The World Trade Organization’s ruling against China’s stranglehold on the distribution of imported books, movies and songs may not unleash a torrent of new business for American entertainment industries, but it comes at exactly the right time for the world economy.
It should serve as a warning to the Chinese government to restrain its growing economic nationalism, which poses a serious threat to international trade and the chances of a global recovery.
Hollywood studios and other media companies currently must deal exclusively with government-run distributors. If the decision by the W.T.O. panel stands — China has the right to appeal — American and other foreign companies should be able to seek better, more lucrative distribution deals. Apple, which owns iTunes, and other companies should be able to sell music over the Internet. But other restrictions remain — only 20 foreign movies can be shown in Chinese theaters each year.
In the midst of the global recession, China has taken increasingly unfair steps to protect its industries. It has given tax rebates to exporters and barred government entities from buying foreign goods if there are domestic substitutes. It has again intervened heavily in currency markets to halt the rise of the renminbi.
The W.T.O. has ruled several times against China in recent years. By Sept. 1, China must comply with a W.T.O. ruling in a case brought by the United States against illicit taxes on imported auto parts. By March, it must comply with another ruling on a case brought by the United States about its lax enforcement of counterfeiting laws.
China has also increasingly turned to the W.T.O. to defend its interests. Last month, it challenged an American ban on Chinese poultry imports. It has another case against American anti-dumping policy. And there will be more. China has as big a stake as the United States in a well-functioning, lawful trading system. If it wants to protect its own rights, it will accept the W.T.O.’s rulings.