USTR Special 301 Report Designates Ukraine as Priority Foreign Country
The U.S. Trade Representative named Ukraine its first Priority Foreign Country (PFC) in seven years, while citing significant progress on copyright issues in Canada and growing concerns over trade secret theft in China. The designations came in the agency’s 2013 Special 301 review process. The Special 301 Report, an annual look at intellectual property rights (IPR) protection and enforcement, placed 41 countries on three different watch lists. The report is meant to help the U.S. promote IPR protection and enforcement. The U.S. can initiate World Trade Organization dispute settlement proceedings or eliminate tariff preferences for countries on the lists.
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Severe deterioration of pirated software and online piracy enforcement -- including government use of pirated software -- as well as stalled bilateral negotiations pushed Ukraine towards its PFC designation, USTR said. PFCs are trading partners “whose onerous or egregious acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products,” USTR said.
The report names 10 countries on the Priority Watch List: Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand and Venezuela. The list designates countries of significant concern for IPR protection, enforcement and market access. China continues to stay on the list, despite the country’s ongoing revision of its IPR legal regime, the report said. Online piracy, counterfeiting and restrictive market access rules persist in China, the report said. Trade secret thefts are also increasing, both in China and outside the country for the benefit of Chinese entities, the report said. “Too often, Chinese authorities view trade secrets cases as routine commercial disputes, rather than as serious violations of law.” In March, U.S. House Ways and Means Committee leaders urged USTR to name China a PFC, due to alleged government-sponsored trade secret theft in the country (WID March 29 p6).
The report names 30 countries on the Watch List, which merit bilateral attention to address underlying IPR problems. Canada -- listed as a priority country last year -- is now on the Watch List, due to the country’s 2012 Copyright Modernization Act and a 2013 IPR enforcement bill. Barbados, Bulgaria, Paraguay and Trinidad and Tobago were also added to the 2013 Watch List. The other countries are: Belarus, Bolivia, Brazil, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Israel, Italy, Jamaica, Kuwait, Lebanon, Mexico, Peru, Philippines, Romania, Tajikistan, Turkey, Turkmenistan, Uzbekistan, and Vietnam. Brunei and Norway moved off the Watch List. El Salvador and Spain are also not listed in the report, but USTR will conduct out-of-cycle reviews to assess progress on IPR challenges there.
Secretary of State John Kerry should address the report’s discussion of Russia when he visits the country next week, RIAA Executive Vice President-International Neil Turkewitz said in a statement. “It is our hope that this Report, together with the Secretary’s visit to Russia, will help spur meaningful action by the Russian government to dramatically improve its intellectual property protection,” he said. Turkewitz applauded the USTR decision to conduct an out-of-cycle review of Spain. “The Spanish music market has essentially been in a free fall, losing an additional 5% of its value in 2012 after having lost nearly 50% of its value over the preceding 4 years,” he said. “The dire situation affecting Spanish creators, as well as their American counterparts, requires dramatic and urgent action.” Turkewitz criticized the Chinese government for failing “to embark on the kind of comprehensive and sustained effort to transition away from a market long dominated by piracy.” Though the government has “taken some encouraging steps,” it needs to ease investment restrictions and end “discriminatory and onerous content reviews that have no effect other than to delay the entry of legitimate materials,” he said.
MPAA Chairman Chris Dodd applauded acting USTR Demetrios Marantis and the report. It “offers an important roadmap for improving strong and enforceable intellectual property protections and expanding U.S. exports, both of which are vital to the strength of the U.S. economy,” he said in a statement. The MPAA said Ukraine “earned” the designation of PFC “by becoming an international source of pirated music and films that has significantly harmed the legitimate film and music market in Ukraine, with spill over losses in the U.S.” Ukraine’s designation as a PFC “is clearly justified,” International Intellectual Property Alliance Counsel Eric Schwartz said in a statement. “Ukraine is, by its own admission, the source of widespread free and pay-for-download (and streaming) piracy of copyrighted materials through websites such as ex.ua, which have halted the development of a legitimate copyright market locally and harmed international markets for content,” he continued. Schwartz said he hopes the report will encourage the country to “make real and measurable progress against piracy."
BSA/The Software Alliance and the Entertainment Software Alliance (ESA) applauded the report in statements. “BSA and its members stand ready to work with the Ukrainian government to combat software piracy,” Jodie Kelley, BSA senior vice president-anti-piracy, said. “The best place to start would be a credible program to make sure the government itself is using legal software.” Kelley commended the report’s discussion of China, as the topic is “an overriding concern for the software industry because of the sheer scale of China’s market.” The ESA said it supports the placement of Russia on the Priority Watch List and Mexico and Brazil on the Watch List, as well as the decision to conduct an out-of-cycle review of Spain.