USTR Reinstates Generalized System of Preferences Benefits for Ukraine

January 23, 2006

IPR Protection Ranking Improved

WASHINGTON - In recognition of the Government of Ukraine's efforts to improve
the enforcement and protection of intellectual property rights, U.S. Trade
Representative Rob Portman today announced that the United States will reinstate
Generalized System of Preferences (GSP) benefits for Ukraine and lower Ukraine’s
designation under Special 301 from Priority Foreign Country to Priority Watch

"I commend the Government of Ukraine for its sustained efforts to crack down
on copyright piracy and urge the government to continue their efforts," said
Ambassador Portman.

In 2001, significant illegal manufacturing of optical media products, such as
CDs and DVDs, was occurring in Ukraine. The Office of the U.S. Trade
Representative designated Ukraine as a Priority Foreign Country and repeatedly
urged Ukraine to take steps to address this problem. In July 2005, Ukraine
passed legislation that strengthens its licensing regime and enforcement efforts
to stem the illegal production and trade of CDs and DVDs.

"Since the legislation passed, Ukraine has been actively inspecting plants
licensed to manufacture optical discs, conducting raids against businesses
involved in commercial distribution of IPR-infringing products, and imposing
fines against infringers," Portman continued. "We strongly urge Ukraine to keep
up these efforts, which reflect positively on the investment environment in



In March 2001, the U.S. Trade Representative designated Ukraine as a Priority
Foreign Country under Special 301 (Section 182 of the Trade Act of 1974), and
initiated an investigation under Section 301 of the Trade Act of 1974. At that
time, Ukraine was the largest producer and exporter of pirated optical media
products (CDs and DVDs) in Europe. As a result of the Section 301 investigation,
USTR suspended Ukraine’s benefits under the Generalized System of Preferences in
August 2001, and in 2002 imposed 100% tariff sanctions on $75 million worth of
Ukrainian exports. The latter sanctions were removed on August 31, 2005, after
extensive efforts by the Ukrainian Government to pass important amendments to
Ukraine’s Laser-Readable Disk Law.

The Administration concluded a Special 301 Out-of-Cycle Review (OCR) of
Ukraine in January 2006, which focused on Ukraine’s IPR enforcement, and
considered Ukraine’s status as a Priority Foreign Country and its eligibility
for Generalized System of Preferences benefits. Ukraine has further agreed to
work with the U.S. Government and with the U.S. copyright industry to monitor
the progress of future enforcement efforts through an Enforcement Cooperation
Group. USTR will continue to monitor developments in the protection of
intellectual property rights in Ukraine pursuant to Section 306 of the Trade Act
of 1974.

The purpose of the GSP program is to promote economic growth in the
developing world by providing preferential duty-free treatment for 3,400
products from nearly 140 designated beneficiary countries and territories.
Ukrainian exports to the United States that could benefit the most from
Ukraine’s restored GSP eligibility include manufactured items such as iron or
steel articles, electrical and railway products, snow skis, protein products
such as casein, and certain mineral and metal products.