A report today by the U.S. government added Canada to a list of countries that fail to protect intellectual property.

Canada joins the likes of Algeria, China, Russia, Pakistan, Indonesia and Venezuela as countries with significant violations of copyrights, according to the U.S Trade Representative’s annual report. It is the first time Canada has been on the U.S. priority watch list.

Critics in film, music and other creative industries have said Canadian copyright laws are outdated and fail to protect creative works. Two Canadian governments have tried unsuccessfully to update the law, with the most recent failure coming in late 2007. The current Canadian government has indicated it intends to amend the Copyright Act, but legislation has not been introduced.

The U.S. Trade Representative said in its report that Canada has not delivered on commitments to improve protections for intellectual property.

"We urge Canada to enact legislation in the near term to strengthen its copyright laws and implement these treaties," the report says, referring to Canada’s failure to move forward with the World Intellectual Property Organization’s treaties, which it agreed to in 1997 but never implemented.

"The United States also continues to urge Canada to improve its [intellectual property rights] enforcement system to enable authorities to take effective action against the trade in counterfeit and pirated products within Canada, as well as curb the volume of infringing products transshipped and transiting through Canada."

Music industry observers have long held that Canada had a higher rate of music piracy that the U.S. A recent poll by Angus Reid found that 23% of Canadians admitted to using peer-to-peer sites, while only 12% had used legal music services. Only 3% of respondents felt file-sharing on the Internet was a criminal offense.

Graham Henderson, president of the Canadian Recording Industry Association, called Canada’s position on the list "unfortunate and embarrassing."

"Unfortunately, it’s too late to avoid this rebuke after years of ignoring our closest trading partners’ pleas to rein in the rampant theft of intellectual property," he says. "But it’s not too late to take the measures needed for our country to be removed from this list of the world’s most notorious pirate nations. We can quickly restore Canada’s good name by strengthening our laws and enforcement against physical counterfeiting and digital piracy. This includes the long-overdue fulfillment of our commitment under the 1996 WIPO Treaties to reform our copyright laws."

"It is very unfortunate but correct that Canada has been placed on the United States Special 301 list of countries that offer inadequate protection for intellectual property," added IFPI chairman and CEO John Kennedy. "For many years it has been difficult to understand why Canada has not modernized its copyright framework in line with accepted international standards.

"The delay has helped create a culture in Canada in which creators' rights are insufficiently protected, and that in turn has damaged the creative sector and held back the development of a legitimate digital music business. Music companies working and investing Canada are hoping that the government will now act quickly and decisively to fix the problem."