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 addition, the United States continues to encourage U.S. cable operators and copyright holders to enter into negotiations with licensed Bahamian cable operators to provide for the legitimate cable transmission of copyrighted works in the Bahamas.

BRAZIL

Brazil continues to fall short in providing adequate and effective protection of IPR. Despite some positive developments, most notably with respect to the formation and activities of the Brazilian Congress' Chamber of Deputies' Commission of Parliamentary Inquiry on piracy and amendments to the criminal code, protection has not significantly improved. Brazil is one of the largest markets globally for legitimate copyrighted products, but also one of the world's largest pirate markets. Optical media piracy and Internet piracy are increasing. The U.S. copyright industry estimates that losses in Brazil are the largest in the hemisphere, with industry-estimated losses exceeding $785 million in 2003. Despite having adopted modern copyright legislation, Brazil has not undertaken adequate enforcement actions against piracy. Criminal enforcement has not been sufficient or effective in deterring piracy. Furthermore, although a substantial number of raids are conducted by Brazilian police, very few result in prosecutions and convictions. Ineffective border enforcement that fails to stop an influx of pirated goods continues to plague trademark and copyright owners. Brazil has not made significant progress processing the backlog of pending patent applications, which industry estimates to be at 47,000 and for which industry has already paid substantial upfront processing fees. Unauthorized copies of pharmaceutical products continue to receive sanitary registrations that rely on undisclosed tests and other confidential data, although no unauthorized copies have been marketed yet. We will continue to monitor Brazil's progress in these areas, including through the ongoing GSP review that was initiated by USTR in 2001.

EGYPT

Egypt was moved from the Priority Watch List to the Watch List in 2003, based in large part on the passage of a comprehensive new IPR law. The United States notes the Government of Egypt's passage of implementing regulations for three of the four chapters of the IPR law, and continuing efforts in enforcement. However, recent marketing approvals for locally produced copies of patented pharmaceutical products, as well as deficiencies in Egypt's copyright enforcement regime, judicial system and trademark enforcement necessitate the elevation of Egypt to the Priority Watch List. The United States is seriously concerned by the Egyptian Health Ministry's marketing approval of four copies of U.S. innovator drugs and approval of four additional applications to register and market innovator drugs on the basis of the U.S. firms' confidential test data. These approvals run counter to Egypt's own domestic laws and raise serious concerns about Egypt's commitment to protect confidential test data. Egypt's copyright enforcement remains weak with continued high losses to the book publishing industry, high corporate end-user piracy levels and lax enforcement against extensive commerce in pirated books, CDs, DVDs and VCDs.

Copyright enforcement is further impaired by the lack of implementing regulations for the copyright portion of Egypt's new IPR law, as well as a court system in which copyright cases continue to move slowly, collection of judgments is difficult and transparency is lacking. Companies continue to experience difficulties with Egypt's Trademark Law, which makes trademark enforcement very difficult. In addition, implementing regulations for the new IPR law's sections for patents, trademarks and botanical varieties do not appear to fully address the deficiencies and ambiguities in the law. Efforts by Egypt to address these problems and improve its IPR regime will continue to play an important role in the expansion of trade and investment ties with the United States.