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 United States Government was considering whether to remove Pakistan's benefits under the Generalized System of Preferences because of inadequate enforcement of copyright laws. Despite improvements, piracy rates remain a concern. The United States is encouraged that Pakistan has established in practice a system to avoid granting marketing approvals to unauthorized copies of drugs protected by a patent. The United States is also encouraged that Pakistan has committed to move forward with implementing protection to effectively protect test and other data submitted by pharmaceutical companies seeking marketing approval for their products against unfair commercial use. The United States will monitor the situation closely as it develops, and will work together with Pakistan to achieve further improvements in its IPR protection and enforcement regimes.

PERU Peru will remain on the Watch List in 2006. Despite high-profile raids and a public anti-piracy campaign, Peru still has numerous IPR problems. Peru's Government took some steps toward improving copyright enforcement through its "Anti-Piracy Crusade" initiated in 2002. The U.S. industry reports that copyright piracy remains high in the sectors of sound recordings and business software. The United States encourages the Government of Peru to continue its efforts to combat IPR piracy by coordinating with the private sector, conducting an increased number of raids and seizures, ensuring that arrests of IPR infringers result in convictions and the imposition of deterrent sentences that include imprisonment, and giving increasing attention to IPR enforcement measures at its borders. The United States is pleased at the signing on April 12, 2006 of the United States-Peru Trade Promotion Agreement (PTPA) and looks forward to stronger IPR protection and enforcement in Peru. Under the PTPA, Peru has committed itself to effective protection of copyrights, trademarks, and patents; enforcement against piracy and counterfeiting; and effective protection against unfair commercial use of undisclosed test and other data submitted by pharmaceutical and agricultural chemical companies seeking marketing approval for their products, among other obligations. The United States also is concerned over reports that Peru lacks an effective coordination system between its health and patent authorities to prevent the issuance of marketing approvals for unauthorized patent-infringing copies of pharmaceutical products. The United States will continue to work with Peru to strengthen IPR protection and enforcement and to ensure that Peru implements its IPR obligations to meet its international and PTPA commitments.

PHILIPPINES The Philippines was lowered from the Priority Watch List to the Watch List at the conclusion of an Out-of-Cycle review in February 2006, due to substantial improvements in IPR protection. The Philippines remains on the Watch List in this Report. Throughout 2005, the Philippines took steps to bolster implementation of its Optical Media Act, including increasing the number of raids against pirate optical disc production facilities and retail establishments. The Philippines' Intellectual Property Office coordinated among IPR enforcement agencies, which resulted in an increased number of raids and enforcement actions. While recognizing these improvements, the United States strongly urges the Philippines to sustain and broaden progress on IPR issues in order to avoid a potential return to the Priority Watch List in the future. Remaining IPR issues include: enforcing the Optical Media Act through continued inspections and raids of optical disc plants; increasing the number of seizures of pirate and counterfeit products and the machinery used to produce such infringing products; increasing the numbers of