The Office of the United States Trade Representative (USTR) released the 2018 Special 301 Report this week, identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to US companies that rely on protection of their IP rights. The report calls on US trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

The Special 301 Report is an annual review of the global state of IP protection and enforcement. USTR conducts the review pursuant to Section 182 of the Trade Act of 1974.

According to US government estimates, IP-intensive industries directly and indirectly support 45.5 million American jobs, about 30 percent of all employment in the United States. This report draws attention to IP-related trade barriers and the steps foreign countries can take to open their markets to IP-intensive goods—steps that help to protect US jobs, create opportunities for job growth, and promote free and fair trade that benefits all Americans.

USTR identified 36 countries on the Priority Watch List or Watch List. Trading partners on the Priority Watch List present the most significant concerns this year regarding inadequate or ineffective IP protection or enforcement or actions that otherwise limit market access for persons relying on IP protection.

USTR identified 12 countries—Algeria, Argentina, Canada, Chile, China, Colombia, India, Indonesia, Kuwait, Russia, Ukraine, and Venezuela—on the Priority Watch List. The IP issues in these countries will be the subject of intense bilateral engagement during the coming year.

China is on the Priority Watch List for the fourteenth consecutive year. Longstanding and new IP concerns merit increased attention, including China’s coercive technology transfer practices, range of impediments to effective IP enforcement, and widespread infringing activity—including trade secret theft, rampant online piracy, and counterfeit manufacturing.

India also remains on the Priority Watch List this year for longstanding challenges in its IP framework and lack of sufficient measurable improvements, particularly with respect to patents, copyrights, trade secrets, and enforcement, as well as for new issues that have negatively affected US right holders over the past year.

USTR downgraded Canada from the Watch List to the Priority Watch List this year for failing to make progress on overcoming important IP enforcement challenges. Key concerns include poor border enforcement generally and, in particular, lack of customs authority to inspect or detain suspected counterfeit or pirated goods shipped through Canada, concerns about IP protections and procedures related to pharmaceuticals, deficient copyright protection, and inadequate transparency and due process regarding the protection of geographical indications.

USTR downgraded Colombia from the Watch List to the Priority Watch List for its longstanding failure to make meaningful progress in fulfilling obligations under the United States-Colombia Trade Promotion Agreement, such as obligations to amend its copyright law. USTR is also announcing an Out-of-Cycle Review of Colombia to assess its progress in addressing these and other concerns.

USTR placed Saudi Arabia and the United Arab Emirates (UAE) on the Watch List. For Saudi Arabia, there are concerns regarding recent deteriorations in IP protection for pharmaceutical products, in addition to outstanding concerns regarding IP enforcement and the continued use of unlicensed software by the government. For the UAE, the placement on the Watch List is in response to longstanding concerns about the sale and transshipment of counterfeit goods and the establishment of collecting management organizations, as well as recent policy changes that may not provide adequate and effective IP protection for pharmaceutical products.

The 2018 Special 301 Report highlights concerns in the pharmaceutical and medical device industries. USTR has sought to reduce market access barriers to US pharmaceutical products and medical devices so that trading partners contribute their fair share to the research and development of new cures and therapies.

This has included fighting against measures that discriminate against US companies, are not adequately transparent, or do not offer sufficient opportunity for meaningful stakeholder engagement. IP issues relating to pharmaceuticals and medical products have been the subject of negotiations with respect to the North American Free Trade Agreement (NAFTA) and the US-Korea Free Trade Agreement (KORUS FTA.