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   problem has been reported in China (including Hong Kong), Indonesia, Malaysia, Taiwan, Thailand, and Vietnam. 

The United States continues to urge trading partners to undertake more effective criminal and border enforcement to stop the manufacture, import, export, transit, and distribution of pirated and counterfeit goods. USTR engages extensively with its trading partners through bilateral consultations, trade agreements, and international organizations, to ensure that penalties are deterrent, and include significant monetary fines and meaningful sentences of imprisonment. Additionally, important elements of a deterrent enforcement system include requirements that pirated and counterfeit goods, as well as the materials and implements used for their production, be seized and destroyed, rather than being re-exported or otherwise allowed to reenter the channels of commerce. Such re-export or entrance into the channels of commerce creates IPR enforcement problems and potential health and safety risks for other trading partners or for the original country of importation. Providing enforcement officials with the authority to seize suspect counterfeit trademark or pirated copyright goods during their import or export, or in transit movement, without the need for a formal complaint from a rights holder is also critical to effective enforcement. The U.S. Government supports trading partners through technical assistance and sharing of best practices on enforcement, including destruction of seized goods. (See Annex 2).

The manufacture and distribution of pharmaceutical products bearing counterfeit trademarks is a growing problem that has important consequences for consumer health and safety. Such trademark counterfeiting is one dimension of the larger problem of substandard medicines. The United States notes its particular concern with the proliferation of counterfeit pharmaceuticals manufactured, sold and distributed in trading partners such as Brazil, China, Indonesia, Lebanon, Peru, Russia, and especially in India, the largest source of counterfeit pharmaceuticals shipped to the United States. Reports indicate that anywhere from 10-40 percent of drugs sold in Indian markets are counterfeit and could represent a serious threat to patient health and safety. The U.S. Government, through the United States Agency for International Development, and other agencies, supports programs in Sub-Saharan Africa and elsewhere that assist trading partners in protecting the public against counterfeit medicines introduced into their markets.

In many cases, the bulk active pharmaceutical ingredients (API) that are used to manufacture pharmaceuticals that bear counterfeit trademarks are not made according to good manufacturing practices. Hence, these products may contain sub-standard and potentially hazardous materials. For instance, in China, some domestic chemical manufacturers that produce API have avoided regulatory oversight by failing to declare that bulk chemicals are intended for use in pharmaceutical products. This contributes to China being a major source country for APIs used in counterfeit pharmaceutical products. Although China has taken some welcome steps, such as requiring manufacturers to register with the State Food and Drug Administration, more effective regulatory controls are needed.

Digital, Internet, and Broadcast Piracy

The increased availability of broadband Internet connections around the world is generating many benefits, from increased economic activity and new business models to greater access to and exchange of information. However, this phenomenon has also made the Internet an 20