A Good Trade Complaint
The United States filed two new complaints against China at the World Trade Organization on Tuesday over copyright policy and restrictions on the sale of American movies, music and books, trade officials said....One case contends that Beijing's lax enforcement of copyright and trademark protections violates WTO rules.Unlike the trade complaints filed last week, these make economic sense.
When China fails to protect intellectual property, its consumers free ride off the efforts of American producers. This free riding reduces the income of those producers, reduces the incentive for such creative activity, and eventually makes American consumers worse off because they enjoy less product variety. Reduced product variety could also impede competition and raise the prices that American consumers pay.
Note that price controls on pharmaceuticals, which are common in many other countries, have a similar adverse effect on the United States. But the U.S. government does not have the policy tools through the WTO to complain about these violations of intellectual property rights.