[Federal Register Volume 71, Number 23 (Friday, February 3, 2006)]
[Notices]
[Pages 5899-5900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-1466]


=======================================================================
-----------------------------------------------------------------------

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-121]


Results of Out-Of-Cycle Review Under Section 182 and Termination 
of Action Under Section 301(b): Intellectual Property Laws and 
Practices of the Government of Ukraine

AGENCY: Office of the United States Trade Representative.

ACTION: Revocation of identification of Ukraine as a Priority Foreign 
Country under section 182 and termination of action under section 
301(b).

-----------------------------------------------------------------------

SUMMARY: The Out-of-Cycle Review (``OCR'') under section 182 (commonly 
referred to as the ``Special 301'' provision) of the Trade Act of 1974, 
as amended (``Trade Act''), has concluded with a finding that the 
Government of Ukraine substantially has improved its intellectual 
property right (``IPR'') enforcement efforts. As a result, the United 
States Trade Representative (``Trade Representative'') is revoking the 
identification of Ukraine as a Priority Foreign Country (``PFC'') under 
section 182 and instead is placing Ukraine on the Priority Watch List, 
and is restoring the tariff-free treatment under the Generalized System 
of Preferences (``GSP'') accorded to products of Ukraine. Pursuant to 
section 306 of the Trade Act, the Office of the United States Trade 
Representative (``USTR'') will continue to monitor closely the 
Government of Ukraine's IPR enforcement efforts.

DATES: The restoration of tariff-free GSP treatment accorded to 
products of Ukraine is effective with respect to articles entered, or 
withdrawn from warehouse, for consumption on or after January 23, 2006.

FOR FURTHER INFORMATION CONTACT: For questions concerning the results 
of the Special 301 Out-of-Cycle Review: Jennifer Choe Groves, Director 
for Intellectual Property and Chair of the Special 301 Committee, USTR, 
(202) 395-4510, Laurie Molnar, Director for European and Mediterranean 
Trade Affairs, USTR, (202) 395-4620, or Stephen Kho, Associate General 
Counsel, USTR, (202) 395-3150; for questions concerning procedures 
under Section 301: William Busis, Associate General Counsel and 
Chairman of the Section 301 Committee, USTR, (202) 395-3150; and for 
questions concerning entries: Teiko Campbell, Program Officer, Office 
of Trade Compliance and Facilitation, U.S. Customs and Border 
Protection, Department of Homeland Security, (202) 344-2698.

SUPPLEMENTARY INFORMATION:

History of the 301 Investigation

    On March 12, 2001, the Trade Representative identified Ukraine as a 
PFC under Special 301. The PFC identification was based on deficiencies 
in Ukraine's acts, policies and practices regarding IPR protection, 
including weak enforcement, as evidenced by high levels of piracy of 
optical media products (such as CDs and DVDs), and the failure of the 
Government of Ukraine to enact adequate and effective IPR legislation 
to address optical media piracy. The Trade Representative 
simultaneously initiated an investigation (Docket 301-121) under 
Section 301(b) of the Trade Act in order to investigate these IPR 
protection issues. See 66 FR 18,346 (April 6, 2001).
    In August 2001, the Trade Representative determined that the acts, 
policies, and practices of Ukraine with respect to IPR protection were 
unreasonable and burdened or restricted United States commerce, and 
were thus actionable under section 301(b) of the Trade Act. As an 
initial action in response, the Trade Representative suspended GSP 
treatment accorded to products of Ukraine, effective August 24, 2001. 
See 66 FR 42,246 (Aug. 10, 2001). In December 2001, the Trade 
Representative took the additional action of imposing 100% ad valorem 
tariffs on certain Ukrainian exports with an annual trade value of 
approximately $75 million, effective January 23, 2002. See 67 FR 120 
(Jan. 2, 2002).
    In August 2005, the Government of Ukraine adopted important 
amendments to its Laser-readable Disc Law that strengthen Ukraine's 
licensing regime and enforcement capabilities to stem the illegal 
production and trade of optical media products. In response, the Trade 
Representative terminated the 100% ad valorem duties. The Trade 
Representative also announced that at the conclusion of an OCR focused 
on whether Ukraine had implemented fully the legislative improvements 
and had otherwise strengthened IPR enforcement, he would determine 
whether to revoke the identification of Ukraine as a PFC and whether to 
restore Ukraine's GSP benefits. USTR requested written comments from 
the public concerning these matters. See 70 FR 53,410 (Sep. 8, 2005).

