[Federal Register Volume 66, Number 67 (Friday, April 6, 2001)]
[Notices]
[Pages 18346-18348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8510]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-121]


Identification of Priority Foreign Country; Initiation of Section 
302 Investigation; Proposed Determinations and Action; and Request for 
Public Comment: Intellectual Property Laws and Practices of the 
Government of Ukraine

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of identification of priority foreign country; notice of 
initiation of investigation; proposed determination and action; request 
for written comments; invitation to participate in public hearing.

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SUMMARY: Pursuant to section 182(c)(1)(B) of the Trade Act of 1974, as 
amended (the Trade Act), the United States Trade Representative (Trade 
Representative) has identified Ukraine as a priority foreign country 
due to its denial of adequate and effective protection of intellectual 
property rights. Pursuant to section 302(b)(2) of the Trade Act, the 
Trade Representative has also initiated a section 302 investigation of 
the acts, policies and practices of the Government of Ukraine that 
resulted in the identification of Ukraine as a priority foreign 
country. The Office of the United States Trade Representative (USTR) 
proposes determinations that these acts, policies and practices are 
actionable under section 301(b) and that the appropriate response 
includes a full or partial suspension of duty-free treatment accorded 
to products of Ukraine under the Generalized System of Preferences 
(GSP). USTR invites interested persons to submit written comments and 
to participate in a public hearing concerning the proposed 
determinations and action.

DATES: The identification was made, and the investigation was 
initiated, on March 12, 2001. Requests to appear at the public hearing 
are due April 13, 2001; written testimony is due April 20, 2001; a 
public hearing will be held on April 27, 2001; and written comments and 
rebuttal comments are due by May 7, 2001.

ADDRESSES: Requests, comments, and testimony should be submitted to 
Sybia Harrison, Staff Assistant to the Section 301 Committee, ATTN: 
Docket 301-121, Office of the United States Trade Representative, 1724 
F Street, NW, Room 217, Washington, DC 20508. The public hearing will 
be held in the main hearing room of the United States International 
Trade Commission, 500 E Street, SW, Washington, DC 20436.

FOR FURTHER INFORMATION CONTACT: Kira Alvarez, Director for 
Intellectual Property, (202) 395-6864; Richard Driscoll, Director for 
Central Europe and Ukraine, (202) 395-5190; William Busis, Associate 
General Counsel, (202) 395-3150; or Stephen Kho, Assistant General 
Counsel, (202) 395-3581. Inquiries regarding participation in the 
hearing or the submission of comments should be directed to Sybia 
Harrison, Staff Assistant to the Section 301 Committee, (202) 395-3419.

SUPPLEMENTARY INFORMATION:

Section 182 of the Trade Act

    Section 182 of the Trade Act of 1974, as amended (the Trade Act) 
(19 U.S.C. 2242), authorizes the Trade Representative to identify 
foreign countries that deny adequate and effective protection of 
intellectual property rights or that deny fair and equitable market 
access to persons that rely on intellectual property protection. 
Procedures under section 182 are commonly referred to as ``Special 
301.''
    Under section 182(d)(2) of the Trade Act, a foreign country is 
considered to be denying adequate and effective protection of 
intellectual property rights if it denies adequate and effective means 
under its laws for persons who are not citizens or nationals of the 
country to secure, exercise, and enforce rights relating to patents, 
process patents, registered trademarks, copyrights and mask works. 
Under section 182(b), countries that have the most onerous or egregious 
acts, policies, or practices that have the greatest adverse impact 
(actual or potential) on the relevant United States products must be 
identified as ``priority foreign countries,'' unless they are entering 
into good faith negotiations or are making significant progress in 
bilateral or multilateral negotiations to provide adequate and 
effective protection for intellectual property rights. In identifying 
countries in this manner, USTR is directed to take into account the 
history of intellectual property laws and practices of the foreign 
country, including any previous identifications as a priority foreign 
country; and the history of efforts of the United States to achieve 
adequate and effective protection and enforcement of intellectual 
property rights. In making these determinations, USTR consults with the 
Register of Copyrights, the Commissioner of Patents and Trademarks, and 
other appropriate officials of the Federal Government, and takes into 
account information from other sources such as information submitted by 
interested persons.

