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 USTR will continue to use all statutory tools, as appropriate, to improve intellectual property protection in countries where it is inadequate. For example, USTR examines IPR practices through the implementation of trade preference programs, such as the ongoing Generalized System of Preferences (GSP) reviews of countries, including Brazil, Kazakhstan, Lebanon, Pakistan, Russia, and Uzbekistan.

Global Scope of Counterfeiting and Piracy

Global IPR theft and trade in fakes have grown to unprecedented levels, threatening innovative and creative economies around the world. Counterfeiting and digital piracy remain areas of particular concern in this year's report. Counterfeiting has developed from a localized industry concentrated on the copying of high-end designer goods into a massive, sophisticated global business involving the manufacturing and sale of counterfeit versions of a vast array of products, including soaps, shampoos, razors, batteries, cigarettes, alcoholic beverages, golf clubs, automobile parts, motorcycles, medicines, and health care products, to name a few. Counterfeiting of such a broad range of products on a global scale affects more than just the companies that produce legitimate products. While it has a direct impact on the sales and profits of those companies, counterfeits also hurt the consumers who waste their money and sometimes put themselves at risk by purchasing fake goods. It also hurts the countries concerned by decreasing tax revenues and deterring investments. In addition, counterfeiters generally pay neither taxes nor duties, and do not comply with basic manufacturing standards for the health and safety of workers or product quality and performance. Piracy of copyrighted products in digital, print (e.g., books, journals, and other printed materials), and other analog formats, as well as counterfeiting of all types of trademarked products, have grown rapidly because these illegal activities offer enormous profits and little risk for the criminal element of society. Criminals can enter into the counterfeiting and pirating business with little capital investment, and even if caught and charged with a crime, the penalties actually imposed in many countries are so low that they offer no deterrent.

The global scope of piracy and counterfeiting requires stronger and more effective border enforcement to stop the import, export, and transit of pirated and counterfeit goods. For example, effective enforcement efforts are needed at the national and local levels in free trade zones in Belize, Panama, and the United Arab Emirates.

This is why USTR seeks through our FTAs and our bilateral consultations to maximize the deterrent effect of remedies, including requirements that pirated and counterfeit products, as well as the equipment used to make them, are seized and destroyed. The economic damage caused by counterfeiting to the legitimate companies whose products are counterfeited is enormous. Losses to U.S. industries alone are estimated at $200-$250 billion per year.

'''STOP! Initiative'''

USTR is actively engaged in implementing the Administration's Strategy Targeting Organized Piracy (STOP!) initiative. Announced in October 2004, STOP! brings together all the major players – the federal government, private sector and trade partners – to take concerted action in