All Smiles in Beijing As US, China Lock Deals

AFTER months of rancor and threats, China and the United States have sent a message that they will not let disputes over human rights, trade, and nuclear-weapons proliferation rupture their growing ties.

Over the past week, US officials clinched deals on a number of lucrative energy projects and on China's abuse of US copyrights, trademarks, and patents.

``This is Washington's `engagement' policy to bring China kicking and screaming into the global economy,'' says one US diplomat.

Relations took a turn for the better following US Energy Secretary Hazel O'Leary's visit to China last week and on Sunday, when US and Chinese negotiators averted a bitter trade war by signing a last-minute agreement.

``This is a win-win agreement, there is no question about it,'' said US Deputy Trade Representative Charlene Barshefsky after signing the accord on intellectual-property protection.

The US business community in China weighed in with a speedy endorsement minutes after Ms. Barshefsky signed off.

William Warwick, chairman of the American Chamber of Commerce here and AT&T's director of China operations said the pact was ``good news for everybody.''

Washington contends US firms in the entertainment and computer software sectors have been losing more than $1 billion annually to piracy in China. On Feb. 4, US Trade Representative Mickey Kantor placed $1.08 billion worth of Chinese products on a list targeted for 100 percent tariffs if an agreement was not reached.

Beijing had promised to counter with retaliatory tariffs on a range of US imports in addition to suspending talks with US firms in the automobile, chemical, and audiovisual sectors. China played a trump card in the final week of talks when it warned that US aircraft company Boeing would ``suffer dearly'' if a trade war erupted. ``This [deal] is good news for both countries, and we're very glad they reached an agreement,'' said Mike Zimmerman, president of Boeing China.

The agreement also brought a heavy sigh of relief from Hong Kong. The British colony's government was concerned that a prolonged trade war could cost the territory more than $570 million and 5,000 jobs.

In signing the deal, Beijing agreed to empower ``special task forces'' to carry out police actions against suspected pirates. Customs officials are to be given ``broad enforcement authority'' to seize and destroy private goods for export. Another Chinese concession was the guarantee of market access for US audiovisual manufacturers and publishers, and an end to a strict quota previously imposed on US films screened in China.

But an important concession was China's pledge to launch a concentrated crackdown on pirating factories and to provide monthly reports on enforcement of copyright laws.

Since Mr. Kantor threatened to launch sanctions, China has closed seven renegade compact disc factories, including one in the city of Shenzhen, named by the US as one of the worst offenders. But Barshefsky warned that the ``very dramatic actions'' were only the beginning of adequate enforcement of China's copyright laws.

She called for vigilance from copyright holders and political will from the Chinese government to ``build on this foundation.''

O'Leary's successful visit

Ms. O'Leary's visit with US energy executives helped reverse an acute energy shortage threatening to stunt China's economic growth while at the same time promoting US technology that resulted in deals worth more than $5.5 billion.

Another breakthrough pact, described by O'Leary as ``advancing important US nonproliferation issues,'' was also signed on nuclear-fuel reactor research. The agreement would help Chinese scientists change their nuclear technology to use low-enriched uranium instead of the highly enriched uranium they currently use.

The new trade accord could lead to China's entry into the World Trade Organization, for which negotiations were scheduled to resume this month. China failed to become a founding member at the beginning of this year, with intellectual-property protection violations and restricted market access cited by Western countries as major stumbling blocks.