U.S. and Macau (2003)

U.S. Releases Special 301 Report on Intellectual Property

Following is the text of the USTR news release followed by the Special 301 report executive summary:

(begin news release)

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C.

May 01, 2003

"Special 301" Report Finds Some Progress on Intellectual Property
Protection, but Significant Improvements Needed
USTR Releases Annual Special 301 Report

The report noted that ongoing implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has helped to improve intellectual property protection worldwide. For example, Egypt passed a comprehensive intellectual property rights (IPR) law which represents an improvement in all major facets of Egypt's intellectual property regime. Colombia and Hungary are now protecting confidential medical test data in line with their TRIPS obligations. Many countries, such as Israel, are making the necessary investments in education, police, and judicial resources to improve enforcement, thereby protecting U.S. right holders in those countries.

However, ineffective enforcement of intellectual property rights, commercial piracy and counterfeiting of consumer products continue to be a global threat. Counterfeit products, from shampoo to auto brakes, harm not only trademark owners, but can also cause serious health and safety problems for consumers. Rampant piracy and lack of IPR enforcement are problems in Russia, Taiwan, Poland, Brazil, and other trading partners.

The Special 301 Report takes its name from section 301 of the Trade Act of 1974, as amended. Attached is a summary of the report, which is available at www.ustr.gov

Background:

Special 301 Report Summary
May 1, 2003

This year's "Special 301" report lists 50 countries or economies as Priority Foreign Countries, Priority Watch List (PWL), Watch List (WL), or Section 306.

Priority Foreign Countries are those pursuing the most onerous or egregious policies that have the greatest adverse impact on U.S. right holders or products, and are subject to accelerated investigations and possible sanctions. Ukraine continues to be listed as a Priority Foreign Country.

Countries or economies on the PWL do not provide an adequate level of IPR protection or enforcement, or market access for persons relying on intellectual property protection. This year's report lists eleven trading partners on the PWL. Priority Watch List countries or economies include Argentina, the Bahamas, Brazil, EU, India, Indonesia, Lebanon, the Philippines, Poland, Russia, and Taiwan.

Thirty-six trading partners are placed on the WL, meriting bilateral attention to address the underlying IPR problem. Watch List countries or economies include Azerbaijan, Belarus, Bolivia, Canada, Chile, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, Egypt, Guatemala, Hungary, Israel, Italy, Jamaica, Kazakhstan, Korea, Kuwait, Latvia, Lithuania, Malaysia, Mexico, Pakistan, Peru, Romania, Saudi Arabia, Slovak Republic, Tajikistan, Thailand, Turkey, Turkmenistan, Uruguay, Uzbekistan, Venezuela, and Vietnam.

In addition to the forty-eight described above, China and Paraguay are subject to another part of the statute, Section 306 monitoring, because of previous agreements reached with the United States to address specific problems raised in earlier reports.

The Special 301 report is available at www.ustr.gov.

(end news release)

(begin Special 301 executive summary)

May 1, 2003

2003 SPECIAL 301 REPORT
Executive Summary

United States Trade Representative Robert B. Zoellick today announced the results of the 2003 "Special 301" annual review, which examined in detail the adequacy and effectiveness of intellectual property protection in approximately 74 countries.

[ ...Intervening Text... ]

The Special 301 report addresses significant concerns with respect to such trading partners as Brazil, The Bahamas, Mexico, India, Indonesia, Korea, Lebanon, Taiwan, Poland, the Philippines, Russia, the European Union (EU), and members of the Andean Community. In addition, the report notes that the United States will consider all options, including but not limited to initiation of dispute settlement consultations with countries that do not appear to have implemented fully their obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

In this year's review, USTR devotes special attention to the growing issue of counterfeiting and piracy, with particular emphasis on the ongoing campaign to reduce production of unauthorized copies of "optical media" products such as CDs, VCDs, DVDs, and CD-ROMs. Counterfeiting of trademarked goods is an increasing problem in many countries, including China, Paraguay, Poland, the Philippines, Russia, Vietnam, and Turkey. In addition, USTR continues to focus on other critically important issues including internet piracy, proper implementation of the TRIPS Agreement by developing country WTO Members and full implementation of TRIPS standards by new WTO Members at the time of their accession. USTR also continues to encourage countries to ensure that government ministries use only authorized software.

