In a landmark victory for the US film industry, the World Trade Organization rejected China’s appeal of its earlier ruling that sided with the United States to get China to provide greater access to its market for US films and DVDs.

“With the rejection of China’s appeal, the WTO has taken a major step forward in leveling the playing field for America’s creative industries seeking to do business in China,” commented Dan Glickman, Chairman and CEO of the Motion Picture Association of America (MPAA). “This ruling will complement our strategy to fight movie piracy in China. In spite of all the restrictions we face, there is no shortage of US filmed entertainment in China. Unfortunately, far too much of it is pirated. This ruling represents a positive step in promoting the growth of legitimate U.S. movies in a market that is growing rapidly, and with great potential,” added Glickman.

Brought in April 2007, the US case challenged the legality of several of the maze of Chinese laws and regulations that strictly control and restrict the ability of the US film industry to bring its movies to Chinese audiences.

When China joined the WTO, it agreed to make several changes to its laws to permit, over time, US companies to compete in its market. Instead, China has maintained its state-owned monopoly on the importation of films, its restrictions on US-owned companies that keep them from importing DVDs, as well as its barriers preventing U.S. companies from distributing DVDs to Chinese consumers, or even investing in such companies. The WTO found all of these barriers to be violations of China’s international obligations.

The United States made a further, complex charge alleging that China’s scheme controlling the way US films are distributed to Chinese theaters is discriminatory. The Chinese government explained that its laws would permit other companies, beside the state-owned monopoly that currently controls this market, to enter this business. The WTO accepted those assurances and thus did not find that those rules are illegal.

The WTO ruling did not, however, address the 20-film quota. That restriction remains in place.

Story filed 09.01.10