News

USTR designates Ukraine as Priority Foreign Country; Russia, China, Spain in spotlight in Special 301 Report

WASHINGTON – The Office of the United States Trade Representative (USTR) announced its Special 301 Report today, identifying countries that warrant U.S. government attention due to their inadequate and ineffective intellectual property protections. USTR designated Ukraine as a Priority Foreign Country (the first time a country has been so designated since 2005), an action that could lead to the imposition of trade sanctions.  The Report can be viewed here.

Along with China, Russia was named high on the list as a “Priority Watch” country by USTR, which comes with news that U.S. Secretary of State John Kerry will visit the country next week to meet with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov.

Below is a comment from RIAA EVP, International Neil Turkewitz:

“This report details continuing problems in a wide variety of markets, including Russia, Ukraine, Spain and China. The situation in Russia continues to be highly problematic. Given the scope and reach of the unlicensed music services, in particular vKontakte, the potential of the legitimate online market remains fully unrealized and music revenue per capita in Russia is by far the worst among the G-8.  While Russian government officials have recently recognized the need for rules to enhance accountability of online platforms, and a December 2012 U.S.-Russia Action Plan commits Russia to an aggressive work plan to address online infringement, there has thus far been little progress in actually moving forward with concrete steps to address a problem of vast dimension that undermines the interests of Russian and American creators alike.  The timing is ripe for this to be addressed with Secretary Kerry’s visit to Russia next week.  While we know and appreciate that there are many significant issues to be discussed, it is our hope that this Report, together with the Secretary’s visit to Russia, will help spur meaningful action by the Russian government to dramatically improve its intellectual property protection. We also highlight that Ukraine was designated as a Priority Foreign Country for its failure to meet its commitments under a 2010 Action Plan negotiated with the U.S.. That is not a good playbook for Russia to follow.

“Spain was not presently named to any Special 301 list, but USTR announced that they would conduct an out-of-cycle review of the situation later in the year to see whether the government of Spain had effectively implemented the various reforms that are currently under discussion. The Spanish music market has essentially been in a free fall, losing an additional 5% of its value in 2012 after having lost nearly 50% of its value over the preceding 4 years. The dire situation affecting Spanish creators, as well as their American counterparts, requires dramatic and urgent action.  We implore the Spanish government to move quickly to redeem its public commitments about the implementation of measures to remedy the situation.

“The situation in China remains extremely high on our agenda. The Chinese government has taken some encouraging steps, including in particular through a clarification of the law to ensure the liability of services that promote or induce infringement, but they have yet to embark on the kind of comprehensive and sustained effort to transition away from a market long dominated by piracy. This includes easing of current investment restrictions to help to create a more robust and competitive marketplace, and the elimination of discriminatory and onerous content reviews that have no effect other than to delay the entry of legitimate materials.

“It is also significant that for the first time since 2005, USTR has designated a country as a Priority Foreign Country (PFC), triggering the imposition of trade sanctions if there is inadequate progress in resolving the underlying problems.  While significant issues related to the protection of intellectual property arise in every country, Ukraine managed to stand out from the crowd by essentially allowing everything to fall apart.  Promised reforms to modernize the legal environment remain long stalled.  Internet piracy remains essentially unchecked, with major notorious markets such as ex.ua permitted to operate without interference.  Collecting societies duly empowered by rightsholders lost their state accreditation, resulting in market confusion and loss of revenue. We hope that the government of Ukraine will take prompt action to address these issues before sanctions are imposed.

“We also note that Switzerland was appropriately called out by USTR in the 301 Report, with USTR specifically noting that: ‘The United States continues to have serious concerns regarding the inability of rights holders to secure legal redress in Switzerland in cases involving copyright piracy over the Internet. The United States strongly encourages Switzerland to demonstrate its commitment to copyright protection and to combating online piracy vigorously, including by taking steps to ensure that rights holders can protect their rights. The United States will be closely monitoring the results of the current AGUR12 (“Arbeitsgruppe Urheberrecht 2012,” or “Working Group on Copyright 2012”) process as well as the Swiss Ministry of Economy (SECO)-led roundtable process.’”