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 fourth largest source of counterfeit and piratical goods seized by the U.S. Customs and Border Protection. The vast majority of these goods were either apparel and pharmaceuticals with counterfeit trademarks or, optical media products. We recognize that Pakistan has taken some initial steps to address these problems, however, we are disappointed that Pakistan has taken minimal action to address these serious and long-standing concerns. The Government of Pakistan must conduct immediate, vigorous and sustained enforcement against the plants involved in piracy and counterfeiting. Additional concerns include lack of protection against the unfair commercial use of data submitted for marketing approval of pharmaceutical products, widespread trademark counterfeiting and copyright piracy beyond optical media (e.g., book piracy), and lax enforcement overall. The United States also remains concerned over a 2002 ordinance that seriously undermined improvements Pakistan made to its patent law in 2000. We do note that some positive developments were made in the past year including the issuance of new trademark regulations, Cabinet approval of legislation for creation of the Pakistan Intellectual Property Rights Organization (PIPRO) and formation of an IPR Advisory Group involving the private sector. However, despite these developments, the overall piracy and counterfeiting problems are worsening rather than improving. As a result, we are elevating Pakistan to the Priority Watch List. The United States urges Pakistan to intensify its IPR protection and enforcement efforts, including finding effective means to address the issues highlighted in the "IPR Roadmap" presented to Pakistan in July 2003. Further, we hope for expeditious passage by Parliament and the devotion of meaningful funding and resources for PIPRO. We will use the future Trade and Investment Framework Agreement discussions to continue pressing for improvements to address our IP-related concerns.

REPUBLIC OF THE PHILIPPINES

Serious concerns remain regarding the lack of consistent, effective, and sustained IPR protection in the Philippines. U.S. distributors report high levels of pirated optical discs of cinematographic and musical works, computer games, business software, as well as widespread unauthorized transmissions of motion pictures and other programming on cable television systems. Trademark infringement in a variety of product lines also is widespread, with counterfeit or pirated merchandise openly available in both legitimate and illegitimate venues. The levels of illegal production and consumption of optical media remain consistently high. Although the estimated domestic demand for optical media is about seven million discs annually, industry and enforcement sources believe that there are at least 20 illegal production lines in the Philippines producing more than 70 million illegal DVDs, VCDs and CD-ROMs per year. We remain concerned over the Philippine Government's failure to implement data protection measures for innovative pharmaceutical and agricultural chemical products, and copyright provisions consistent with its obligations under the WIPO treaties. Many enforcement agencies suffer from a lack of resources while IPR issues remain a relatively low priority. Enforcement efforts such as raids and seizures often have only a temporary effect due to ineffective post-raid enforcement. Counterfeit goods from China, Malaysia, Hong Kong, Taiwan, and Thailand continue to enter the Philippines in large quantities. In response, the Bureau of Customs created a permanent IPR unit in September 2003 to investigate all shipments of counterfeit and pirated goods. Domestic enforcement suffers from lack of training and interagency coordination, which hinder raids, and there is a growing backlog of cases in the judicial system. The signing of the Optical Media Law in 2004 was a welcome step toward better protection of IP, and is intended to regulate the import, export and production of optical discs, including the tools and materials involved in the replication of optical discs. Full implementation of this law, including prosecution of IPR violators, is critical. Implementing regulations and the transformation of the Videogram Regulatory Board into the Optical Media Board have yet to be completed and will be a key factor in the effectiveness of the new law. The United States appreciates the Government of Philippines' efforts to address these concerns, and will continue to use the bilateral TIFA to address specific elements included in the IPR Action Plan concerning judicial, legislative and enforcement issues.