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 declining to renew licenses for pirate optical disc facilities. The United States appreciates these steps as well as the Government's statements that it is in the process of establishing a specialized IP court to more effectively handle civil and criminal copyright cases. The United States urges Malaysia to continue its enforcement efforts, particularly with respect to closing licensed and unlicensed optical disc plants that are producing pirated products, stopping the export of pirated goods, and combating the growing problem of piracy and counterfeiting on the Internet. In addition, the United States notes that Malaysia should address several deficiencies in its copyright law to fully implement the WIPO Internet Treaties, and should join the WCT and WPPT. Trademark counterfeiting, including of pharmaceuticals that pose a health and safety risk to the public, is rampant in Malaysia due to poor enforcement. The United States is also concerned that Malaysia has enacted neither protection against unfair commercial use of undisclosed test and other data submitted by pharmaceutical companies seeking marketing approval for their products, nor a coordination mechanism between the health authorities and patent office to prevent the registration of unauthorized copies of patent-infringing products. The United States will work with Malaysia to make progress on these pressing IPR issues through the upcoming U.S.-Malaysia Free Trade Agreement negotiations.

MEXICO Mexico will remain on the Watch List in 2006. The last year has seen some improvements in IPR enforcement, including the formation of a specialized IPR customs unit, as well as increased raids and seizures of counterfeit and pirated goods. However, significant problems remain. Although the IP unit of the Prosecutor General's Office (PGR) has again increased the number and scope of raids against sellers of counterfeit and pirate goods, convictions and terms of incarceration for the pirates and counterfeiters have not kept pace. The United States encourages Mexico to follow its commendable raids with aggressive prosecutions and deterrent penalties, to improve domestic cooperation efforts on enforcement, and also to encourage cooperation between Mexican Customs and the PGR to stem the flow of infringing items before they reach the markets. The United States notes that Mexico made progress by drafting IPR legislation this past year, including efforts to criminalize the circumvention of technological protection measures, to give ex officio authority to the police, and to subject businesses engaged in counterfeiting to administrative sanctions and to closure. The United States encourages Mexico to enact and implement these laws, as well as strengthen other IPR laws, including amending the copyright law to implement fully the WIPO Internet Treaties. The United States encourages Mexico to make further efforts to provide protections for patents and against unfair commercial use of undisclosed test and other data submitted by pharmaceutical companies seeking marketing approval for their products, and notes concern over the lack of an effective coordination system between its health and patent authorities to prevent the issuance of marketing approvals for patent-infringing copies of pharmaceutical products. The United States will continue to work with Mexico to address and resolve these IPR concerns in an effective manner.

PAKISTAN Pakistan will be lowered to the Watch List in 2006. Pakistan made notable progress on IPR issues during the past year, particularly with respect to the closure of numerous pirate optical disc factories and improved enforcement efforts, including the establishment of the Intellectual Property Organization of Pakistan (IPOP) to centralize and coordinate IPR enforcement. In January 2006, in recognition of these improvements, USTR terminated a review in which the