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 In today's action, the United States Trade Representative designated Paraguay and China for "Section 306 monitoring" to ensure both countries comply with the commitments made to the United States under bilateral intellectual property agreements.

Ambassador Barshefsky also announced placement of 16 trading partners on the "Priority Watch List": Israel, Ukraine, Macau, Argentina, Peru, Egypt, the European Union, Greece, India, Indonesia, Russia, Turkey, Italy, Dominican Republic, Guatemala, and Kuwait. She also placed 37 trading partners on the "Watch List." In addition, out-of-cycle reviews will be conducted of Malaysia, Hong Kong, Israel, Kuwait, South Africa, Colombia, Poland, the Czech Republic, and Korea.

In addition, Ambassador Barshefsky today announced that an out-of-cycle review will be conducted in September 1999 to assess Malaysia's progress toward substantially reducing pirated optical media production and export.

Reports indicate that approximately 90 optical media (CD, CD-ROM, VCD, and DVD) production lines are operating in Malaysia. The combined production capacity of these lines far exceeds local demand plus legitimate exports. Pirate products believed to have originated in Malaysia have been identified throughout the Asia-Pacific region, North America, South America, and Europe, and pirate products are sold openly in public markets in Malaysia.

Malaysia has recently undertaken a series of constructive steps including the creation of an interagency task force to develop and implement a regulatory regime for optical media production, development of manufacturing and retail level enforcement efforts, and revised affidavit requirements. Malaysia has also prioritized efforts to deter unlicenced use of software by end-users. The United States will monitor progress to ensure that Malaysia's efforts produce a concrete reduction in piracy rates.

As a result of the decisive steps taken by Hong Kong in 1998, we removed Hong Kong from the Watch List during a February 1999 out-of-cycle review. However, piracy rates, which are some of the highest in the world, have not been significantly reduced. Hong Kong has only just begun to address the situation since that review. The U.S. remains deeply concerned that Hong Kong has not devoted adequate resources to address the piracy problem. We note that just today Hong Kong announced that some additional resources are being temporarily dedicated to its anti-piracy effort and that they will launch a public campaign to convince corporations to buy legitimate software. We urge Hong Kong to demonstrate its commitment to intellectual property protection by dedicating additional manpower to the effort on a permanent basis and to substantially reduce piracy rates in the near term. We are encouraged by the promulgation of a concept paper to solicit public support for new efforts to fight copyright piracy, and look forward to seeing additional reforms implemented swiftly. We will assess Hong Kong's progress on these issues in an out-of-cycle review in September.

While on-going piracy and counterfeiting problems persist in many countries, progress has occurred in such countries as India, Bulgaria, Jordan, Mexico, China, Sweden, Korea, and