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 force on January 1, 1996. Today, Ambassador Barshefsky announced that USTR is expanding these claims to include new concerns that have arisen as a result of Argentina's failure to implement several significant TRIPS obligations that came due on January 1, 2000.

Ambassador Barshefsky concluded by noting that Brazil, in contrast, has a largely TRIPS-consistent patent regime which has been in place for some time. Nevertheless, there remains a longstanding difference between the U.S. and Brazil over the provision of the TRIPS Agreement which prohibits Members from requiring patent owners to manufacture their product in-country in order to maintain full patent rights. Having been unable to resolve this narrow difference over the past five years, both governments have now accepted that the matter should be referred to dispute settlement in the WTO.

Progress continues by many countries toward more effective enforcement against piracy and counterfeiting, though there are notable exceptions highlighted in this report. This is an ongoing effort which USTR is addressing in a number of ways, including pressing for government software legalization decrees and controls on optical media production.

Controlling Optical Media Production

To prevent piratical activity, over the past year several of our trading partners, including Macau, Malaysia and Thailand, have adopted new measures, have taken important steps toward adopting, or have committed to adopt much needed controls on optical media production. However, others that are in urgent need of such controls, including Israel, Ukraine and the West Bank and Gaza, have made insufficient progress.

Governments such as those of Bulgaria, China, and Hong Kong that implemented optical media controls in previous years have clearly demonstrated their commitment to continue to enforce these measures. The effectiveness of such measures is underscored by the direct experience of these governments in successfully reducing pirate production of optical media. We urge our trading partners facing the challenge of pirate optical media production within their borders, or the threat of such production developing, to adopt similar controls in the coming year.

Government Use of Software

In October 1998, Vice President Gore announced a new Executive Order directing U.S. Government agencies to maintain appropriate, effective procedures to ensure legitimate use of software. The President also directed USTR to undertake an initiative over the following 12 months to work with other governments, particularly those in need of modernizing their software management systems, or about which concerns have been expressed regarding inappropriate government use.

USTR has achieved considerable progress under this initiative since October of 1998. Last year, China, Colombia, Jordan, Paraguay, and the Philippines issued decrees mandating the use of only