SPA Supports USTR Sanctions Against China

May 15, 1996 (Washington, D.C.) - The Software Publishers Association (SPA)
commends the United States Trade Representative (USTR) for its strong
stance against China and its decision to send a clear message to the
Chinese government that failure to comply with the terms of last year's
U.S.-China Intellectual Property Rights (IPR) Agreement will not be
overlooked.

"Entertainment and business software companies are deeply disappointed that
China has not kept its promises to control software piracy," said Ken
Wasch, SPA president. "Many U.S. companies are interested in building
business relationships in China but cannot justify the risk until Chinese
authorities create a safe legal environment for their software."

SPA's support is in direct response to today's announcement by the USTR
that the Administration will levy U.S.$ 3 billion in sanctions on Chinese
exports. Particularly of concern to SPA is China's failure to implement
long-promised enforcement to fight rampant piracy of entertainment and
business software in China. Despite continued pressure from the United
States to improve its IPR enforcement of U.S. copyrights, losses from
software piracy and the value of pirate exported software in China are
estimated by SPA and the Business Software Alliance (BSA) to total at
least $488 million in 1995. Overall, SPA and BSA estimate China's piracy
rate in 1995 was 95 percent, the highest rate of software piracy in the
world.

Although the Chinese have made some efforts to improve IPR protection, they
have not fully complied with the terms of the 1995 IPR agreement. For
example, the agreement committed the Chinese government to shut down and
prosecute all pirate CD-ROM factories. Although the Chinese have conducted
raids on several, SPA has received reports that 31 of these factories
remain together producing tens of millions of illegal CD-ROMs each year.
The Chinese have also failed to implement a much-needed CD-ROM Title
Verification System, called for in the IPR agreement, to help control the
production of illegal CD-ROM programs.

"SPA commends Ambassador Barshefsky and her trade negotiators for their
dedication and patience in seeking to ensure China makes good on its
promises," said Mark Traphagen, SPA counsel. "We also commend the
administration for its decisive action and appreciate the efforts of many
in Congress to focus attention on this important issue."

Although the software industry boasts some large, well-known companies, a
recent survey showed that more than 80 percent of the industry is actually
made up of software companies with annual revenues under $10 million.
These smaller, entrepreneurial companies cannot withstand large-scale
counterfeit operations like those in China. Piracy in China denies the
smaller U.S. software companies, who are beginning to look to Southeast
Asia as an expanding market, revenues that could be used for job expansion
and new product development.

SPA is the leading trade association of the software industry, representing
the leading publishers as well as many start-up firms in the business,
entertainment and education markets. Its 1,200 members account for 90
percent of the sales of the U.S. packaged software industry. SPA is an
international organization with offices in both the United States and
Europe. SPA press releases are available on SPA's Web site at
http://www.spa.org or through Fax-on-Demand at (800) 637-6823.

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036
202-452-1600,  Fax: 202-223-8756
 
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