“This report underscores the Administration’s scrutiny in pinpointing challenges in protecting IPR and signals to our trading partners that effective IPR protection will remain a critical focus in US policy.”

As in previous years, the USTR’s Special 301 report highlighted the prominence of concerns with respect to China and Russia, in spite of some evidence of improvement.

The USTR explained that:

"Russia remains a focus of US trade policy in the area of intellectual property. Large-scale production and distribution of IP-infringing optical media and minimally-restrained Internet piracy are among the major problems that require more enforcement action."

"The coming months will be a critical period, as Russia moves to implement a variety of legal and law enforcement improvements to which it committed as part of a bilateral agreement with the United States on Russia’s eventual accession to the World Trade Organization (WTO). Implementation of these commitments will be essential to completing the final multilateral negotiations on the overall accession package."

However, the department added that:

"Russia made ambitious commitments to improve its IPR protection and enforcement. As part of the Special 301 report, USTR is also announcing an out-of-cycle review to evaluate Russia’s progress."

Similar out-of-cycle reviews will be carried out with respect to Brazil, the Czech Republic and Pakistan.

In conjunction with the release of the report, USTR announced the results of an unprecedented year-long review of strengths and weaknesses in IPR protection and enforcement in key Chinese provinces.

“Leadership at the provincial and local levels is critical to improving China’s IPR climate,” Schwab explained. “By highlighting local problems and also giving credit where it is due, we encourage local leadership.”

While the US continues to work with China in many fora to strengthen that country’s IPR regime, high levels of copyright piracy and trademark counterfeiting remain of concern. The US recently sought consultations under the WTO to address a number of discrete deficiencies in China’s IPR regime. The US has since been joined by Canada, EU, Japan, and Mexico as third parties in these consultations.

“Our recent decision to pursue IPR-related concerns in China through consultations under WTO dispute settlement rules demonstrates our determination to defend vigorously American innovation,” commented Schwab.

The Special 301 report also provided an opportunity for the US to recognize progress. Brazil is being moved to the Watch List (from Priority Watch List), reflecting significant improvements in copyright enforcement, and five other trading partners – Bahamas, Bulgaria, Croatia, the EU, and Latvia – are being removed from the Special 301 listing altogether.

This year’s Special 301 report places 43 countries on the Priority Watch List (PWL), Watch List (WL) or the Section 306 monitoring list.

Countries on the Priority Watch List are not deemed to provide an adequate level of IPR protection or enforcement, or market access for persons relying on intellectual property protection. In addition to China and Russia, 10 countries are on the PWL in this year’s report: Argentina, Chile, Egypt, India, Israel, Lebanon, Thailand, Turkey, Ukraine, and Venezuela.

Thirty trading partners are on the lower level Watch List, meriting bilateral attention to address the underlying IPR problems. The Watch List countries are: Belarus, Belize, Bolivia, Brazil, Canada, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Hungary, Indonesia, Italy, Jamaica, Korea, Kuwait, Lithuania, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Romania, Saudi Arabia, Taiwan, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.

Paraguay will continue to be subject to Section 306 monitoring under a bilateral Memorandum of Understanding that establishes objectives and actions for addressing IPR concerns in that country.