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Controlling Optical Media Production

To address existing and prevent future piratical activity, over the past year some of our trading partners, such as Malaysia and Taiwan, have taken important steps toward implementing, or have committed to adopt, much needed controls on optical media production. We await news of aggressive enforcement of these laws. However, others that are in urgent need of such controls, including Ukraine, Thailand, Indonesia, Pakistan, the Philippines, and Russia, have not made sufficient progress in this regard.

Governments such as those of China, Hong Kong, and Macau that implemented optical media controls in previous years have clearly demonstrated their commitment to continue to enforce these measures. The effectiveness of such measures is underscored by the direct experience of these governments in successfully reducing pirate production of optical media. We continue to urge our trading partners facing the threat of pirate optical media production within their borders to adopt similar controls or aggressively enforce existing regulations in the coming year. USTR is concerned, moreover, about recent reports of increased piracy and counterfeiting in Bulgaria, which had been a model in its region for taking the necessary steps to tackle optical media piracy by, for example, enacting optical media controls. Particularly troubling are reports that the CD plant licensing laws may be revised in a manner that would undermine, not improve, their effectiveness. We will be closely monitoring the situation and look to the Government of Bulgaria to maintain strong optical disk regulations.

Implementation of the WTO TRIPS Agreement

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Most countries, including the United States, impose stringent regulatory testing requirements on companies seeking to market a new drug or agricultural chemical product. Many countries have recognized, however, the value of allowing abbreviated approval procedures for second-comers seeking to market an identical product to one that has already been approved. Generally, these second applicants may be required to demonstrate only the bioequivalence of their products with the product of the first company, and will not be required to repeat all of the expensive and laborious clinical tests conducted by the first company to prove the safety of the product.

However, because of the expense involved in producing the safety and efficacy data needed to obtain marketing approval, the TRIPS Agreement recognizes that the original applicant should be entitled to a period of exclusivity during which second-comers may not rely on the data that the innovative company has created to obtain approval for their copies of the product. During this period of exclusive use, the data cannot be relied upon by regulatory officials to approve similar products. This period of exclusivity is generally five years in the United States and six to ten years in the EC member States. Other countries that provide a period of exclusivity against reliance on data include Australia, Canada, China, Czech Republic, Estonia, Japan, Jordan, Korea, Mexico, New Zealand, Slovenia, and Switzerland. We commend Hungary and Colombia on their recently implemented decrees that provide data protection. We urge all WTO members to swiftly complete their implementation of Article 39.3 including the rest of the countries in the Andean Community, as well as Israel.

[ ...Intervening Text... ]

Government Use of Software

In October 1998, the United States announced a new Executive Order directing U.S. Government agencies to maintain appropriate and effective procedures to ensure legitimate use of software. In addition, USTR was directed to undertake an initiative to work with other governments, particularly those in need of modernizing their software management systems or about which concerns have been expressed, regarding inappropriate government use of illegal software.

The United States has achieved considerable progress under this initiative. Countries that have issued decrees mandating the use of only authorized software by government ministries include Bolivia, China, Chile, Colombia, Costa Rica, the Czech Republic, France, Ireland, Israel, Jordan, Paraguay, Thailand, the U.K., Spain, Peru, Greece, Turkey, Hungary, Korea, Hong Kong, Macau, Lebanon, Taiwan and the Philippines. Ambassador Zoellick was pleased that these governments have recognized the importance of setting an example in this area and expects that these decrees will be fully implemented. The United States looks forward to the adoption of similar decrees, with effective and transparent procedures that ensure legitimate use of software, by additional governments in the coming year.

(end Special 301 executive summary)