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 Priority Watch List because of the Knesset's repeated failure to make good on promised legislative reforms and the absence of serious attempts by Israel to rein in piracy of intellectual property. Much of the 50-60 million unit capacity of Israel's five CD plants is believed to be employed in unauthorized duplication of CD's for export. A new draft copyright law intended to meet international standards has been pending for several years, but has not passed and still falls short of international standards. In February 1998, the Israeli Knesset amended the patent law to allow non-patent holders to manufacture and export patented pharmaceutical products prior to the expiration of the patent to seek foreign and Israeli marketing approval when the patent expires. The law also contains a provision allowing a relatively short term of patent extension. Now pending are draft regulations that would allow parallel importation of pharmaceuticals. We urge the Israeli government to take effective steps to control CD piracy and to reconsider its pending parallel import regulations.

is being elevated to the Priority Watch List because the Government of Italy has failed to enact effective anti-piracy legislation that includes TRIPS-consistent penalties sufficient to provide a deterrent to piracy and counterfeiting. In announcing the results of an out-of-cycle review of Italy in October 1997, Ambassador Barshefsky noted that the U.S. looked to the GOI to pass such legislation prior to this year's annual review. We are extremely concerned that Italy has failed to pass such legislation especially because Italy currently has some of the lowest criminal penalties in Europe and one of the highest rates of piracy. Piracy and counterfeiting of American intellectual property in Italy continue to be major problems, particularly with regard to piracy of video, sound recordings and books. While noting that Italy has stepped-up enforcement actions, we are concerned with recent indications that TRIPS-consistent remedies against end-user software piracy may not be available in Italy. We are also alarmed by recent passage of a new television law that increases restrictions on U.S. television programming.

has been formulating copyright legislation since 1989, but has not yet enacted it. Elevation to the Priority Watch List is the result of our heightened concern at the tardiness of Kuwait's action. A new draft law has been circulating since October 1997; the U.S. government provided comments to make this draft TRIPS compatible — particularly with regard to rental rights, protection of sound recordings, and protection of computer programs and databases. There has been little tangible progress made on implementing adequate and effective patent protection. Kuwait has claimed the developing-country transition period to bring its intellectual property regime into compliance with its TRIPS obligations, but the pace of work thus far has not been sufficient to complete the needed steps by January 1, 2000. We will develop an Action Plan with Kuwaiti authorities to make it possible to meet those obligations in a timely manner.

is being elevated to the Priority Watch List because of an explosion of illegal CD, CD-ROM and VCD manufacturing in Macao which causes economic losses to U.S. business. Macao has taken initial enforcement actions, including the seizure of production lines. We look to the Government of Macao to intensify cooperation with the representatives of the legitimate copyright holders, prosecute vigorously copyright violators, and enact a strong new copyright law. We also look to Macao to reinforce its system for the regulation and monitoring of