Foreign Access to China's Publishing Market
On July 6, 2005, the Certain Opinions Regarding the Introduction of Foreign Investment into the Cultural Domain (Certain Opinions), was jointly issued by the Ministry of Culture, State Administration for Radio, Film, and Television, GAPP, National Development and Reform Commission, and Ministry of Commerce. The Certain Opinions stated that "in order to safeguard the nation's cultural security," foreign investors are prohibited from "investing in businesses engaged in the publication, general distribution, or importation of books, newspapers, or periodicals." The distinction between "wholesaling" [pifa] and "general distribution" [zongfaxing] is unclear. The Provisions on the Administration of the Publications Market defines "general distribution" opaquely and circularly as "integrated publication by a publication general distribution work unit," while "wholesaling" is broadly defined as "engaging in sales of publications to other publications."
When China acceded to the WTO in 2001, the Chinese government agreed in its Schedule of Specific Commitments on Services that it would allow foreign investors to establish a commercial presence to engage in retailing services for books, magazines, and newspapers within one year of accession (except through chain stores), and to engage in wholesale trade services of books, magazines, and newspapers within three years of accession. Moreover, Article 5 of China's Protocol of Accession provides that "within three years after accession, all enterprises in China shall have the right to trade in all goods throughout the customs territory of China, except for those goods listed in Annex 2A which continue to be subject to state trading in accordance with this Protocol." Books, newspapers, and periodicals are not listed in Annex 2A.
Government Restrictions on Foreign Access to China's Publishing Market
The government initially appeared willing to fulfill these commitments when it issued the Measures on the Administration of Foreign-Invested Book, Newspaper, and Periodical Distribution Enterprises on March 17, 2003, which granted foreign companies the rights to engage in limited wholesaling and retailing activities. These rights were reaffirmed in the Measures on the Management of Foreign Investment in the Commercial Sector issued on April 16, 2004.
More recently, however, Chinese authorities have enacted regulations that appear to restrict this right. In addition to the Certain Opinions, other examples include:
- Measures on the Administration of the Subscription of Imported Publications, issued December 31, 2004: Only publication-importing businesses designated by the GAPP may engage in the newspaper and periodical import business.
- Catalogue for the Guidance of Foreign-Investment Industries, issued November 30, 2004: Placed the periodical and wholesale and retail distribution of books, newspapers, and periodicals in the "restricted" category, and placed the publication, general distribution, and importation of books, newspapers, and periodicals in the "prohibited" category.
The Chinese government maintains that it may impose restrictions on the importation of books, newspapers, and periodicals based on the general exception for the protection of the public morals in Article XX of the General Agreement on Tariffs and Trade 1994. On September 15 and November 3, 2006, the United States submitted questions to China at the WTO's Committee on Market Access and Council for Trade in Goods, respectively, asking the Chinese delegation to explain the relevance of GATT Article XX and why the government's restrictions on the import books, newspapers, and periodicals is "necessary" within the meaning of Article XX.
The United States government and U.S. and international trade associations continue to complain that the Chinese government's regulation of foreign investment in publishing is opaque and may conflict with its WTO commitments. Examples include:
- Written Comments Regarding Copyright Protection and Services/Market Access in China in Response to the Request for Comments and Notice of Public Hearing Concerning China's Compliance With WTO Commitments, submission by the International Intellectual Property Alliance (IIPA) to the Trade Policy Staff Committee, Office of the U.S. Trade Representative, September 21, 2006: "IIPA believes that China has failed to afford full trading rights to foreign entities as to books, newspapers and periodicals. . . . [C]ontinued severe restrictions on activities of paramount importance to U.S. publishers, such as printing (which is 'restricted'), and failure to define key activities which are prohibited, for example, 'master issuing' and 'producing' cast doubt on whether China is meeting its WTO obligations."
- 2005 Report to Congress on China's WTO Compliance, Office of the U.S. Trade Representative, December 11, 2005: "China has not yet implemented its trading rights commitments insofar as they relate to the importation of books, newspapers, and magazines. . . . China continues to wholly reserve the right to import books, newspapers, and magazines to state trading enterprises."
- Moving Forward on Distribution, The US-China Business Council, September 2005: States that the Chinese government's implementation of its commitments on allowing wholesaling of printed matter are "unclear."