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   capital investment, and even when they are detected and prosecuted, the penalties imposed on them in many countries are very low and therefore offer little or no deterrence against further infringements. Instead, the penalties are viewed merely as a cost of doing business.

Continued growth in the online sale of pirated and counterfeit hard goods that will soon surpass the volume of such goods sold by street vendors and in other physical markets. Enforcement authorities, unfortunately, face difficulties in responding to this trend. Online advertisements for the sale of illicit physical goods that are delivered through the mail or by hand are found in many places. For example, in China, although the largest Internet-based sales portals have responded to rights holders' complaints of counterfeit and pirated product listings, and even though major online sellers and distributors seem to be making efforts to ensure that the content available on their websites is legal, more than 75 percent of illicit sellers have reportedly re-listed the infringing goods.

A surge in the use of legitimate courier services to deliver infringing goods, making it more difficult for enforcement officials to detect these goods.

An increase in the practice of shipping of counterfeit products separately from labels and packaging in order to evade enforcement efforts. For example, infringers in Russia reportedly import unbranded products, package these products with unauthorized packaging materials bearing the rights holders' trademarks, and subsequently export the products to various countries. Infringers in countries such as Paraguay reportedly facilitate these illegal activities by exporting label and packaging components to counterfeit and pirated product assemblers. There are reports of the transit of such labels through other countries as well, including Mexico and China.

Growing challenges facing rights holders seeking to collect royalties that are legally owed for the public performance of their musical works in certain regions. This is a significant issue in the Caribbean region, including in the Bahamas, Barbados, Jamaica and Trinidad and Tobago. For example, in Trinidad and Tobago, there is ongoing litigation concerning the collection of unpaid performance royalties from cable system operators, a problem which occurs in Jamaica and in the Bahamas as well. In addition, a government owned broadcasting service in Barbados has reportedly refused to pay for a license to broadcast U.S. musical works on its network. Despite a ruling against this broadcasting service by the Barbados Supreme Court in 2007, U.S. composers have been unable to receive royalties because the government has not established a Copyright Tribunal to determine the appropriate compensation. The problem also persists in India and Vietnam, and in China where the public performance of musical works has been subject to a compulsory license since 2001, but no tariff was set until 2009 when it was ultimately set at the lowest rate in world. 

Stronger and more effective criminal and border enforcement is required to stop the manufacture, import, export, transit, and distribution of pirated and counterfeit goods. Through bilateral consultations, FTAs, and international organizations, USTR is working to ensure that penalties have deterrent effects, and include significant monetary fines and meaningful sentences of imprisonment. Additionally, important elements of a deterrent enforcement system include 15