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 through the implementation of effective optical media production controls, enforcement of copyright law, and other available means. The U.S. Government will remain actively engaged with Ukraine, to help and encourage the nation to combat piracy and to enact the intellectual property rights legislation required by both the 1992 bilateral Trade Relations Agreement and the WTO TRIPS Agreement.

The U.S. Government has been consulting with the European Union and other countries about the serious piracy problem in Ukraine. We are pleased to see the European Union actively engaged in trying to resolve this problem and in upgrading Ukraine's intellectual property regime.

Ambassador Zoellick again 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.

Although lack of enforcement of intellectual property rights remains a significant problem in China, particularly for trademarked products and copyrighted works, China's officials recognize the need for more effective action to address this continuing problem. Ambassador Zoellick welcomed the initial progress they have made through such actions as the new anti-counterfeiting "campaigns" initiated in late 2000 and continued into 2001. Nevertheless, piracy and counterfeiting remain rampant in China. The United States will continue to monitor China's actions to address these problems through an active program of bilateral consultations to ensure that the laws as enacted are consistent with China's WTO obligations and that China applies its laws in a manner that provides more effective protection of intellectual property rights.

Special concern was expressed that Paraguay's efforts to implement the bilateral agreement with the United States over the past year, especially regarding enforcement and enactment of a TRIPS-consistent patent law, have not been sufficient and further consultations will be scheduled. If no progress is made in the coming year, the U.S. Government may have no choice but to reactivate the Section 301 investigation.

Ambassador Zoellick also announced placement of 16 trading partners on the Special 301 Priority Watch List: Argentina, Costa Rica, Dominican Republic, EU, Egypt, Hungary, India, Indonesia, Israel, Korea, Lebanon, Malaysia, the Philippines, Russia, Taiwan, and Uruguay. Additionally, there will be an "out-of-cycle" review (OCR) scheduled for Costa Rica and Malaysia. He also placed 32 trading partners on the Watch List.

Finally, Ambassador Zoellick noted that, while not listing Mexico, enforcement efforts in Mexico continue to need improvement. Also, while not listing Japan, the Bahamas, Georgia and the Kyrgyz Republic, USTR will conduct OCRs of Georgia and the Kyrgyz Republic later in the year and OCRs of Japan and the Bahamas as warranted.

Should a review of Japan be necessary, it will focus on assessing the Japanese Government's