USTR - Report Notes Continued Progress on Intellectual Property Rights, Identifies Significant Improvements Still Needed in China and Russia
Office of the United States Trade Representative


Report Notes Continued Progress on Intellectual Property Rights, Identifies Significant Improvements Still Needed in China and Russia
USTR to Initiate Review of China’s Province Level IPR Enforcement Efforts 04/28/2006

WASHINGTON – The Office of the U.S. Trade Representative today released its "Special 301" annual report on the adequacy and effectiveness of intellectual property rights (IPR) protection provided by trading partners around the world. The report identifies governments who need to take stronger actions to combat piracy and counterfeiting, for example, by cracking down on illegal optical disc production and Internet piracy, or stepping up border enforcement against trade in fake goods. Concerns regarding China and Russia feature prominently throughout the report.

"As one of the world’s leading innovators, the United States places significant emphasis on intellectual property protection and enforcement," said U.S. Trade Representative Rob Portman. "Safeguarding our creations and innovations is a key element of our trade competitiveness, but it is also in the interest of our trading partners to strengthen their IPR regimes."

"This report acknowledges the positive steps that several of our trading partners have taken to strengthen IPR protection over the past year," continued Portman. "However, more needs to be done. Our review reveals a continuing need for improvements, particularly with the implementation of effective protection and enforcement against piracy and counterfeiting."

China and Russia

China is a top IPR enforcement priority. USTR will maintain heightened scrutiny of China, step up consideration of its WTO dispute settlement options, and for the first time scrutinize IPR protection and enforcement at China’s provincial level by conducting a special provincial review in the coming year. The China section of the report recognizes China’s efforts to address IPR problems but concludes that IPR infringements throughout China remain at unacceptable levels.

"The Administration continues to use our trade tools in strong and innovative ways to press China for better progress on IPR problems," continued Portman.

Although the United States recognizes the efforts of top officials in China, IPR enforcement in China continues to lag far behind the commitment made in the April 2004 Joint Commission on Commerce and Trade (JCCT), renewed in 2005 and 2006, to achieve a significant reduction in IPR infringement throughout China.

Russia also continues to be a serious concern. The Russia section of the report notes that although Russia has taken some steps to curb pirated production of optical discs in factories, particularly those located on government-owned property, high levels of IPR infringement remain, particularly infringements connected with Russia-based optical disc plants and websites.

New Focus on Progress, Priorities, Problems

This year’s Special 301 Report includes a new section that highlights progress in some countries. In addition, the Report sets out priorities for the coming year, such as implementation of free trade agreements , combating Internet piracy and counterfeit pharmaceuticals. The report also includes a new section that highlights notorious markets, including both on-line websites, such as, and traditional marketplaces.


This year's Special 301 Report places 48 countries on the Priority Watch List (PWL), Watch List (WL) or the Section 306 monitoring list.

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 addition to China and Russia, eleven countries are placed on the PWL in this year's report are: Argentina, Belize, Brazil, Egypt, India, Indonesia, Israel, Lebanon, Turkey, Ukraine, and Venezuela.

Thirty-four trading partners are placed on the lower level Watch List, meriting bilateral attention to address the underlying IPR problems. The Watch List countries are the Bahamas, Belarus, Bolivia, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, European Union, Guatemala, Hungary, Italy, Jamaica, Kuwait, Latvia, Lithuania, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, the Republic of Korea, Romania, Saudi Arabia, Taiwan, Tajikistan, Thailand, Turkmenistan, Uzbekistan, and Vietnam.

The Special 301 Report adds a new section that notes the improvements and progress that several countries have made in addressing IPR-related concerns identified in previous Special 301 Reports. For example, Pakistan made notable progress by shutting down pirate optical disc factories. Ukraine implemented new legislation to combat pirate optical production in plants, and Brazil took steps to improve IPR enforcement. In addition, Indonesia, Malaysia, the Philippines, the Republic of Korea, and Taiwan have made progress with IPR protection and enforcement against retail piracy, Internet piracy, and optical disc pirate production.

However, numerous IPR problems persist, including ineffective enforcement of intellectual property rights, commercial-scale piracy of CDs, DVDs and CD-ROMs, and counterfeiting of consumer goods. Trade in infringing goods is significantly harming both large and small American companies, and fake drugs put public health and safety at risk.

Paraguay will continue to be subject to Section 306 monitoring because of previous bilateral agreements reached with the United States, and we will address specific problems raised in earlier reports.

Due to progress on intellectual property, the status of several countries has been improved since last year’s Special 301 report. In January, the Ukraine was moved from the Priority Foreign Country list to the Priority Watch List. In February, the Philippines was moved from the Priority Watch List to the Watch List. Today, USTR is announcing that Kuwait and Pakistan are also being moved from the Priority Watch List to the Watch List

Four countries were removed from the Watch List entirely because of improvement in intellectual property protection: Azerbaijan, Kazakhstan, Slovak Republic and Uruguay.

This year’s Special 301 Report also announced five out-of-cycle reviews involving Canada, Chile, Indonesia, Latvia, and Saudi Arabia. Out-of-cycle reviews are conducted on countries that warrant further review before the next Special 301 Report and could result in changes in their status before next April’s report.


The full text of the report can be found by clicking here.

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item: 2006 Special 301 Report