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USTR Calls Out 36 Countries for Intellectual Property Fails

The U.S. Trade Representative’s Office (USTR) has identified 36 countries for not adequately or effectively protecting and enforcing intellectual property rights, or for denying market access to U.S. innovators and creators that rely on protection of their IP rights.

The Special 301 Report calls on U.S. trading partners to address IP-related challenges, with a special focus on the countries identified on the lists.

“The ideas and creativity of American entrepreneurs fuel economic growth and employ millions of hardworking Americans,” said U.S. Trade Representative Robert Lighthizer. “This report sends a clear signal to our trading partners that the protection of Americans’ intellectual property rights is a top priority of the Trump Administration.”

Trading partners on the Priority Watch List present the most significant concerns regarding inadequate or ineffective IP protection or enforcement or actions that limit market access.

“In its most pernicious forms, IP infringement endangers the public, such as through exposure to health and safety risks from counterfeit products like semiconductors, automobile parts, apparel and footwear, toys, and medicines,” the report notes. “In addition, trade in counterfeit and pirated products often fuels cross-border organized criminal networks and hinders sustainable economic development in many countries.”

The report pointed to 12 countries—Algeria, Argentina, Canada, Chile, China, Colombia, India, Indonesia, Kuwait, Russia, Ukraine and Venezuela—that made the Priority Watch List. The IP issues in these countries will be the subject of intense bilateral engagement during the coming year, USTR said.

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USTR downgraded Canada to the Priority Watch List from the Watch List “for failing to make progress on overcoming important IP enforcement challenges.” Key concerns, according to USTR, include poor border enforcement and lack of customs authority to inspect or detain suspected counterfeit or pirated goods shipped through Canada, as well as concerns about IP protections and procedures related to pharmaceuticals, deficient copyright protection and “inadequate transparency and due process regarding the protection of geographical indications.”

Colombia was also downgraded to the Priority Watch List from the Watch List for its “longstanding failure to make meaningful progress in fulfilling obligations under the United States-Colombia Trade Promotion Agreement, such as obligations to amend its copyright law.” USTR also announced an Out-of-Cycle Review of Colombia to assess its progress in addressing these and other concerns.

China remained on the Priority Watch List for the 14th consecutive year due to longstanding and new IP concerns that warrant increased attention, including the country’s “coercive technology transfer practices, range of impediments to effective IP enforcement and widespread infringing activity, including trade secret theft, rampant online piracy and counterfeit manufacturing,” USTR said. These issues have been the key concern in the ongoing tariff battle between the U.S. and China.

India also remained on the Priority Watch List for its long-term challenges in its IP framework and lack of sufficient measurable improvements, notably in the areas of patents, copyrights, trade secrets and enforcement.

For the Watch List, USTR added 24 trading partners, including Brazil, Egypt, Guatemala, Mexico, Pakistan, Peru, Thailand, Turkey and Vietnam.

USTR also placed Saudi Arabia and the UAE on the Watch List for the first time. In Saudi Arabia’s case, USTR cited its “recent deteriorations in IP protection for pharmaceutical products, in addition to outstanding concerns regarding IP enforcement and the continued use of unlicensed software by the government.” The UAE made the list for long-term concerns over its treatment of the “sale and transshipment of counterfeit goods and the establishment of collecting management organizations, as well as recent policy changes that may not provide adequate and effective IP protection for pharmaceutical products.”

According to U.S. government estimates, IP-intensive industries directly and indirectly support 45.5 million American jobs, about 30 percent of all employment in the country.

“The Special 301 Review by USTR is essential in the protection of intellectual property, and serves as an important benchmark for improvements in intellectual property protection around the world,” said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. “Preventing intellectual property theft is essential for U.S. businesses and the growth of U.S. jobs.”

USTR said in the report that the problem of trademark counterfeiting remains significant on a global scale and involves the production and sale of a wide array of fake goods.

“Counterfeit goods, including semiconductors and other electronics, chemicals, automotive and aircraft parts, medicines, food and beverages, household consumer products, personal care products, apparel and footwear, toys and sporting goods make their way from China and other source countries directly to purchasers around the world and indirectly through transit hubs, including Indonesia, Turkey and the UAE, to third country markets such as Brazil, Nigeria, Paraguay and Thailand that are reported to have ineffective or inadequate IP enforcement systems,” according to the report.

USTR closed Out-of-Cycle Reviews for Kuwait without a change in status and Tajikistan with a downgrade to the Watch List. Kuwait has not yet brought its copyright regime in line with its international commitments and still needs to make improvements to regulations, USTR said, while Tajikistan failed to address unlicensed software use by government agencies.

The Special 301 Report is an annual review of the global state of IP protection and enforcement required by law.