Results of OCR

    In the OCR, the interagency Special 301 Committee has concluded 
that enforcement against optical media piracy in Ukraine has improved 
since the initiation of the investigation in 2001, and that the 
Government of Ukraine has made substantial progress on IPR enforcement 
actions suggested in an August 2005 OCR Action Plan. The Government of 
Ukraine has presented statistical and other data to show that it has 
conducted raids against entities involved in commercial distribution of 
IPR-infringing products and has conducted numerous and continuing 
inspections of Ukraine's licensed optical disc plants. The Government 
of Ukraine has established a specialized IPR unit within the Economic 
Crime Division under the Ministry of the Interior and a specialized 
unit in Customs to deal with IP crimes. The Government of Ukraine has 
agreed to establish an Enforcement Coordination Group that will provide 
Ukrainian IPR enforcement officials, U.S. Government officials, and 
copyright industry representatives with a forum to meet and share 
information on Ukraine's enforcement efforts. In sum, in contrast to 
2001 when the Trade Representative designated Ukraine as a PFC, Ukraine 
is no longer a major producer of pirated optical media sold elsewhere 
in Europe. IPR enforcement concerns do remain, however, including with 
respect to the transshipment through Ukraine of pirated optical media 
produced in neighboring countries.
    Under section 182(c)(1)(A) of the Trade Act, the Trade 
Representative is authorized to revoke the identification of any 
foreign country as a PFC at any time. In light of the positive results 
of

[[Page 5900]]

the OCR, the Trade Representative has determined to revoke the 
identification of Ukraine as a PFC under section 182 and instead has 
placed Ukraine on the Priority Watch List.

Termination of Action

    Section 307(a) of the Trade Act authorizes the Trade Representative 
to ``modify or terminate any [Section 301] action, subject to the 
specific direction, if any, of the President * * * if * * * such action 
is being taken under Section 301(b) and is no longer appropriate.'' In 
passing the amendments to its Laser-readable Disc Law, in improving its 
record of IPR enforcement, and by agreeing to the creation of an 
Enforcement Coordination Group, the Government of Ukraine has responded 
adequately to the two issues (inadequate IPR legislation and inadequate 
IPR enforcement) that were the basis of the PFC designation and the 
Trade Representative's finding that Ukraine's acts, policies and 
practices were actionable under section 301(b). In recognition of these 
changes in Ukraine's acts, policies, and practices regarding IPR 
enforcement, and taking into account public comments and the results of 
consultations with U.S. copyright industries, the Trade Representative 
has decided to terminate the suspension of GSP treatment accorded to 
products of Ukraine. The termination of the GSP suspension concludes 
this Section 301 investigation, except for the ongoing monitoring 
required by section 306 of the Trade Act.
    The termination of the suspension of the GSP treatment accorded to 
products of Ukraine restores the GSP treatment applicable in August 
2001, when Ukraine's GSP benefits were suspended. Accordingly, 
effective January 23, 2006, the Harmonized Tariff Schedule of the 
United States (HTS) is modified as follows: (1) General note 4(a) is 
modified by adding ``Ukraine'' to the list entitled ``Independent 
Countries''; (2) general note 4(d) is modified by adding in numerical 
sequence ``2306.30.00 Ukraine'' and ``2804.29.00 Ukraine''; and (3) the 
Rates of Duty 1-Special subcolumn for HTS subheadings 2306.30.00 and 
2804.29.00 is modified by deleting the ``A'' and inserting an ``A* ''. 
The foregoing modifications to the HTS apply to articles entered, or 
withdrawn from warehouse, for consumption on or after January 23, 2006.

Section 306 Monitoring

    Pursuant to section 306 of the Trade Act, USTR is required to 
continue to monitor the implementation of each measure undertaken, and 
agreement entered into, to provide a satisfactory resolution of a 
matter subject to a section 301 investigation. Accordingly, USTR will 
continue to monitor Ukraine's IPR enforcement efforts, including 
through the activities of the Enforcement Coordination Group. If on the 
basis of such monitoring the Trade Representative were to conclude that 
the Government of Ukraine is not satisfactorily implementing a measure 
or agreement that resulted in the resolution of this investigation, the 
Trade Representative would be authorized under section 306(b) to take 
further action.

William Busis,
Chairman, Section 301 Committee.
[FR Doc. E6-1466 Filed 2-2-06; 8:45 am]
BILLING CODE 3190-W6-P