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The Office of the United States Trade Representative
Special 301 Report Finds Progress and
Need for Significant Improvements
Results of China OCR Released, China Elevated to Priority Watch List
April 29, 2005
WASHINGTON --- The
Office of the U.S. Trade Representative today released its annual "Special 301"
report on the adequacy and effectiveness of intellectual property rights (IPR)
protection around the world. Despite progress by some countries, the report
finds that weak IPR protection continues to be a serious problem and calls for
tough actions to combat global piracy and counterfeiting. The report presents
the results of USTR's special Out-of-Cycle Review of China's intellectual
property regime, and concludes that infringement levels remain unacceptably high
throughout China, in spite of Beijing's efforts to reduce them.
"Strong intellectual property rights protections and enforcement at home and
abroad are critical for the success of America's innovative economy and are top
priorities for this Administration," said Acting U.S. Trade Representative Peter
Allgeier. "We are committed to vigilantly enforcing U.S. intellectual property
laws and procedures and to working with our trading partners around the world to
effectively protect the ideas, brands and inventions of our businesses and
entrepreneurs."
"This year, we are elevating China to the Priority Watch List for failure to
effectively protect intellectual property rights and to meet its commitment to
significantly reduce infringement levels, despite efforts by China's senior
leadership to do so," Allgeier added. "China must take action to address rampant
piracy and counterfeiting, including increasing the number of criminal IPR cases
and further opening its market to legitimate copyright and other goods. We will
work closely with U.S. industry and other stakeholders, with an eye toward
utilizing WTO procedures to bring China into compliance with its trade
obligations."
The Administration is working globally, regionally and bilaterally, using all
available tools, to establish strong legal protections for intellectual
property, promote effective enforcement, and solve problems identified in this
year's Special 301 Report - including piracy of copyrighted works in Ukraine,
China, Paraguay, Brazil, Russia, India, Thailand, Bulgaria, Pakistan and other
markets and inadequate protection against unfair commercial use for test data
submitted by drug companies to health authorities in Israel, Turkey and
elsewhere.
These efforts are delivering real results. The Special 301 Report notes the
improvements and progress that several countries have made in addressing IPR-related
concerns identified in previous Special 301 Reports. For example, Indonesia and
the Philippines have recently passed optical disc legislation that will help
combat optical media piracy, Malaysia and Taiwan have begun to take more
enforcement actions, and India passed a new ordinance to improve patent
protection. A list of positive developments for IPR protection over the past
year is attached to the report.
"India took a significant step to improve its patent protection regime this year
with passage of a new Patent Amendment," Allgeier said. "We will closely monitor
implementation of the amendment, and we are considering actions that would
acknowledge progress in this area."
China Out-of-Cycle Review
The People's Republic of China was designated a Priority Foreign Country (PFC)
in 1994, and has subsequently remained subject to monitoring under Section 306
of the Trade Act. Section 306 monitoring indicates that a country previously
listed as a PFC was removed from the Special 301 list on the basis of an
agreement with the United States, and the U.S. is monitoring its commitment to
that agreement. In China's case, we are monitoring its implementation of 1992
and 1995 bilateral agreements with the United States.
In its 2004 Special 301 report, USTR announced that it would conduct an
Out-of-Cycle Review (OCR) in early 2005 to evaluate China's implementation of
its commitments to significantly reduce IPR infringement levels. These
commitments were made at the 15th annual meeting of the Joint Commission on
Commerce and Trade (JCCT) in April 2004, in addition to China's WTO commitments,
and the commitments made in the 1992 and 1995 bilateral agreements with the
United States. During the OCR process, USTR requested detailed information on
the prevalence of IPR infringement in China and the strengths and weaknesses of
China's IPR protection and enforcement regimes. USTR also engaged with dozens of
right holders, interested members of the public and with the U.S. Congress. The
OCR found that piracy and counterfeiting rates remain at extremely high levels
due to China's inadequate and non-deterrent enforcement system, despite efforts
made by Beijing.
