The Chinese government has said it "regrets" that the United States has appealed to the World Trade Organisation (WTO) for the second time for the setting up of an expert panel to investigate US complaints that China is not doing enough to protect intellectual property rights (IPR).

Washington says US manufacturers of DVDs, CDs, designer clothes and medications are losing billions of dollars every year, because of China''s thriving counterfeit industry. It says pirated versions of these goods sell for a fraction of their cost and this has to stop.

In a statement on Thursday 27 September, China said it would actively respond to the US plaint and protect China''s interests under WTO rules. After the first request was rejected by China last month, under WTO rules, the panel was automatically approved following a second request from the United States. The two parties now have 20 days in which to agree on three panellists, otherwise the director general of the WTO will name the panel.

The United States initiated the case on 10 April, claiming that China''s legal structure for IPR protection is unfairly deficient and inconsistent with WTO regulations. The European Union, Japan, Argentina, Mexico and Taiwan have joined the US complaint.

Consultations between the two sides had earlier failed to solve the dispute. The Chinese still say they would prefer to settle the dispute bilaterally. The panel is due to make a recommendation six to nine months after it begins hearing the case. A decision can be appealed, so the dispute could take years to resolve.

The latest US complaint is the fifth it has levelled against Beijing and the third time it has sought the intervention of the WTO''s Dispute Settlement Body (DSB). China has also initiated a case against the US at the WTO over anti-dumping measures on paper imports from China.

The DSB panel process can take up to 15 months and comprises numerous stages that the parties must go through before any findings are released. The first step is for consultations and mediation, which is prescribed to take 60 days to complete. This is followed by the setting up of the panel and appointment of its members, a 45-day process.

Preparation and provision of the final panel report to the parties involved in the case takes six months, while three weeks is allotted for the same report to be circulated among WTO members. A further 60 days is set aside for the DSB to adopt the report if there is no appeal lodged. In the case of an appeal, a further three months of negotiations is expected.

For nearly 30 years, and particularly since joining the WTO in 2001, China says it has spared no efforts to improve its IPR legislation, which is in full accordance with WTO rules. It says that by initiating the case, the US is actually trying to change the international practice on IPR protection, and make developing members shoulder extra obligations by putting pressure through the dispute settlement system.

China says it is firmly opposed to accepting obligations that go beyond what is prescribed in the WTO''s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It is confident that other developing members, too, will not accept the outcome of any such attempt.

A representative reiterated that China would continue to pay great attention to IPR protection, as it was necessary for its own economic development. Last year, the US trade deficit reached a record $765.3 billion. The imbalance with China grew to $232.5 billion, the highest ever with a single country. China''s trade has increased - in both exports and imports - by an average 25 per cent per year since the country came into the WTO in 2001.