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UKRAINE

The United States withdrew Ukraine's benefits under the Generalized System of Preferences (GSP) program in August 2001 and imposed $75 million worth of sanctions on Ukrainian imports on January 23, 2002. These sanctions remain in effect based on the repeated failure of the Government of Ukraine to enact and enforce adequate optical disc media licensing legislation in order to fully comply with the June 2000 U.S.-Ukraine Joint Action Plan to Combat Optical Media Piracy. The Ukrainian Government has drafted amendments to the existing Optical Disc Licensing Law to address the law's inadequacies, but Ukraine's Rada has failed to pass these amendments on several occasions. As a result, Ukraine's law does not have adequate enforcement provisions to prevent unauthorized optical media production and distribution. Ukraine is also a major trans-shipment point and storage location for illegal optical media produced in Russia and elsewhere. While Ukraine has taken some steps to address its optical media piracy problem, border enforcement efforts remain weak and small criminal penalties for unauthorized production and export of CDs and CD-ROMs do not act as an effective deterrent. As a result, there continue to be extremely high levels of piracy and substantial losses to U.S. industry. Trademark counterfeiting is also a serious problem and U.S. firms remain concerned over the lack of cooperation by enforcement officials in combating counterfeiting activities. The United States urges the Ukrainian Government to pass amendments to its optical media law to provide for adequate enforcement. Ukrainian officials also must strengthen current enforcement efforts to deter optical media piracy and address trademark counterfeiting.

CHINA

Addressing weak IPR protection and enforcement in China is one of the Administration's top priorities. At the April meeting of the Joint Commission on Commerce and Trade (JCCT), the United States secured a commitment from China's Vice Premier Wu Yi that China will undertake a series of actions to significantly reduce IPR infringements throughout the country. These actions are critical in light of the rampant counterfeit and piracy problems that plague China's domestic market, and because China has become a leading exporter of counterfeit and pirated goods to the world.

Prior to the JCCT, China issued several rules and other measures concerning IPR protection and enforcement. These include: Rules on the Determination and Protection of Well-Known Trademarks, Measures on the Implementation of the Madrid Agreement on Trademark International Registration, Measures on the Registration and Administration of Collective Trademarks and Certification Marks, Measures on the Implementation of Administrative Penalties in Copyright Cases, and Regulations on the Customs Protection of IPR. The new measures are generally positive developments. Further, China announced last fall the formation of a "Leading Group" on IPR to better coordinate policy and enforce IPRs across China. The Group, headed by Vice Premier Wu Yi, functions under the State Council and is composed of officials from 36 departments.

China made many commitments at the recent JCCT meetings intended to address our underlying concerns on IPR. Vice Premier Wu announced that China would undertake a series of near-term actions with the objective of significantly reducing IPR infringement levels. In particular, China will:

1. Promulgate a judicial interpretation before the end of the year from the Supreme People's Court