While it may never become a true open market for foreign media, China is being forced by the World Trade Organization (WTO) to at least take a small step or two in that direction.
In filing an appeal against a WTO ruling earlier this year, China had claimed that routing foreign media through its own distributors was a requirement in order to protect “public morals.” The WTO did not agree and has denied China’s appeal, reports the Wall Street Journal.
China now has one year to comply with the ruling and to open its country to more films, videogames and music, which could obviously be a financial windfall for Western companies eying global expansion. If China does not comply within the specified timeframe, the U.S. could rain down trade sanctions on China equivalent to revenue lost on media not allowed into the country. Such sanctions could total billions of dollars.
U.S. Trade Representative Ron Kirk stated:
U.S. companies and workers are at the cutting edge of these industries, and they deserve a full chance to compete under agreed WTO rules. We expect China to respond promptly to these findings and bring its measures into compliance.
China’s Yao Jian, a spokesman for the Ministry of Commerce, responded:
China has conscientiously carried out its obligations under WTO rules in terms of access to the publishing market since its entry into the WTO.
China currently allows only 20 foreign films a year to be released within its borders, a number that the Motion Picture Association of America (MPAA) does not see changing, even in light of the new ruling.
The Journal called the rejection of the appeal, “… one of China’s biggest-ever losses at the WTO.”