The top U.S. trade official calls the issue of Chinese counterfeiting U.S. goods "one of the thorniest issues" in U.S.-China relations. She added that Washington has put on hold its plans to file suit against China in the World Trade Organization over intellectual property rights violations, in the hope that the two sides can resolve the issue on their own. VOA's Stephanie Ho reports from Washington.

Susan Schwab at the WTO headquarters in Geneva, 30 Jan 2007

U.S. Trade Representative Susan Schwab says there are serious problems with the piracy and counterfeiting of U.S. goods in China.

"Something like 80 percent of the pirated and counterfeit goods that show up at our borders, that are seized by the customs service come from China," said Susan Schwab. "So, we know this is a very serious trade problem because it means if you have got pirated counterfeit goods being sold in China, of American products, that represents sales foregone, sales lost, by our manufacturers, by our businesses, by our workers."

American companies say fake U.S. products made in China are costing them billions of dollars in lost revenue.

The United States has filed cases against China in the World Trade Organization for Chinese subsidies it says are competitively unfair and in an auto parts dispute. This time, though, Schwab said that instead of filing a WTO case, the U.S. government and American businesses are trying to work out a resolution with the Chinese side.

"We are all going to run out of patience at some point, and that will be, I suspect, sooner rather than later," she said. "But for now, we had planned to file the case in the Fall. We were set to file the case. We had informed the Chinese we were about to file the case. They said, 'wait a minute, let us continue this conversation.'"

She pointed to one recent success story, where all new computers made in China had to be loaded with legal operating software before they left the factory.

"The impact of that in terms of sales in China of legitimate software, as distinct from pirated software, has been significant," noted Susan Schwab. "If we can identify solutions like that, where you really make a difference in dollars and cents, in sales, and you do that in the near term, that is a far better solution than litigation, which is costly and time-consuming."

The U.S. Trade Representative said she is concerned that the new Democratic-controlled Congress may be tougher on China, especially since the U.S. trade deficit with China reached a record $232 billion last year. At the same time, she emphasized that U.S.-China trade relations should be dealt with in what she called "a balanced and constructive manner."

Meanwhile, although Russia is another major producer of fake U.S. goods, she said it appears that Moscow is headed in the right direction on that issue, in its quest to join the World Trade Organization.

"After China, Russia is the most serious problem we have in terms of intellectual property rights and protection of intellectual property rights, counterfeiting, piracy and so on," she said. "We felt that the Russians had made some very strong commitments."

Schwab spoke in an interview shown Sunday on C-SPAN, a private, non-profit network that broadcasts U.S. Congressional proceedings and other Washington political events on cable television.