U.S.-China Copyright Conflict Heading Towards Possible Trade Sanctions
U.S.-China Copyright Conflict Heading Towards Possible Trade Sanctions

China and the United States started the clock on a new stage of their trade dispute over films, books and music on Tuesday, a signal Washington will go ahead with a threat to seek retaliation rights.

The battle, one of a series between the world's two top trading nations under the rules of the World Trade Organization, centers on China's restrictions on imports of copyright intensive goods.

The United States says the curbs create demand for pirated copies, and has won the case through the WTO's court system after China's appeal failed in December 2009.

China says the issue is complex and sensitive, and that it has made great efforts to comply. However, the United States said on March 25 it still had "significant concerns" and was looking at the next step -- requesting the right to impose retaliatory sanctions after China's so-called "reasonable period of time" to implement the ruling ran out on March 19.

A statement released by the two countries' trade missions on Tuesday sends the process into the next stage, with China effectively relinquishing the right to use another procedure to hold up the process in exchange for time to prepare its defense against a U.S. bid to be allowed to impose sanctions.

(Reporting by Andrew Callus; Editing by Stephanie Nebehay)