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Paraguay: Paraguay and the United States signed a comprehensive Memorandum of Understanding (MOU) and Enforcement Action Plan on November 17, 1998. Ambassador Barshefsky successfully conclude the section 301 investigation of Paraguay's intellectual property practices on the basis of this agreement, in conjunction with the passage of trademark and copyright laws and Paraguayan efforts to improve enforcement. The U.S. Government will continue to monitor Paraguay's compliance with the MOU under section 306 of the Trade Act. We are seriously concerned that limited progress has been made on implementation of the MOU despite the efforts of certain Government officials. As a result, we agreed it was necessary to extend the MOU's "Special Enforcement Period" by six months to September 15, 1999, during bilateral consultations on March 11. Some steps to improve Paraguay's intellectual property regime have been taken, but much remains to be done. We look to the newly-installed Paraguayan Administration to rapidly and fully implement the November 1998 MOU, most immediately by ensuring that copyright enforcement is designated as a "public crime" and by taking significant and effective enforcement actions to protect intellectual property rights, both within Paraguay and at its borders.
China: Based on the 1995 and 1996 bilateral IPR agreements and extensive follow-up work with Chinese officials, China now has a functioning system capable of protecting intellectual property rights. China has made progress on software end-user piracy including the recent issuance of a State Council directive to all government ministries mandating that only legitimate software be used in government and quasi-government agencies. Enforcement of intellectual property rights has become part of China's nationwide anti-crime campaign; the Chinese police and court system have become involved in combating IPR piracy. The production of pirated copyrighted works has dropped dramatically. China expects to enact a new copyright law this year. Reform of the trademark and patent law are expected to follow. China needs to comply with international standards such as those in the WTO Agreement on Trade-Related Aspects of Intellectual Property and other international IPR Agreements.
Various problems remain. American companies report that retail piracy and counterfeit goods remain widespread in China. The structure of IPR administration and enforcement in China remains opaque. Enforcement at the provincial level is sporadic. Corruption remains a problem and convictions only occasionally result in jail time. Enforced quotas on imported U.S. films, end-user piracy of business software, trademark infringement, and problems in obtaining administrative protection for pharmaceuticals are persistent problems. Progress on market access issues, while improved over last year, remains disappointing and significant improvements need to be made bilaterally and in the WTO accession negotiations.
PRIORITY WATCH LIST
Argentina: Argentina's patent regime denies adequate and effective protection to U.S. right holders, particularly in the pharmaceutical industry, which in 1997 led to a withdrawal of benefits for approximately 50 percent of Argentina's exports under the Generalized System of Preferences (GSP) program. The Argentine patent regime, which contains onerous compulsory licensing provisions and fails to adequately protect test data, does not yet meet the WTO TRIPS
