A recent ruling by the World Trade Organization (WTO) has those in the U.S. entertainment industry rejoicing. The ruling would force China to open the channels of distribution to free enterprise. This means that those from the U.S. in the entertainment business will be have their work distributed in a manner which should yield more profits. The ruling will play a major role in the complex relationship between China and the U.S. entertainment industry.
In China, the government has a monopoly on the distribution of an array of media content, such as films, music, and books. These government-run companies often take a large cut of the revenue that this media content makes, as well as charging the producers hefty fees for distribution costs. The WTO ruling allows for owners of the copyrighted material to deal with other distributors, which not only will raise profits for these individuals, but also prompt the rise of an entirely new industry in the Chinese economy: media content distribution. Competition between prospective distributors will lower the pseudo-tariffs imposed on producers and allow them to a reach a larger audience with their content. The ruling is also expected to cut down on media piracy, as productions will be able to reach audiences faster. The deal also has implications on the U.S.-China trade relationship as a whole.
Since the WTO is simply a supervisor and not an enforcer of international trade policy, it can’t force China to make the changes in its ruling. However, recently, China has become more inclined to cooperate with the WTO. China’s dedication to switch from an export-based economy to a consumer-based one will rely heavily on international trade. If they comply with the WTO ruling and see successful results, it could lead to China removing other economically nationalistic policies, thus promoting even more trade. Future rulings like this could prompt even more welcome changes in China’s trade policy.