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 cracking down on piracy and counterfeiting. The initiative is part of an effort to enhance coordination among all relevant U.S. Government agencies and U.S. trading partners to tackle this global problem. As part of STOP!, USTR is advocating international adoption of best practices guidelines incorporating enhanced enforcement disciplines drawn from the IP chapters of recent FTAs. USTR is also introducing in multilateral fora new initiatives to improve the global intellectual property environment that will aid in disrupting the operations of pirates and counterfeiters. Key initiatives are currently underway in the G-8, Organization for Economic Cooperation and Development (OECD), and the Asia-Pacific Economic Cooperation (APEC) forum. As part of the STOP! Initiative, USTR requests recommendations from interested parties on criteria to be used in the Special 301 Report with respect to individual businesses that have been found to have significantly infringed IPR.

Transshipment and Transiting of Goods

"Transshipment" and "in transit goods" are expanding problems that USTR highlights in this year's Special 301 Report. Transshipped goods enter the customs territory of a country, are transferred from one importing means to another, and then leave from the same port for another destination. In transit goods, on the other hand, move "under customs control" from one customs office to another customs office. In transit goods may move entirely within one customs territory or may cross borders from one customs territory to another customs territory. Frequently goods moving under one of these procedures will be "diverted" for consumption into the customs territory where they first arrive. Transshipped and in transit goods pose a high risk for counterfeiting and piracy because those customs procedures may be used to disguise the true country of origin of the goods or to enter goods into customs territories where border enforcement for transshipped or in transit goods is known to be weak with the intention of passing the goods through those customs territories to their destination. The Special 301 Report notes that transshipment or in transit goods are growing problems in Ukraine, Belize, Canada, Latvia, Lithuania, Taiwan, and Thailand. We urge these countries to provide stronger intellectual property border enforcement protections, and the United States will work together with these countries to improve their IPR border enforcement systems.

Free Trade Zones

We are concerned with the growing problem of pirated and counterfeit goods moving through "free trade zones," which are geographic areas considered to be outside of a nation's customs territory for the purposes of collecting import duties and taxes. Free trade zones range in size from small commercial warehouses to complexes housing hundreds of businesses. Free trade zones are generally established by governments to promote legitimate trade and offer the advantage of providing a free trading environment whereby a minimum level of regulation is demanded of companies approved to operate within them. Permissible operations within free trade zones include preserving goods, preparing goods for shipping, and handling goods in order to improve their packaging or marketing to manufacturing processes. Free trade zones present a considerable risk, however, of serving as a conduit for counterfeit and pirated goods, and as a situs of manufacturing ofIPR infringing goods. The United States has received complaints from U.S. industry regarding the Colon Free Zone in Panama, the Jebel Ali Free Zone in the United Arab Emirates, the Corozal Commercial Free Trade Zone in Belize, and the Manaus Free Trade