The WTO appeals body on Monday upheld an initial August ruling that China was breaching international trade commitments by blocking foreign-owned companies from acting as importers and wholesalers -- a charge Beijing denies.

"China has conscientiously carried out its obligations under WTO rules in terms of access to the publishing market since its entry into the WTO," the commerce ministry said in a statement on its website.

"China thinks cultural products feature commercial value as well as cultural value, which determines that the management of the trade of such products should be differentiated from that of general commodities."

The commerce ministry said it "regrets" the ruling but did not say if China would comply with the appellate body's decision.

The ruling, which is now final, affects distribution in China of foreign films for theatrical release, DVDs, music, books and journals.

Beijing faces possible sanctions if it fails to free up imports.

Tao Jingzhou, a Beijing-based lawyer at international law firm Jones Day, said US companies could levy duties equivalent to the revenue lost by film, music and book distributors.

China currently allows 20 foreign films to be shown in local movie theatres every year on a revenue-sharing basis, according to Chinafilm.com, a government linked website.

The United States hailed the decision as a "big win".

"We are very pleased that the WTO has found against China's import and distribution restrictions," US Trade Representative Ron Kirk said in a statement.

"The Appellate Body's findings are key to ensuring full market access in China for legitimate, high-quality entertainment products and the exporters and distributors of those products," he said.

Kirk added that "we expect China to respond promptly to these findings and bring its measures into compliance."

The ruling means China should permit US/Chinese tie-ups to distribute music on the Internet, the Financial Times newspaper reported -- potentially opening the door for firms like Apple to cash in with its iTunes downloading business.

The United States and China have for months been locked in a tit-for-tat trade tussle involving a number of WTO complaints and retaliatory measures on an array of products, from chicken meat to US car products to Chinese tyres.

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