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SPECIAL 301 Report

April 30, 2007

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

DC– 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 by U.S. trading

“Innovation is the lifeblood of a dynamic economy here in

States, and around the world.  We
defend ideas, inventions and creativity from rip off artists and
thieves,” said
U.S. Trade Representative Susan C. Schwab.  “This
report underscores the
Administration’s scrutiny in pinpointing
challenges in protecting IPR and
signals to our trading partners that
effective IPR protection will remain a
critical focus in
U.S. policy.”

As the scale of production and trade in pirated and
goods continues to expand globally, Special 301 constitutes a
policy tool for pinpointing problems, and provides a basis for

constructive engagement with U.S. trading partners in order to
address these challenges.

This “Special 301” report makes clear that many
U.S. trading
partners increasingly
appreciate the link between innovation-fueled
economic vitality and effective
government enforcement against those
who produce and trade in pirated and
counterfeit goods.  This
report makes equally clear, though, that
U.S. right
holders continue to face
major challenges to protecting their
intellectual property in many parts of the

Chinese and Russian Concerns Highlighted

Again this year, USTR’s Special 301 report highlights the
of concerns with respect to China and Russia, in spite

of some evidence of improvement.  The report also provides an
to acknowledge those trading partners whose efforts to
improve intellectual
property protection are producing positive results
both for U.S. right
holders and for
home-grown innovators in those countries.

Russia, Three Other Trading Partners,

Subject to “Out-of-Cycle” Reviews

remains a
focus of U.S. trade policy in the area of
intellectual property.  Large-scale production and distribution of

IP-infringing optical media and minimally-restrained Internet piracy
are among
the major problems that require more enforcement
action.  The coming months
will be a critical period, as 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 eventual accession to the World
Trade Organization
(WTO).  Implementation of these commitments will be
essential to
completing the final multilateral negotiations on the overall

Russia made ambitious commitments to
improve its IPR protection and enforcement.  As part of the
Special 301
report, USTR is also announcing an out-of-cycle review to
Russia’s progress. 

“I know that our Russian colleagues see the value of
property to Russia’s economy and are working hard

to deliver on their commitments,” said Schwab.  “I urge them to
make the
most of the coming weeks and months.”

In addition to the out-of-cycle review for
Russia, USTR announces that
reviews will be carried out with respect to Brazil, the Czech Republic and Pakistan. 

Out-of-cycle reviews are conducted on countries that
warrant further
review before the next Special 301 Report and could result in
in their status before next April’s report. 


In conjunction with the release of the report, USTR
announced the
results of an unprecedented year-long review of strengths and

weaknesses in IPR protection and enforcement in key Chinese provinces.
 “Leadership at the provincial and local levels is critical to
China’s IPR climate,” Schwab
said.  “By highlighting local problems and also giving credit
where it is
due, we encourage local leadership.” 

While the U.S. continues
to work with China in many
fora to
strengthen that country’s IPR regime, high levels of copyright piracy

and trademark counterfeiting remain of concern.  The
U.S. recently sought

consultations under the WTO to address a number of discrete
deficiencies in
China’s IPR regime.  The
U.S. has since been
by Canada, EU,
Japan, and
Mexico as third
parties in these

“Our recent decision to pursue IPR-related concerns in

China through
under WTO dispute settlement rules demonstrates our
determination to defend
vigorously American innovation,” commented
Schwab on the Special 301 report’s
focus on China. “The
Special 301 report flags
many other issues on which we hope to remain
constructively engaged with
China, building on the recognition of

many Chinese officials that their country has its own huge stake in
IPR protection.” 

Improvements Noted for Several Trading

In addition to flagging prominent intellectual property
concerns of
U.S. trade policy, the Special 301
report also provides an opportunity to recognize progress. 
Brazil is being moved to the Watch
List (from Priority Watch List), reflecting significant improvements in

copyright enforcement.  USTR will conduct an out-of-cycle review
evaluate the sustainability of the progress Brazil has
achieved with respect to IPR enforcement, and to encourage progress on
outstanding IPR concerns.  Five other trading partners –
Bulgaria, Croatia, the EU, and Latvia – are
being removed from the Special 301 listing altogether.


This year’s Special 301 report places 43 countries on the
Watch List (PWL), Watch List (WL) or the Section 306 monitoring


Countries on the Priority Watch List do not provide an
level of IPR protection or enforcement, or market access for persons

relying on intellectual property protection.  In addition to
China and
Russia, 10 countries are on
the PWL in this
year’s report:  Argentina, Chile, Egypt, India, Israel, Lebanon, Thailand, Turkey, Ukraine, and Venezuela.
 In announcing the elevation of Thailand to the
Priority Watch List,
the report cites a range of intellectual property
concerns, including
deteriorating protection for patents and
copyrights.  Priority Watch List
countries will be the subject of
particularly intense engagement through
bilateral discussion during the
coming year.

Thirty trading partners are on the lower level Watch List,
bilateral attention to address the underlying IPR problems.  The

Watch List countries are:  Belarus, Belize, Bolivia, Brazil, Canada, Colombia, Costa
Rica, Dominican
Republic, Ecuador, Guatemala, Hungary, Indonesia, Italy, Jamaica, Korea, Kuwait, Lithuania, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Romania, Saudi
Arabia, Taiwan, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.

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

The implementation of Free Trade Agreements negotiated
with the

States constitutes an important
element in IPR
improvements.  FTA partner countries, including
those in Central America
and the Dominican

Republic, have undertaken important
improvements in IPR legal frameworks in keeping with the obligations
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,
Korea, Panama and Peru. 

Despite some encouraging developments, the detailed
discussions in the Special 301 report make clear that numerous IPR

problems persist around the world.  Trade in counterfeit
pharmaceuticals is
a particularly grave concern, in light of the risks
to human health and
safety.  Unabated piracy of CDs, DVDs and
CD-ROMS, and the widespread
counterfeiting of trademark-protected
consumer and industrial goods will also
remain important focuses of
U.S. IPR trade policy efforts in the coming