Page:Special 301 Report 1996.pdf/9



remains the site of extensive piracy of intellectual property, particularly copyrighted sound recordings, music, videos and business and entertainment software. Despite signing a bilateral IPR Enforcement Agreement with the United States in February 1995, in which China promised to substantially improve enforcement efforts and grant market access for legitimate audiovisual and computer software products, piracy remains rampant, and economic damage to U.S. industries continues to rise. Overall, China has made some progress in halting the retail trade in infringing goods, but has failed to stop illegal CD, video and CD-ROM production at some 31 plants operating in China to prevent the export of infringing goods, or to honor its promise to grant market access for legitimate audiovisual products. No new investigation will be initiated following this designation; rather, the focus of further efforts will be on China's compliance with the current Agreement. Trade sanctions for noncompliance could be imposed at any time pursuant to a decision by USTR that China is not satisfactorily implementing the Agreement.

The Administration has decided to place eight trading partners on the priority watch list because the lack of adequate and effective intellectual property protection or market access in these countries is especially significant for U.S. interests. The trading partners are:

recently enacted new patent legislation and an implementing decree that fall far short of adequate and effective protection and fail to achieve earlier Argentine assurances. As a result, Argentina is being placed back on the priority watch list. This regressive movement on Argentina's part is particularly striking in comparison to the positive direction of patent protection in its MERCOSUR partner Brazil. The United States will continue to seek further improvements, monitor this situation and review Argentina's status as appropriate. The United States will continue to seek further improvements, monitor this situation and review Argentina's status through an out-of-cyc1e review no later than December 1.

The patent fees and those of its member-states are extraordinarily expensive; fees associated with filing, issuance and maintenance of a patent over its life far exceed those in the United States and other countries. The EU's new single trademark system raises concerns as does the reciprocity requirement in the recently approved data base directive. The availability of ex parte relief in civil cases remains uncertain in some member-states. Denial of national treatment with respect to audio and video levies remains a problem in certain member-states. Certain provisions in the patent laws of some member-states appear to be inconsistent with the provisions of the WTO's TRIPs Agreement. In this context, the United States is invoking WTO dispute settlement procedures against Portugal with respect to its patent law.