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U.S. Ups Pressure on China Over IP Rights

Unabated Internet piracy has earned China a spot on an United States' Priority Watch List that could lead to trade sanctions.

Beijing joins Russia and 12 other trading partners that Washington says are not effectively promoting, protecting or enforcing intellectual property rights (IPR).

Ultimate failure to comply with World Trade Organization IPR agreements could lead to trade sanctions against the countries on the list.

"China must take action to address rampant piracy and counterfeiting, including increasing the number of criminal IPR cases and further opening its market to legitimate copyright and other goods," Acting U.S. Trade Representative Peter Allgeier said in a statement issued late Friday.

China was placed on the list after a January review of Beijing's intellectual property laws and enforcement actions. The Office of the United States Trade Representative (USTR) concluded in its report that infringement levels remain unacceptably high throughout China.

The USTR said Russia maintained its perennial spot on the list due to continuing problems with Moscow's IPR regime, including weak enforcement and lack of data protection.

"It appears that Russia's current IPR regime is inconsistent with Russia's bilateral trade obligations and may not conform to obligations which Russia needs to fulfill in order to join the WTO," the report states. "In particular, we remain concerned about high levels of piracy of optical media (CDs and DVDs) and a growing problem with Internet piracy of copyrighted works.

Joining China and Russia on the Priority Watch List are Argentina, Brazil, Egypt, India, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the Philippines, Turkey and Venezuela.

In addition to piracy of copyrighted works, Israel and Turkey were cited for their inadequate protection against unfair commercial use of data submitted by drug companies to health authorities.

Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement or market access for persons relying on intellectual property.

Countries are placed into a hierarchy of categories: (1) Priority Foreign Country; (2) Priority Watch List; or (3) Watch List. The ranking of Priority Foreign Country is reserved for the worst situations. Currently, one country, Ukraine, is designated in this category and remains subject to $75 million in sanctions.

"We are committed to vigilantly enforcing U.S. intellectual property laws and procedures and to working with our trading partners around the world to effectively protect the ideas, brands and inventions of our businesses and entrepreneurs," Allgeier said.

China was designated a Priority Foreign Country in 1994, but subsequently entered bilateral trade agreements with the U.S. in 1992 and 1995.

"This year, we are elevating China to the Priority Watch List for failure to effectively protect intellectual property rights and to meet its commitment to significantly reduce infringement levels, despite efforts by China's senior leadership to do so," Allgeier said.