WASHINGTON: Copyright piracy in China remains at "unacceptably high levels," causing "serious harm" to American businesses, the top US trade official said in an annual report to US Congress.

US Trade Representative Ron Kirk said in the mandatory report on China's compliance with its World Trade Organization accession obligations that Beijing was not taking adequate steps to enforce intellectual property rights laws.

He said enforcement of China's copyright protection "remains a significant challenge."

The report cited other "priority" trade issues such as industrial policies, trading rights and distribution services, agriculture and services, but indicated piracy is a key issue where China has made little progress.

"Despite repeated anti-piracy campaigns in China and an increasing number of civil IPR (intellectual property rights) cases in Chinese courts, counterfeiting and piracy remain at unacceptably high levels and continue to cause serious harm to US businesses across many sectors of the economy," the 121-page report said.

The US copyright industries estimate that losses in 2008 due to piracy were about 3.5 billion dollars for the music recording and software industries alone, it said.

"These figures indicate little or no overall improvement over the previous year."

China is among nations in the annual intellectual property rights blacklist of the US Trade Representative's office.

China acceded to the World Trade Organization eight years ago. The terms of its accession called for China to implement numerous specific commitments over time.

All of China's key commitments should have been phased in three years ago.

Kirk's report said that while China had put in place laws aimed at protecting intellectual property rights as required by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights or the TRIPS Agreement, "some critical reforms are still needed in a few areas."

It cited further improvement of China's measures for copyright protection on the Internet following China?s accession to the World Intellectual Property Rights Organization (WIPO) Internet treaties, and correction of "continuing deficiencies" in China's criminal IPR enforcement measures.

The United States obtained a favorable ruling about a year ago from a WTO panel in a case challenging deficiencies in China's legal regime for protecting and enforcing copyrights and trademarks.

Specifically, in a case in which 12 other WTO members had joined in as third parties, a WTO panel found as inconsistent China's denial of copyright protection to works that do not meet China's content review standards as well as China's handling of border enforcement seizures of counterfeit goods.

The panel also clarified important legal standards relating to China's criminal enforcement of copyrights and trademarks.

Neither side appealed the panel?s decision, and China subsequently agreed to bring the measures at issue into compliance by March 2010, Kirk's report said.