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  First, the Administration will use WTO instruments whenever appropriate to address our concerns regarding the unacceptable levels of counterfeiting and piracy in China. We agree with the many industries and companies that have identified lack of transparency as a serious barrier to a more complete understanding of key deficiencies in China's IPR enforcement system. Accordingly, we will invoke the transparency provisions of the WTO TRIPS Agreement to request that China provide detailed documentation on certain aspects of IPR enforcement that affect U.S. rights under the TRIPS Agreement. We will, for example, be seeking information on criminal and administrative penalties actually imposed. Statistics provided by China's central Government list numbers of cases, but often lack specificity on the legal basis for those cases and other important details. We look forward to China's complete response.

Second, USTR is elevating China onto the Priority Watch List on the basis of serious concerns about compliance with WTO TRIPS obligations related to IPR enforcement, and the commitments China made to the United States at the April 2004 meeting of the JCCT to achieve a significant reduction in IPR infringement, and make progress in other areas. This marks the first time that China has been elevated to the Priority Watch List on the basis of WTO TRIPS or JCCT-related concerns. The United States will also maintain Section 306 monitoring of China's implementation of its 1992 and 1995 bilateral agreements with the United States (including additional commitments made in 1996).

Third, the United States will use the JCCT and IPR Working Group to secure new, specific commitments concerning additional actions that China will take that result in significant improvements in IPR protection and enforcement, particularly over the next quarter. We will seek tangible results in areas of weakness identified in the OCR and of key concern to U.S. persons that rely upon intellectual property protection. 

China must fulfill its 2004 JCCT commitments to the United States. Based upon deficiencies identified during the OCR, China must:

 Undertake additional aggressive action to significantly reduce IPR infringement levels.

Show demonstrable results in at least the following areas:  Demonstrate a significant increase in the number of criminal IPR investigations, prosecutions, convictions and deterrent, proportionate sentences involving U.S./foreign rights holders, especially including but not limited to criminal copyright cases.

<li>Remove the market advantages currently enjoyed by pirated and counterfeited goods resulting from market access restrictions and administrative delays so as to facilitate increased sales of the legitimate products.</li> </ul></li> </ul>