WASHINGTON (Reuters) — The Bush administration, under pressure from Congress to get tougher on trade, said yesterday it would take legal action against China for failing to stop widespread piracy and counterfeiting of American goods.“Inadequate protection of intellectual property rights in China costs US firms and workers billions of dollars each year,” Schwab said in a statement announcing two separate cases against China at the World Trade Organisation.

The move came as congressional anger over last year’s record $232 billion US trade deficit with China is hampering Bush administration efforts to win renewal of trade promotion authority, which the White House needs to finish negotiations on the Doha round of world trade talks.

Schwab told reporters the two requests for dispute settlement consultations — the first steps in bringing a complaint at the WTO — “should not be viewed as hostile action against China” and also rejected suggestions the two countries risked slipping into a trade war.

The United States recognises Beijing has already taken some important action to crack down on piracy and remains open to a negotiated settlement without going through the WTO, which could take 18 months or more, Schwab said.

But pointing to a table displaying 500 pirated copies of music CDs and Hollywood blockbusters like “Walk the Line,” “Mr. and Mrs. Smith” and “The Da Vinci Code,” Schwab complained it was too easy for pirates in China to avoid jail time.

“If I took just one DVD off the pile back there, leaving 499 still there, and there was a raid, the most Chinese authorities could do would be to seize the goods and impose an administrative fine” because the current threshold for criminal prosecution is 500 copies, Schwab said.

Although China appears to have taken some steps to close that legal loophole, the US believes Beijing needs to go further. It also wants China to make other changes to beef up legal protections for copyrighted and trademarked US products, Schwab said.

The United States’ second WTO complaint focuses on market access barriers that make it difficult for US movie, music and publishing companies to offer legitimate products that could compete for sales with pirated goods.

“Only specially authorised state-owned companies are permitted to import movies, DVDs, music, books, journals and other publications,” despite China’s commitment to end such monopolies when it joined the WTO, Schwab said.

US movie and recording groups applauded the action at the WTO, but the Business Software Alliance was unenthusiastic — even though US software piracy losses in China totalled an estimated $1.95 billion in 2006, compared to $206 million for US records and music in the same year and $244 million for US motion pictures in 2005.

“BSA continues to believe that a constructive dialogue between the US and China is the best way to address the broad range of issues that affect both countries and their economies,” group President Robert Holleyman said in a statement noting software piracy rates in China have fallen significantly in the last three years.

China has also ordered computer makers to pre-install legally licensed operating systems software on all computers sold in China and has required Chinese government agencies to only buy those computers, Holleyman said.

US lawmakers welcomed the action, which many said was long overdue. Sen. Sherrod Brown, an Ohio Democrat, called the timing of the two cases “suspicious” because of the Bush administration effort to win renewal of trade promotion authority, which allows the White House to negotiate trade deals that can not be changed by Congress.