China, Russia featured prominently.

The U.S. Trade Representative's office released its annual report today (April 28) on the adequacy and effectiveness of intellectual-property rights (IPR) protection. China and Russia are among 13 countries on the Priority Watch List, which identifies governments that do not provide an adequate level of IPR protection, enforcement or market access for rights holders. Canada and the European Union are among 34 U.S. trading partners on the lower-level Watch List, identifying countries that merit attention to ensure they address IPR problems.

The "Special 301" annual report identifies governments that need to take stronger actions to combat piracy and counterfeiting by, for example, cracking down on illegal optical disc production and Internet piracy or stepping up border enforcement against trade in fake goods. Concerns regarding China and Russia are featured prominently throughout the report.

"As one of the world’s leading innovators, the United States places significant emphasis on intellectual property protection and enforcement," said U.S. Trade Representative Rob Portman. "This report acknowledges the positive steps that several of our trading partners have taken to strengthen IPR protection over the past year. However, more needs to be done."

China is a top priority, the report notes. Although the United States recognizes the efforts of top officials in China, IPR enforcement in China continues to lag far behind the commitment made in the April 2004 Joint Commission on Commerce and Trade (JCCT), renewed in 2005 and 2006, to achieve a significant reduction in IPR infringement throughout China. The report concludes that IPR infringements throughout China remain at unacceptable levels.

The USTR reported that it will maintain heightened scrutiny of China, step up consideration of its World Trade Organization dispute settlement options, and for the first time scrutinize IPR protection and enforcement at China’s provincial level by conducting a special provincial review in the coming year.

“We look forward to the implementation and results of USTR’s new directive for a review of Chinese government efforts at the provincial level," says Neil Turkewitz, RIAA executive VP, international. "This announcement comes on the heels of a State Council directive earlier this week stating that China will punish officials who do not enforce intellectual property rights protection under a program that intensifies the country's crackdown on infringement. We are hopeful that these combined announcements will trigger meaningful reform."

Russia also continues to be a serious concern, the USTR's report notes. Although Russia has taken some steps to curb pirated production of optical discs in factories (particularly those located on government-owned property), high levels of IPR infringement remain, particularly infringements connected with Russia-based optical disc plants and Web sites.

"We have been in discussions with the Russian government on these issues for nearly a decade," Turkewitz says. "Their relative inaction is inexcusable. In the coming months, the U.S. government should declare Russia ineligible to participate in the Generalized System of Preferences (GSP) program. Russia does not meet the criteria for enjoying benefits under GSP, and its eligibility should be terminated. The U.S. government should also continue to delay the entry of Russia into the World Trade Organization until they have demonstrated a clear and unambiguous ability and determination to meet their TRIPS obligations."

Canada is among the countries now scheduled for an out-of-cycle review. These are conducted on countries that warrant further review before the next Special 301 Report and could result in changes in their status before next April’s report. Other such reviews will involve Chile, Indonesia, Latvia and Saudi Arabia.

In addition to China and Russia, those countries on the Priority Watch List this year are Argentina, Belize, Brazil, Egypt, India, Indonesia, Israel, Lebanon, Turkey, Ukraine and Venezuela. Those on the Watch List are Bahamas, Belarus, Bolivia, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, European Union, Guatemala, Hungary, Italy, Jamaica, Kuwait, Latvia, Lithuania, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, the Republic of Korea, Romania, Saudi Arabia, Taiwan, Tajikistan, Thailand, Turkmenistan, Uzbekistan and Vietnam.

Four countries were removed from the Watch List entirely because of improvement in intellectual property protection: Azerbaijan, Kazakhstan, Slovak Republic and Uruguay.