CRACKDOWN ON PIRACY PROMISED.

Byline: Jason Z. Cohen Staff Writer

Once the world's largest producer and exporter of pirated compact discs, software and videos, China has created a set of trademark laws modeled after those found in the United States.

Thanks to a 1995 agreement - signed under the threat of trade sanctions - China says it is cleaning up its act and driving the pirates out. The entertainment and software industries are working to make sure that cooperation continues.

In 1994, China was the world's largest exporter of pirated compact discs, digital video discs and software on CD-ROM, said U.S. Trade Representative Charlene Barshefsky.

The United States stepped in and threatened the Chinese with $1 billion in trade sanctions if it continued to look the other way while pirates produced illegal copies of protected materials.

And China responded, shutting down numerous pirate compact disc factories.

``In the years since those agreements were made, China has in fact followed the rule of law,'' said Jeff Harleston, senior vice president of MCA Records. ``We still have concerns about China being a market for pirated product, but we think permanent normal trade relations is an answer for that.''

According to the International Federation of the Phonographic Industry, China produced $240 million in pirated material in 1998, and 60 percent of the domestic market for music, software and video discs was in pirated material.

The entertainment industry loses $5 billion in sales every year to pirates, according to the Recording Industry Association of America.

China has more of a reason now to respect intellectual property, said Vance Baugham, trade manager of the San Fernando Valley Trade Office of the Port of Los Angeles.

Because of the negotiated concessions and the requirements of being a WTO member, the rules are stricter, Baugham said.

``They have to now become on par with Western Europe and North America,'' he said. ``In the past, they've been under their own laws. Once they get into the WTO, there is no longer an excuse that they're a developing country. They have to abide by the same laws.''

There is evidence that China's legal system is growing more Western, said Shelley Presser, deputy general counsel for Burbank-based Warner Bros.

``We believe the Chinese are committed to the rule of law,'' Presser said. ``In the last few years, we've come into contact with more and more Chinese scholars who have become more sophisticated in their knowledge of our laws and of intellectual property in general.''

That sophistication is very important for the entertainment industry, said Susan Genco, senior vice president of Capitol Records.

``Without the proper protection of our intellectual property rights, we have nothing,'' she said. ``At the end of the day, intellectual property rights are all we have.''