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The restrictions, such as a limitation on how many foreign films can be shown, help control the influence of foreigners in China, but also give the domestic film industry a decided advantage, The New York Times reported.

The United States filed a complaint on the issue in April 2007. Shortly thereafter, the European Union signed on as a complainant.

The Chinese government has not reacted to the ruling, which was issued late at night Beijing time, the Times said.

United States Trade Representative Ron Kirk said the ruling would "level the playing field for American companies."

Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong, said the ruling "is a firm step toward common sense."

The WTO has limited power of enforcement, but its rulings are influential when trade representatives negotiate agreements, the Times said.

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