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 closer compliance with its TRlPs obligations. Nevertheless, U.S. firms continue to face inadequate enforcement against retail and end-user software piracy and video compact disk (VCD) piracy at the retail level. Although the Government of Indonesia is beginning to develop an enforcement response, enforcement efforts have not yet been regular, aggressive, or comprehensive enough to address effectively the problems of software and VCD piracy. Also, U.S. companies experience serious problems in Indonesia from counterfeiting and appropriation of their trademarks by local registrants and have problems with the protection of well-known trademarks. Finally, pervasive market access barriers impede the full entry of all copyright-based industries into the Indonesian market.


 * Last October, Ambassador Barshefsky stated that Paraguay needed to make "significant, meaningful progress in combating piracy and counterfeiting" by the April 1997 review. Since then, the Paraguayan Government taken important initial steps to address Paraguay's serious IPR problems. These steps include the introduction of new intellectual property legislation and the creation of a National Intellectual Property Council. However despite efforts of concerned Government officials, piracy and counterfeiting in Paraguay have reached alarming levels and much more needs to be done. As a result, Paraguay is being placed on the priority watch list. An out-of-cycle review will be conducted before next April to monitor the efforts of the Government of Paraguay in cracking down against piracy and counterfeiting internally and especially at the border and enacting modern intellectual property legislation.


 * Russia continues to take steps to address U.S. intellectual property concerns, but a number of serious problems remain including insufficient progress in improving copyright protection and enforcement. Russia is being elevated to the Priority Watch List in large part because it fails to provide protection, as required by international agreements, for pre-existing U.S. copyright works and sound recordings still under protection in the United States. Russia's future placement on Special 301 lists will be determined substantially by its willingness to address this important issue. Extensive piracy of U.S. video cassettes, films, music, books and software remains a serious problem. We recognize increased Russian enforcement efforts, but piracy remains widespread. We welcome the new criminal code, which significantly increases criminal penalties for copyright and trademark infringements. However there are shortcomings in this law that need to be addressed. Finally, Russia maintains a discriminatory registration fee on foreign motion pictures, which discourages the development of a market for legitimate protected products, and increases the market for pirated versions.

remains on the priority watch list largely because it continues to have inadequate intellectual property laws and its enforcement efforts have been ineffective. As part of Turkey's entry into a customs union with the EU, Turkey has agreed to continue to improve its intellectual property protection. Nevertheless, Turkey's copyright and patent laws remain deficient and TRIPS inconsistent in a number of respects. Moreover, enforcement efforts remain lax and, as a result, copyright and patent piracy is widespread. Turkey also maintains a discriminatory 25 percent municipality tax only on receipts from the showing of foreign films in a manner inconsistent with the national treatment obligations of Article III of the GATT 1994. The Administration is currently pursuing this matter under WTO's dispute settlement procedures. The Administration intends to review Turkey's progress toward resolving these issues in an out-of-cycle review in December 1997.