Identification of Ukraine as a Priority Foreign Country

    Enterprises in Ukraine are engaged in the large-scale production 
and export of unauthorized optical media (such as CDs, CD-Rs, DVDs, and 
V-CDs). The Recording Industry Association of America alleges that for 
each of the last two years, Ukraine has produced and exported between 
30 and 40 million pirated CDs. Ukraine reportedly has the annual 
capacity to produce up to 70 million CDs, while annual domestic demand 
is only in the range of 1 to 5 million CDs. In short, Ukraine has 
become a world leader in pirated optical media production.
    For over two years, the United States Government has requested that 
the Ukrainian Government close down the pirate CD production facilities 
and enact legislation to adequately protect copyrights. The Ukrainian 
Government has been unwilling to curtail such activities or to enact 
necessary legislation. During the annual Special 301 review in April 
2000, the interagency Trade Policy Staff

[[Page 18347]]

Committee recommended that ``Ukraine would be designated a priority 
foreign country on August 1, 2000 unless the Government of the Ukraine 
makes substantial progress in eliminating production of pirated optical 
media in its territory.''
    At a summit held in June 2000, the President of Ukraine endorsed a 
U.S.-Ukraine Joint Action Plan to Combat Optical Media Piracy. The 
three key components of the Joint Action Plan are (1) to suspend the 
pirate activities while putting necessary legislation in place, (2) to 
provide copyright protection to foreign sound recordings, and (3) to 
adopt a strict optical media licensing regime. Given these commitments, 
the United States deferred a decision on priority foreign country 
identification until November 2000. The United States subsequently 
extended the decision date until March 1, 2001 in order to allow 
Ukraine sufficient time to implement its anti-piracy commitments.
    As of March 1, 2001, however, the Ukrainian Government failed to 
make any significant progress in meeting the critical components of the 
Joint Action Plan. Enterprises in Ukraine continue to produce and 
export unauthorized CDs on a large scale, and necessary legislation on 
the enforcement of intellectual property rights remains unenacted.
    As a result, on March 12, 2001 the Trade Representative identified 
Ukraine as a priority foreign country under section 182 of the Trade 
Act. The identification was based on (1) deficiencies in Ukraine's 
acts, policies and practices regarding the protection of intellectual 
property rights, including the lack of effective action enforcing 
intellectual property rights, as evidenced by the alarming levels of 
compact disc piracy within the country; and (2) the failure of the 
Government of Ukraine to enact adequate and effective intellectual 
property legislation addressed to enforcement and optical media piracy.

Section 301 Investigation and Consultations

    Under Section 302(b)(2) of the Trade Act (19 U.S.C. 2412(b)(2)), 
the Trade Representative shall initiate an investigation under Chapter 
1 of Title III of the Trade Act (commonly referred to as ``section 
301'') with respect to any act, policy or practice that was the basis 
of the identification of a country as a priority foreign country under 
section 182 of the Trade Act, unless such acts, policies and practices 
are already subject to investigation or action under section 301, or 
unless the investigation is not in the national economic interest. 
Neither exception applies.
    Accordingly, simultaneously with the identification of Ukraine as a 
priority foreign country, on March 12, 2001 the Trade Representative 
initiated an investigation to determine whether the acts, policies, and 
practices of Ukraine that resulted in the priority foreign country 
identification are actionable under section 301(b) of the Trade Act. 
Matters actionable under section 301(b) include acts, policies, or 
practices of a foreign country that are unreasonable and burden or 
restrict U.S. commerce. Under section 301(d)(3)(B)(i)(II) of the Trade 
Act, unreasonable acts, policies or practices include any act, policy 
or practice which denies fair and equitable provision of adequate and 
effective protection of intellectual property rights.
    As provided under section 303(a) of the Trade Act, by letter dated 
March 12, 2001 USTR requested consultations with the Government of 
Ukraine regarding the issues under investigation. USTR will seek 
information and advice from appropriate representatives provided for 
under section 135 of the Trade Act in preparing the U.S. presentations 
for such consultations.

