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 a commitment to ensure the legalization of software used in Chinese enterprises and to take up issues of government and enterprise software asset management in the JCCT IPR Working Group. 

The two governments also agreed to step up cooperation on IPR law enforcement efforts, increase customs cooperation, and provide China with additional technical assistance to fully implement the WIPO Internet Treaties. Together with Japan and Switzerland, the United States has also used WTO tools in new ways to start an ongoing process of making China's whole IPR regime more transparent.

Apart from longstanding concerns over IPR enforcement, the United States is alert to U.S. industry concerns about the possibility that laws or policies in a variety of fields might be misused to favor domestic over foreign IPR. Such concerns are especially relevant in light of recently issued Chinese government policies establishing a procurement preference for domestically innovated products, statements and consideration of legal changes regarding such areas as compulsory licensing and the use of IPR in setting standards, and other emerging legal and policy developments that have the potential to affect IPR protection and market access for IPR-bearing goods and services. The United States will monitor these developments closely to ensure fair treatment for U.S. rights holders.

Despite anti-piracy campaigns in China and an increasing number of IPR cases in Chinese courts, overall piracy and counterfeiting levels in China remained unacceptably high in 2005. IPR infringement continued to affect products, brands and technologies from a wide range of industries, including films, music and sound recordings, publishing, business and entertainment software, pharmaceuticals, chemicals, information technology, apparel, athletic footwear, textile fabrics and floor coverings, consumer goods, electrical equipment, automotive parts and industrial products, among many others.

Industry sources in 2005 continued to estimate that levels of piracy in China across all lines of copyright business are 85 to 93 percent, indicating little to no improvement. For example, estimated business software losses fell to $1.27 billion in 2005 from $1.48 billion in 2004. However, the software industry reports that the level of government purchases does not support the conclusion that all software in government offices has been legalized, and notes that software end-user piracy outside the government remains rampant. Internet piracy is increasing and end-user piracy of business software and other copyright materials, such as books and journals, remains a key concern. The share of IPR infringing product seizures of Chinese origin at the U.S. border increased to 69 percent in 2005 from 63 percent in 2004, while the total value of the IPR infringing goods from China decreased to $63.9 million in 2005 from $87.2 million in 2004. China's share of infringing goods seized at the border is more than ten times greater than that of any other U.S. trading partner.

China's counterfeits include many products that pose a direct threat to the health and safety of consumers in the United States, China and elsewhere, such as pharmaceuticals, batteries, auto parts, industrial equipment, toys, and many other products. The harm from counterfeiting is not