Report Highlights Shortfalls in Intellectual Property Protection, Acknowledges Progress by Some U.S. Trading Partners

WASHINGTON, D.C. – The Office of the United States Trade Representative (USTR) today released its annual “Special 301” Report on the adequacy and effectiveness of intellectual property rights (IPR) protection by U.S. trading partners.  

“The Special 301 Report spotlights one of the central challenges facing the global economy,” said Ambassador Susan C. Schwab. “Pirates and counterfeiters don’t just steal ideas; they steal jobs, and too often they threaten our health and safety.  The Administration has been committed to stepping up the fight against IPR infringers who seek to profit from American artists, inventors, and entrepreneurs.”

As the United States confronts international piracy, counterfeiting, and other forms of IPR theft, the Special 301 Report constitutes a critical policy tool for focusing on urgent problems including the growing problem of Internet piracy and the counterfeiting of pharmaceuticals and other products that threaten the health and safety of consumers around the world.  The Report provides a basis for constructive engagement with U.S. trading partners in order to address these challenges, particularly in key countries such as China and Russia. 

“We continue to work with our Chinese and Russian colleagues to ensure that they deliver on their commitments to improve intellectual property protection and enforcement,” said Schwab.

“Our bilateral engagement with China, Russia and other trading partners complement our efforts to enforce our rights through the WTO.  The Administration will continue to defend vigorously American innovation,” stated Schwab.  “U.S. leadership remains critical to improving the global IPR climate.” 

Continuing Concerns in China and Russia

Again this year, USTR’s Special 301 Report highlights serious IPR concerns with respect to China and Russia, in spite of some evidence of improvement in both countries. 

China

USTR announced that it will once again retain China on the Priority Watch List and continue monitoring China under Section 306 of the 1974 Trade Act, thus maintaining pressure on China to improve its IPR situation.  While the United States continues to seek cooperative channels to work with China to strengthen that country’s IPR regime, high levels of copyright piracy and trademark counterfeiting remain serious concerns.  At the same time, the United States is also using the WTO dispute settlement process to address a number of specific deficiencies in China’s IPR regime.  

Russia

The Administration also continues to work for improvements to the intellectual property regime in Russia.  Although Russia has made some progress – for example, in moving optical disc factories off of government-controlled sites and raiding unlicensed factories – large-scale production and distribution of IP-infringing optical media and Internet piracy remain significant problems that require more enforcement action.  The United States will continue to monitor to ensure that Russia moves to implement a variety of legal and law enforcement improvements to which it committed as part of a bilateral agreement with the United States on Russia’s accession to the WTO.  Implementation of these commitments remains essential to completing the final multilateral negotiations on the overall accession package.

Improvements Noted for Several Trading Partners

In addition to flagging prominent intellectual property concerns of U.S. trade policy, the Special 301 Report also provides an opportunity to recognize trading partners whose efforts to improve intellectual property protection and enforcement are delivering results both for home-grown innovators in those countries and for U.S. right holders.  Egypt, Lebanon, Turkey, and Ukraine are being moved to the Watch List (from Priority Watch List), reflecting improvements in each country’s IPR regime.  Two other trading partners – Belize and Lithuania – are being removed from the Special 301 Report altogether.

Background

This year’s Special 301 Report places forty-six (46) countries on the Priority Watch List, Watch List, or the Section 306 monitoring list.

There are nine (9) countries on this year’s Priority Watch List: China, Russia, Argentina, Chile, India, Israel, Pakistan, Thailand, and Venezuela.  Countries on the Priority Watch List do not provide an adequate level of IPR protection or enforcement, or market access for persons relying on intellectual property protection, in absolute terms and/or relative to a range of factors such as their level of development.  Priority Watch List countries will be the subject of particularly intense engagement through bilateral discussion during the coming year.

Thirty-six (36) trading partners are on the lower level Watch List, meriting bilateral attention to address IPR problems:  Algeria, Belarus, Bolivia, Brazil, Canada, Colombia, Costa Rica, Czech Republic, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Hungary, Indonesia, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Republic of Korea, Romania, Saudi Arabia, Spain, Taiwan, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, and Vietnam. 

The Administration will conduct Out-of-Cycle Reviews for Taiwan and Israel to assess progress on specific IPR issues. 

Canada has taken some significant steps in the past year and, given the importance of the outstanding issues and maturity of its economy, we look forward to additional action in the coming months on the IP reforms identified as key priorities by the Government of Canada.

Paraguay will continue to be subject to Section 306 monitoring under a bilateral Memorandum of Understanding that establishes objectives and actions for addressing IPR concerns in that country.  

The implementation of Free Trade Agreements (FTA) negotiated with the United States constitutes an important element in IPR improvements.  FTA partner countries have undertaken important improvements in IPR legal frameworks in keeping with the obligations reflected in the FTAs.  Our most recent FTAs also reflect these high standards and we welcome the commitments made to improve intellectual property protection and enforcement by future FTA trading partners, including Colombia, Panama and Korea.  

On October 23, 2007, United States Trade Representative Susan Schwab announced that the U.S. Government will seek to negotiate an Anti-Counterfeiting Trade Agreement (ACTA).  This is a new and dynamic effort to combat the challenges of counterfeiting and piracy today.  The ACTA is envisioned as a leadership effort among trading partners that will raise the international standard for IPR enforcement. 

Despite some encouraging developments, the detailed country discussions in the Special 301 Report make clear that numerous IPR problems persist around the world.  Trade in counterfeit pharmaceuticals continues to be a particularly grave concern in light of the risks to human health and safety, and the United States continues to be actively engaged in addressing this serious problem.  The United States will also remain focused on combating large-scale piracy of optical media and the widespread counterfeiting of trademark-protected consumer and industrial goods.

# # #