*EPF508 03/03/00
Review Under Way on Status of Global IPR Protection
(USTR report expected April 28) (1030)
By Merle D. Kellerhals, Jr.
Washington File Staff Writer

Washington -- As the United States begins its annual review of intellectual property rights (IPR) protection among its trading partners, the compliance of more than 80 developing countries is receiving added scrutiny.

The review under "Special 301" provisions of U.S. trade law in 2000 will gauge how well those developing countries have implemented their obligations under the 1994 World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The special 301 review conducted by the Office of the U.S. Trade Represenative (USTR) identifies inadequate protection of intellectual property by U.S. trading partners. The report is mandated by "special 301" provisions of the 1988 Trade Act.

This year the USTR is expected to announce Special 301 results April 28. The USTR undertakes a review of foreign IPR practices each year within 30 days after the issuance of the National Trade Estimate (NTE) report in late March.

USTR would then begin a lengthy process that could lead to WTO dispute-settlement panels and ultimately -- if U.S. complaints are not resolved satisfactorily -- to retaliatory trade sanctions.

However, Clinton administration officials have expressed intent to assist those countries that are making genuine attempts to implement the WTO agreement, which some have found onerous.

Most developing and transition economies were supposed to begin implementing TRIPS obligations January 1, 2000. That group included countries such as Argentina, Brazil, Egypt, India and Israel.

Industrialized countries -- such as the United States, European Union members and Japan -- had to comply in 1996. Least developed nations -- such as Bangladesh, Haiti, Laos, Nepal and some African states -- have until 2006 to comply.

Under the Uruguay Round accord, WTO member countries agreed to a set of international rules to stop trade in goods that violate intellectual property rights. Under TRIPS, nations are required to make national laws conform to internationally agreed norms for the protection of patents, trademarks, copyrights, industrial designs, trade secrets, integrated circuits, and geographical indications.

The TRIPS agreement broadened the area of IPR protection to also include pharmaceutical products, computer software, and inventions and works from new technologies.

Many countries have yet to provide adequate IPR protection procedures and hundreds of millions of dollars worth of counterfeit and copyrighted products continue being sold daily, according to industry estimates in support of the USTR Special 301 Review process.

"Of course we support the rapid implementation by developing countries of their responsibilities under the TRIPS agreement," a State Department officer said.

However, some developing nations expressed concerns during the recent WTO ministerial meeting in Seattle about the consequences of not being able to meet the pending TRIPS deadline. In some instances, the officer said, the United States "will consider action in the WTO under the Dispute Settlement Understanding (DSU), as we have already done in past intellectual property disputes."

"In case of outright refusal by other governments to honor their commitments we will not hesitate to use the DSU to enforce compliance," he said.

The United States does recognize, however, that the TRIPS agreement is complex.

"Some countries have genuine difficulty implementing it despite their sincere efforts," he said. "Our preferred approach in such cases is to work through the problems with them on a constructive and pragmatic basis."

The USTR Special 301 Review is compiled from reports from U.S. embassies, NTE reports from USTR and other materials.

"The annual Special 301 review remains a powerful tool in identifying and addressing the lack of intellectual property protection our industry encounters in overseas markets," he said.

The Brussels-based World Customs Organization (WCO), in cooperation with the WTO, has developed model Customs IPR legislation that countries can use to implement the TRIPS agreement and attain compliance. In addition, the WTO also provides training and support in developing TRIPS implementation and compliance.

Article 67 of the agreement specifies that developed nations must provide technical and financial cooperation to developing and least-developed states who request assistance for implementation.

Besides checking for TRIPS compliance and IPR safeguards, USTR will also determine in the 301 review if countries are ensuring that their use of computer software is in compliance with national and international standards on copyright protection.

USTR will also be checking to determine if countries have adopted regulations similar to those passed in Hong Kong, Macau and Bulgaria, which establish controls on and require licensing of the manufacture of optical media to prevent piracy of compact discs, video compact discs and digital video discs.

Those countries found to be pursuing the most egregious or onerous practices in the Special 301 review that has the greatest negative economic impact -- actual or potential -- on U.S. rights or products would be designated as "priority foreign countries."

If a trading partner is identified as a "priority foreign country," the USTR must decide within 30 days whether to initiate an investigation. Section 301 also requires mandatory trade negotiations and possible sanctions if there is a lack of progress in these priority cases.

USTR has created two non-statutory categories -- priority watch list and watch list. Placement on these lists indicates that problems exist either in IPR protection, enforcement or market access for persons relying on intellectual property.

Countries placed on the priority watch list by USTR become the focus of increased bilateral attention.

In the 1999 special 301 review, USTR did not designate any priority foreign countries. However, it did place 16 countries on the priority watch list and 37 countries were put on the watch list.

China remained under Section 306 monitoring in 1999, while Paraguay was placed under Section 306 monitoring in 1999, the State Department said.

As a result of out-of-cycle reviews conducted in 1999 after the annual review was published April 30, 1999, by USTR, Hong Kong and Malaysia remained off the watch list, while Colombia and the Czech Republic remained on the list. Jordan and South Africa were removed from the watch list.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Website: usinfo.state.gov)
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