Proposed Determinations and Action

    Based on the acts, policies and practices of the Government of 
Ukraine that resulted in the identification of Ukraine as a priority 
foreign country under section 182 of the Trade Act, USTR proposes 
determinations under sections 304(a)(1)(A) and 301(b) of the Trade Act 
that the acts, policies, and practices of Ukraine with respect to the 
protection of intellectual property rights are unreasonable and burden 
or restrict United States commerce, and that action by the United 
States is appropriate.
    Section 301(b)(2) of the Trade Act authorizes the Trade 
Representative to take all appropriate and feasible action authorized 
under section 301(c) to obtain the elimination of the actionable acts, 
policies, or practices. Section 301(c)(1)(B) authorizes the Trade 
Representative to impose duties or other import restrictions on the 
goods of the foreign country subject to the investigation. Section 
301(c)(1)(C) provides that in a case in which the act, policy, or 
practice of the foreign country also fails to meet the eligibility 
requirements for duty-free treatment under the GSP, the Trade 
Representative may withdraw, limit or suspend such treatment. The GSP 
includes an eligibility requirement concerning the extent to which the 
foreign country provides adequate and effective protection of 
intellectual property rights (section 502(c)(5) of the Trade Act (19 
U.S.C. 2462(c)(5))).
    Under sections 304(a)(1)(B) and 301(c)(1)(C) of the Trade Act, USTR 
proposes a determination that appropriate and feasible action includes 
the suspension of duty-free treatment accorded under GSP to some or all 
products of Ukraine. As a further step, USTR may also consider 
increased duties or other import restrictions on Ukrainian goods. 
Ukraine's leading exports to the United States are steel, chemical 
products, aircraft and parts, textile products, fertilizers and 
aluminum. Before the imposition of increased duties or other import 
restrictions on Ukrainian goods under section 301(c)(1)(B) of the Trade 
Act, however, USTR would expect to publish a second notice requesting 
comments with regard to the possible imposition of increased duties or 
other import restrictions on a specific list of products. At this time, 
the only product-specific comments requested by USTR are comments 
concerning the possible suspension of GSP benefits.

Written Comments and Public Hearing

    In accordance with section 304(b) of the Trade Act, USTR invites 
interested persons to provide comments on the matters under 
investigation and the proposed determinations. The requested comments 
include comments on: (i) The acts, policies and practices of the 
Government of Ukraine that are the subject of this investigation; (ii) 
the amount of burden or restriction on U.S. commerce caused by these 
acts, policies and practices; (iii) whether the acts policies and 
practices of Ukraine are actionable under section 301(b); and (iv) 
appropriate action under section 301 which could be taken in response. 
As noted, USTR proposes that appropriate action under section 301 
should include the full or partial suspension of GSP duty-free 
treatment for products of Ukraine. USTR requests that comments on the 
proposed action address the degree to which suspension of GSP duty-free 
treatment on particular products of Ukraine might have an adverse 
effect on U.S. businesses--including small-and medium-sized 
businesses--and on consumers.
    Written comments are due by May 7, 2001. A public hearing addressed 
to these same issues will be held on April 27, 2001 in the main hearing 
room of the United States International Trade Commission, 500 E Street, 
SW., Washington, DC 20436. Interested persons wishing to testify orally 
at the hearings must provide a written request by April 13, 2001 to 
Sybia Harrison, Staff Assistant to the Section 301

[[Page 18348]]

Committee, ATTN: Docket 301-121, Office of the United States Trade 
Representative, 1724 F Street, NW., Room 217, Washington, DC 20508. 
Requests to testify must include the following information: (1) Name, 
address, telephone number, fax number, and firm or affiliation of the 
person wishing to testify; and (2) a brief summary of the comments to 
be presented. After the Chairman of the Section 301 Committee considers 
the request to present oral testimony, Ms. Harrison will notify the 
applicant of the time of his or her testimony. In addition, persons 
presenting oral testimony must submit their complete written testimony 
by April 20, 2001. In order to allow each interested party an 
opportunity to contest the information provided by other parties at the 
hearing, USTR will accept written rebuttal comments, which must be 
filed by May 7, 2001. Rebuttal comments should be limited to 
demonstrating errors of fact or analysis not pointed out in the briefs 
or hearing and should be as concise as possible. All written comments 
must state clearly the position taken, describe with particularity the 
supporting rationale, be in English, and be provided in twenty copies 
to: Sybia Harrison, Staff Assistant to the Section 301 Committee, ATTN: 
Docket 301-121, Office of the United States Trade Representative, 1724 
F Street, NW., Room 217, Washington, DC 20508.
    Comments will be placed in a file (Docket 301-121) open to public 
inspection pursuant to 15 CFR 2006.13, except confidential business 
information exempt from public inspection in accordance with 15 CFR 
2006.15. Confidential business information submitted in accordance with 
15 CFR 2006.15 must be clearly marked ``BUSINESS CONFIDENTIAL'' in a 
contrasting color ink at the top of each page on each of the 20 copies, 
and must be accompanied by a non-confidential summary of the 
confidential information. The non-confidential summary shall be placed 
in the file that is open to public inspection. An appointment to review 
the docket may be made by calling Brenda Webb at (202) 395-6186. The 
USTR Reading Room is open to the public from 10 a.m. to 12 noon and 1 
p.m. to 4 p.m., Monday through Friday, and is located in Room 3, First 
Floor, Office of the United States Trade Representative, 1724 F Street, 
NW., Washington, DC 20508.

William Busis,
Chairman, Section 301 Committee.
[FR Doc. 01-8510 Filed 4-5-01; 8:45 am]
BILLING CODE 3190-01-P