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 addition, lack of full implementation of the EU Biotech Directive (98/44/EC) by EU member States continues to be a concern. We look forward to continued cooperation between the United States and the EU on intellectual property matters.

GUATEMALA Guatemala remains on the Watch List in 2005 due to continuing concerns with its IPR regime. The principle IPR concerns currently facing Guatemala include high levels of piracy and counterfeiting. Guatemala signed the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) with the United States that will require Guatemala to upgrade considerably its IPR protections. The United States commends Guatemala's commitment to ensuring that its IPR legislation conforms to the TRIPS Agreement and CAFTA-DR, including its recent reinstatement of protection of proprietary data against unfair commercial use for pharmaceutical and agricultural chemical products.

HUNGARY Hungary has made improvements to its IPR regime in the past several years, but still needs additional improvement in certain areas. Thus, Hungary will be maintained on the Watch List in 2005 to monitor its progress. The key issues facing the U.S. copyright industry include prosecutorial delays, low fines or weak sentences, and weak border enforcement. We commend Hungary for modernizing its copyright code, but urge Hungary to enforce these laws in order to curb piracy within its borders. Problems exist with piracy of sound recordings (CDs and CD-Rs) and motion pictures (DVD-Rs), unauthorized optical disc plants, channels of marketing and distribution of pirated discs through the Internet, business and entertainment software piracy, and unauthorized photocopying of books. In the pharmaceutical context, Hungary does not provide any coordination between its health regulatory agency and its patent authority to prevent the marketing registrations of patent-infringing products. We urge the Hungarian Government to address these issues and to continue to improve IPR enforcement efforts in all intellectual property areas.

ITALY Despite Italy's continued implementation of the 2000 Copyright Law and its subsequent amendments, increased enforcement actions in 2004 and decreased piracy rates for selected products, Italy continues to possess one of the highest overall piracy rates in Western Europe. Counterfeiting remains a concern as well. For these reasons, Italy will remain on the Watch List for 2005. The United States has reached out to Italy to express our concern over its IPR regime, but we have not seen sufficient improvements to warrant removal from the Watch List. Widespread piracy exists, primarily due to chronic problems with the piracy of business and entertainment software, piracy of video forms of motion pictures, music piracy, and widespread book piracy. Implementation of Italy's Copyright Law amendments is resulting in more active enforcement efforts and more frequent imposition of deterrent penalties by the Italian judiciary. However, the U.S. copyright industry is concerned that Italy may be amending its anti-piracy legislation in a manner that will undermine ongoing IPR enforcement efforts. In most sectors, the U.S. copyright industry reports that the number of raids, product seizures, and arrests rose in 2004. We continue to observe wide variations in the effectiveness of IPR enforcement activities within Italy. The United States will continue to work with Italy to raise awareness regarding intellectual property issues and to improve IPR protection across all sectors.