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 efforts of the Korean government in resolving the intellectual property issues regarding the WIPI standard and will carefully monitor the situation to ensure the agreement with US industry is beihg implemented fully. Regarding film registration, while the U.S. Government recognizes Korea's cooperation in devising and implementing an interim resolution of this problem, a permanent solution has not yet been implemented. This issue is of serious concern to U.S. rights holders who already have lost millions of dollars in revenues as a result of this lack of adequate IP protection.

The U.S. Government also notes that Korea has not taken sufficient new steps since last year to address U.S. concerns, outlined in the 2002 Special 301 Report, related to the protection of temporary copies, reciprocity provisions regarding database protection, ex parte relief and the lack of full retroactive protection for pre-existing copyrighted works.

As a result of incomplete follow through on key April 2002 commitments, the emergence of serious new IP issues, and the failure by Korea to make progress on other issues of priority raises concerns about adequate and effective protection for intellectual property rights in Korea. As a result, USTR has decided to conduct an out-of-cycle review in the fall.

The United States' decision on whether Korea should remain on the Watch List or be moved to Priority Watch List will be based on Korea's taking action in all of the following areas. As it agreed in 2002, the Government of Korea should: 1) Take all actions necessary to ensure that the Standing Inspection Team (SIT) is granted police powers at the earliest opportunity; 2) Draft and submit legislation to the National Assembly that establishes the exclusive right of transmission for sound recordings, including both the full right of making available and the full right of communication to the public, and seek its enactment by the end of 2003; 3) Provide additional, new data on the ROKG's enforcement efforts that is sufficient to more fully evaluate the full range of its enforcement activities, including the imposition of deterrent penalties, and sufficient to allow right holders to have the opportunity to take action against infringers who are not convicted. In addition, in order to resolve the film distribution issues, the Government of Korea should: 4) Draft and submit legislation to the National Assembly to grant the Korea Media Review Board (KMRB) all authority necessary to stop film piracy. This legislation and/or the implementing regulations must: a) clearly provide the KMRB the authority to reject false applications; b) clearly provide the KMRB the authority to cancel existing ratings which were approved on the basis of a false application; and c) not place undue burdens on legitimate rights holders to prove their rightful ownership; 5) Fully and faithfully implement its agreement on the "WIPI" intellectual property issue.

KUWAIT

The United States supports the steps Kuwait has taken to improve enforcement and protection of intellectual property rights over the past year. However, copyright violations continue to pose a serious problem, and the piracy rate in Kuwait remains the highest in the region. The United May 1, 2003