As a result of the OCR, USTR has elevated China to the Priority Watch List
because of serious concerns about China's compliance with its obligations under
the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) and its JCCT commitments. USTR will work with U.S. industry and other
stakeholders with an eye toward utilizing WTO procedures to bring China into
compliance with its TRIPS obligations, invoke TRIPS transparency provisions to
obtain detailed documentation on certain aspects of China's IPR enforcement
regime, and seek additional aggressive actions by China at the 2005 JCCT aimed
at significantly reducing IPR infringement levels.
Russia
In addition, the Special 301 Report notes that Russia remains on the Priority
Watch List this year due to continuing problems with Russia's IPR regime,
including weak IPR enforcement and lack of data protection. It appears that
Russia's current IPR regime is inconsistent with Russia's bilateral trade
obligations and may not conform to obligations which Russia needs to fulfill in
order to join the WTO. In particular, we remain concerned about high levels of
piracy of optical media (CDs and DVDs) and a growing problem with Internet
piracy of copyrighted works. In addition to maintaining Russia on the Priority
Watch List, USTR is announcing that we will conduct an OCR in 2005 to monitor
progress by Russia and to evaluate whether actions undertaken are resulting in
substantial reductions in the levels of piracy and counterfeiting. We will
continue to monitor Russia's progress in bringing its IPR regime in line with
international standards through the OCR, the ongoing review of Russia's
eligibility under the GSP program, bilateral IPR working group discussion, and
WTO accession process.
Background
The Trade Act of 1974 instructed the Office of the US Trade Representative to
identify annually those countries that deny adequate and effective protection
for IPR or deny fair and equitable market access for persons that rely on
intellectual property protection. Section 182 is commonly referred to as the
''Special 301'' provision of the Trade Act. Countries are placed into a
hierarchy of categories, with the ranking of Priority Foreign Country reserved
for the worst situations: (1) Priority Foreign Country; (2) Priority Watch List;
or (3) Watch List.
Placement of a trading partner on the Priority Watch List or Watch List
indicates that particular problems exist in that country with respect to IPR
protection, enforcement, or market access for persons relying on intellectual
property. The Special 301 review occurs annually each April, but OCRs may be
conducted at any time to evaluate changes and developments in particular
countries. This year's Special 301 Report lists 52 countries or economies as
Priority Foreign Countries, Priority Watch List, Watch List or Section 306
monitoring.
Countries identified as Priority Foreign Countries can be subjected to a Section
301 investigation and face the possible threat of trade sanctions. These are
countries that fail to enter into good faith negotiations or make significant
progress in bilateral or multilateral negotiations to provide adequate and
effective protection of IPR. Currently, one country (Ukraine) is designated to
be in this category and remains subject to $75 million in sanctions.
Paraguay's implementation of its bilateral agreements with the United States
will continue to be monitored under Section 306, and we will address specific
problems raised in earlier reports. USTR will also continue to monitor China's
implementation of its 1992 and 1995 bilateral agreements with the United States
under Section 306.
This year's report lists fourteen trading partners on the Priority Watch List.
These countries are: Argentina, Brazil, China, Egypt, India, Indonesia, Israel,
Kuwait, Lebanon, Pakistan, the Philippines, Russia, Turkey, and Venezuela.
Thirty-six trading partners are placed on the Watch List, meriting bilateral
attention to address the underlying IPR problems. These countries or economies
are: Azerbaijan, Bahamas, Belarus, Belize, Bolivia, Bulgaria, Canada, Chile,
Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, European Union,
Guatemala, Hungary, Italy, Jamaica, Kazakhstan, Korea, Latvia, Lithuania,
Malaysia, Mexico, Peru, Poland, Romania, Saudi Arabia, Slovakia, Taiwan,
Tajikistan, Thailand, Turkmenistan, Uruguay, Uzbekistan, and Vietnam.
This year's Special 301 Report also announced OCRs for the following seven
countries: Ukraine, Russia, Philippines, Indonesia, Canada, the European Union
and Saudi Arabia.
Source:
http://www.ustr.gov/Document_Library/Press_Releases/2005/April/Special_301_Report_Finds_Progress_
Need_for_Significant_Improvements.html Link:
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2005/2005_Special_301/
asset_upload_file195_7636.pdf
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