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 the United States Customs Service, to enhance their border control enforcement. Legislation is needed to improve the ability of law enforcement and judicial authorities to combat this piracy, such as providing for adequate civil ex parte search remedies. These serious enforcement and criminal law deficiencies mar the progress Latvia has made in improving its intellectual property rights laws and regulations. We urge Latvia to increase its efforts to combat piracy.

 Lithuania is awash with pirated copyrighted materials, including large volumes of optical media products. It has become a major transshipment country in between pirate producers in Russia and Ukraine and consumers in the West. Lithuania's domestic markets are themselves also flooded with pirated products. Lithuania could potentially become a major producer of pirated optical media products if it does not introduce and enforce a strict licensing regime. Also of concern is the fact that Lithuania does not appear likely to ratify the 1994 bilateral Trade Relations and Intellectual Property Rights Agreement, nor provide the transitional "pipeline" protection agreed to in that agreement. Further, Lithuania does not appear to provide protection for confidential test data submitted by pharmaceutical firms, which is required by the TRIPS Agreement. We encourage Lithuania to bring its intellectual property rights regime into conformity with the TRIPS Agreement and to greatly step up its anti-piracy efforts. The United States will conduct an OCR in the fall to assess Lithuania's enforcement efforts.

 In December 2000, USTR conducted an out-of-cycle review of Macau and decided to keep Macau on the Watch List. Since that time, Macau has made some progress in enhancing its intellectual property regime, but Macau's failure to convict and sentence manufacturers of infringing intellectual property products remains a serious concern. Macau has demonstrated its willingness to improve intellectual property protections by signing a contract for the implementation of Source Identification (SID) codes to be embossed on all optical disks produced in Macau. Also, a new licensing requirement for the raw materials used in optical media production led to the reduction of manufacturing lines from 38 in mid-1999 to 10 in early 2001. Despite these improvements, a major manufacturer of pirated CDs, who was eventually convicted by Macau's Court of Final Appeal, received only an eight month suspended sentence and a fine of $15,000 as penalty for his crime. This case is significant because it was the first intellectual property case to exhaust appeals, and yet the courts ordered the forfeiture of production equipment without sentencing the accused to any jail time. As such, we continue to urge Macau to improve intellectual property protection and to vigorously prosecute and punish those responsible for piracy.

 In 1999, the Government of New Zealand pledged to introduce legislation imposing bans on parallel imports of newly-released copyrighted products (e.g., music, films, software and books) for up to two years. By the end of 2000, however, the government had not introduced this legislation. The continuation of New Zealand's policy regarding parallel imports erodes the value of copyright protection and threatens to stimulate black market trade in copyrighted goods throughout the region. We urge the Government of New Zealand to introduce this promised legislation as soon as possible and to follow through on separate plans to strengthen other laws