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 obligations.

One country especially worth noting in this regard is Hungary, which is on the Priority Watch List this year. USTR is currently considering initiating a WTO dispute settlement case against Hungary for its failure to adequately protect confidential test data submitted by pharmaceutical companies associated with applications for marketing approval, in apparent violation of Article 39.3 of the TRIPS Agreement. Specifically, Hungary does not provide protection against the unfair commercial use of test or other data submitted to its regulatory authorities in order to obtain marketing approval. As a result, generic pharmaceutical companies have been permitted to rely on data generated and submitted at great cost and effort by innovator companies -- without their consent -- almost immediately after the original applications for marketing approval have been filed. U.S. industry estimates that it loses between $50 million and $100 million annually due to the TRIPS Article 39.3 problem and other weaknesses in Hungary's patent protection regime.

Other countries that do not appear to meet their TRIPS obligations include the Andean Community, the Dominican Republic, India, Israel and the Philippines. The United States will consider all options, including but not limited to, possible initiation of new WTO dispute settlement cases, in working with these countries toward full TRIPS implementation. The United States will continue to consult in the coming months with all these countries in an effort to encourage them to resolve outstanding TRIPS compliance concerns as soon as possible.

Examples of Progress during the Past Year

While ongoing piracy and counterfeiting problems persist in many countries, progress has occurred in a number of countries. An attachment to this release, entitled, identifies the improvements made by a range of countries. Significant developments are highlighted below.

 China's Vice Premier Wu Bangguo initiated a campaign against counterfeiting to be implemented at the national, provincial and municipal levels in October and the State Council issued Document No. 18 earlier on June 27, 2000 which made clear that no entity (public or private) may make unauthorized use of software.

Italy's long-awaited anti-piracy legislation, which significantly increased penalties, became effective in September 2000. We anticipate immediate resolution of the legislation's stickering requirement.

Malaysia's Optical Disc Act 2000 was enacted September 15, 2000. It gives the Government of Malaysia greater enforcement powers and allows for stiffer penalties (including jail time) for the production and export of pirated optical media products. 