Trump Administration's first Special 301 Report slams Canada and Mexico for inadequate border enforcement against counterfeits 28 Apr 17
The Office of the US Trade Representative (USTR) has published the 2017 Special 301 Report, the first released under the Trump administration. While Pakistan and Spain are complimented for “positive momentum” behind their IP regimes, the report knocks a number of jurisdictions – including neighbours Canada and Mexico – for what it deems to be ineffective border enforcement against fakes.
The Special 301 Report is the US government’s annual roundup of countries it claims pose the greatest challenges to US IP rights owners. It also acknowledges those markets where significant improvements have been made. Its release always splits opinion; many find it to be an informative roundup of jurisdictions that rights holders should keep an eye on, whereas some feel it is simply an opportunity for Washington to “name and shame” countries around the world. The most controversial aspect of the report is the ranking of countries based on a perceived disregard for IP rights using a subjective, rather than objective data-driven, methodology. Some countries fully reject the report; Canada, which has made an appearance nearly every year, has previously criticised it for "lacking reliable and objective analysis".
Nonetheless, Canada makes a reappearance in the 2017 edition of the Special 301 Report. In fact, every country that was added to the ‘Priority Watch List’ (those deemed most lax in IP enforcement) and ‘Watch List’ last year makes a reappearance in this year’s report – with zero change between the two tables year-on-year (for context, there were seven changes across the two tables in the 2016 report compared to the 2015 one).
This year’s Priority Watch List is as follows: Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Thailand, Ukraine and Venezuela. Meanwhile, this year’s Watch List is: Barbados, Bolivia, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Switzerland, Turkey, Turkmenistan, Uzbekistan, Vietnam.
While the rankings remain the same, the report does acknowledge developments – both positive and negative – that have occurred in different IP regimes around the world. The most praise was reserved for Pakistan and Spain, with the report noting: “Pakistan and Spain [have] both undertaken improvements in recent years: Pakistan has maintained positive momentum in its efforts to reform its IP regime and Spain has strengthened its criminal laws for IP infringement and demonstrated a continued commitment to tackling online piracy.”
But criticism was aimed at a number of countries for ineffectiveness when it comes to halting counterfeit goods at the border. “Many of [our] listed trading partners including Canada, Egypt, Indonesia, Mexico, Turkey, Turkmenistan, and Uzbekistan do not provide adequate or effective border enforcement against counterfeit and pirated goods; in addition, many listed countries’ customs officials lack authority to take ex officio action to seize and destroy such goods at the border or to take such action for goods in-transit,” the report notes.
The criticism of customs enforcement in Canada appears to go against the hundreds of respondents to this year’s WTR Global Trademark Benchmarking Survey, which placed the country’s customs regime in the top half of the 20 countries ranked. The report expanded on its reasoning as follows: “The United States remains deeply concerned that Canada does not provide customs officials with the ability to detain, seize, and destroy pirated and counterfeit goods that are moving in transit or are trans-shipped through Canada. As a result, the United States strongly urges Canada to provide its customs officials with full ex officio authority to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains.”
Southern neighbour Mexico was praised by the report for its establishment of opposition procedures for trademark applications. However, criticism was directed at the detrimental effect that budget cuts have had on IP enforcement. “[There has been a] troubling decline in 2016 of seizures, investigations and prosecutions and the United States strongly urges Mexico to reverse this decline. Additionally, government-wide budget cuts have negatively affected IP enforcement, with even more widespread availability of pirated and counterfeit goods throughout Mexico than in the past year,” the report claims. “To combat the growing level of IP infringement, Mexico needs to improve coordination among federal and sub-federal officials, devote additional resources to enforcement, bring more IP-related prosecutions, and impose deterrent penalties against infringers.”
Overall, the report’s findings are broadly similar to last year, but nonetheless provide an extensive one-stop-shop guide for rights holders on jurisdictions that could be worth prioritising enforcement measures on. One interesting side-note is the difference between today’s press release marking the release of the report and last year’s statement. There appears to be a subtle shift in tone in this year’s release (which speaks of how the Special 301 Report “reflects the Administration’s resolve to aggressively defend Americans from harmful IP-related trade barriers” and “helps focus efforts towards protecting and creating US jobs”) compared to the 2015 release (which noted how “intellectual property protections enhance job growth both domestically and internationally”). Donald Trump’s administration may only be 100 days old, but his “US first” agenda appears to have made its mark already.
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