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 The United States is committed to a policy of promoting increased intellectual property protection. In this regard, we are making progress in advancing the protection of these rights through a variety of mechanisms, including through the negotiation of free trade agreements. We are pleased that the recently concluded free trade agreements (FTAs) with Chile and Singapore will strengthen the protection of intellectual property rights in those two countries. Specifically, the intellectual property chapters of those two agreements provide for higher levels of intellectual property protection in a number of areas covered by the TRIPS Agreement. We are also seeking higher levels of protection and enforcement in the FTAs that are currently under negotiation with Central America, Morocco, Australia, and the Southern Africa Customs Union, and in the ongoing negotiation of a Free Trade Area of the Americas.

USTR will continue to use all statutory tools, as appropriate, to improve intellectual property protection in such countries where it is inadequate, such as Ukraine, Russia, Brazil, Peru, Ecuador, Bolivia, Venezuela, the Dominican Republic, Pakistan, Thailand and Turkey including through implementation of the Generalized System of Preferences and other trade preference programs.

Global Scourge of Counterfeiting and Piracy

One area of particular concern in this year's report is counterfeiting and digital piracy, which has increased dramatically in recent years. Unfortunately, in the area of counterfeiting what was once a localized industry concentrated on the copying of high-end designer goods has now become a massive, sophisticated global business involving the manufacturing and sale of counterfeit versions of everything from soaps, shampoos, razors and batteries to cigarettes, alcoholic beverages and automobile parts, as well as medicines and health care products.

Counterfeiting of such a broad range of products on a global scale affects more than just the companies that produce legitimate products. While it has a direct impact on the sales and profits of those companies, counterfeits also hurt the consumers who waste their money and sometimes put themselves at risk by purchasing fake goods. It also hurts the countries concerned, by decreasing tax revenues and deterring investments. In addition, counterfeiters pay no taxes or duties and do not comply with basic manufacturing standards for the health and safety of workers or product quality and performance.

Piracy and counterfeiting of copyrighted products in digital format, as well as counterfeiting of all types of trademarked products, has grown to such a scale because it offers enormous profits and little risk for the criminal element of society. Criminals can get into the counterfeiting business with little capital investment, and even if caught and charged with a crime, the penalties in many countries are so low that they offer no deterrent. This is why USTR seeks through our FTAs, and through our bilateral consultations to ensure that criminal penalties are high enough to have a deterrent effect, as well as to ensure that pirated and counterfeit products, and the May 1, 2003