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The Honorable William J. Clinton
The White House
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20550

Dear Mr. President:

A wide variety of U.S. industries rely heavily on the protection of intellectual property rights to safeguard their ideas and inventions, which form the essential basis for their products. These industries, which employ thousands of American workers and contribute several hundred billion dollars to the U.S. economy annually, include some of the country's largest and most vibrant sectors and are global leaders in their respective fields given the continued strength of American creativity and ingenuity. However, these IPR-reliant U.S. industries continue to be the victim of massive piracy of their products overseas.

As members of the President's Export Council, we wish to underline the importance of, and seek your support for, continued strong U.S. leadership in seeking full enforcement of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The enactment of the TRIPS agreement in 1994 was critical in establishing multilateral standards for the protection of intellectual property rights, and in creating a binding dispute settlement system to address the failure of any WTO member countries to meet their TRIPS commitments.

However, despite the important benefits of the TRIPS agreement, the accord has several drawbacks which have limited its effectiveness for U.S. industries. Most importantly, the agreement granted developing countries a transition period lasting until January 1, 2000 to meet their TRIPS commitments. Furthermore, although less than one year remains before the end of the transition period, many of these developing countries do not appear to be taking adequate steps to ensure that they will meet their TRIPS commitments on time.

The impending failure of developing countries to meet their TRIPS obligations by 2000 will have several adverse results. First, the long-awaited commercial gains for the United States and other developed countries that have already met their TRIPS commitments will not be realized, effectively providing an extended implementation period for developing countries. Second, while the WTO dispute resolution system offers a means for the United States to challenge the developing countries' failure to meet their TRIPS commitments, the sheer number of complaints expected to be filed will likely overwhelm this dispute resolution system. Finally, a wide-spread failure by developing countries to meet their commitments will call into question the viability of the WTO to develop and enforce rules governing the international trading system.

Given the global leadership position of the many U.S. industries dependent on intellectual property rights, the United States must take the lead in establishing a strategy to ensure that developing countries meet their commitments under the TRIPS agreement. Therefore, we urge that you and the Administration continue to support ongoing efforts aimed at ensuring strong IPR protection safeguarding U.S. ideas and inventions in both developed and developing countries. Attached you will find a description of some of the various initiatives the Administration should undertake to meet this objective.

We look forward to receiving your support and hope to work with you and the Administration in continuing to seek the protection of intellectual property rights worldwide.

Sincerely,

C. Michael Armstrong
Chairman

Attachment

A wide variety of U.S. industries rely heavily on the protection of intellectual property rights, such as patents, copyrights and trademarks. These industries include some of the country's largest and most vibrant sectors, such as pharmaceuticals, computer software, sound recordings, publishing and films. In addition, these industries employ thousands of U.S. workers, contribute several hundred billion dollars annually to the U.S. economy, and in most cases are growing at twice the annual rate of the U.S. economy.

Furthermore, each of these IPR-reliant U.S. industries are global leaders in their field, maintaining dominant positions in global market share and the development of new products. In addition, the royalties resulting from the overseas sales of U.S. products in these industries represent an increasing large and important source of foreign earnings for the U.S. economy.

However, these industries continue to be the victims of massive piracy of their products overseas. As a result, the United States successfully sought the negotiation of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) in 1994. This agreement establishes for the first time multilateral standards for the protection of intellectual property rights in areas such as copyrights, patents, trademarks and trade secrets. Another key component of the TRIPS agreement is its provision for a binding dispute resolution system to address the failure of WTO member countries to meet their TRIPS commitments.

Despite the important benefits included in the TRIPS agreement, the agreement has several drawbacks which limit its effectiveness for U.S. industries. Most importantly, the agreement granted developing countries, which in many cases have high-tech industries that compete with U.S. industries, a transition period lasting until January 1, 2000 to meet many of their obligations under TRIPS. In addition, the least developed countries were allowed to wait until 2006 to meet their TRIPS obligations.

Of even greater concern, many developing countries do not appear to be taking adequate steps to ensure that they will meet their TRIPS commitments at the end of this implementation period. Although less than one year remains before the end of the transition period, very few developing countries have taken action to bring them fully into compliance with the TRIPS agreement. In addition, the failure of certain developing countries to comply with those few TRIPS commitments already in effect calls into further question whether these countries will meet their full TRIPS obligations in 2000.

Efforts by the United States and other developed countries to address this issue in the WTO TRIPS Council have repeatedly been blocked by developing countries such as India. For instance, India has blocked attempts by the TRIPS Council to conduct a "non-prejudicial" review of the status of developing country compliance with TRIPS. As a result, nearly all TRIPS Council activities have focused on the compliance of developed countries with the TRIPS agreement.

The failure of these developing countries to meet their TRIPS obligations on January 1, 2000 would have several adverse results. First, the long-awaited commercial gains for the United States and other developed countries that have already met their TRIPS commitments will not be realized. This will effectively result in an extended implementation period for developing countries, which could last for several additional years.

Second, while the WTO dispute resolution system offers a means for the United States and other developed countries to challenge the developing countries' failure to meet their TRIPS commitments on time, the sheer number of complaints expected to be filed will likely overwhelm this dispute resolution system, further delaying action.

Third, the failure of developing countries to meet their TRIPS obligations by 2000 could have a detrimental affect on the new round of multilateral negotiations expected to begin next year. Although intellectual property issues are included in the list of items intended to be covered in these negotiations, a lack of TRIPS compliance by developing countries will likely shift the focus of these talks from achieving further progress on intellectual property protection to simply ensuring compliance with existing TRIPS commitments.

Finally, a wide-spread failure by developing countries to meet their commitments will call into question the viability of the WTO to develop and enforce rules governing the international trading system, thus endangering much of the progress reached to date.

Given the global leadership position of many U.S. industries heavily dependent on intellectual property rights, the United States must take the lead in establishing a coordinated strategy to ensure that developing countries meet their commitments under the TRIPS agreement. In addition to undertaking various unilateral actions, the United States must also work with its trade partners (particularly the other Quad countries -- the EU, Canada and Japan) and the WTO in implementing this strategy in order to ensure IPR protection among both developed and developing countries.

Administration actions:

Technical assistance: The Administration should make compliance with TRIPS commitments by 2000 the focus of all current IPR-related technical assistance programs undertaken by U.S. agencies (such as USAID, PTO and the Copyright Office). The United States should also press the WTO and the Quad countries to undertake an inventory of all technical assistance programs on IPR issues currently provided by the WTO, WIPO, individual governments, and the private sector. The annual country submissions to the WTO TRIPS Council on technical assistance programs undertaken with developing and least developed countries could serve as a starting point for this inventory. This list should then be evaluated to eliminate any duplication of efforts and thus maximize the impact of the assistance programs.

Public awareness: The Administration, together with its Quad partners, should raise the importance of compliance with TRIPS at all appropriate forums. These trade partners should also be sure to include TRIPS compliance as an integral element of all joint communiqués and declarations issued in coming months, such as Quad meetings, OECD ministerials, the U.S.-EU summit, and of course the WTO ministerial meeting.

Embassy programs: The United States and the other Quad countries should instruct their Ambassadors and Embassy staff in developing countries to prioritize the issue of TRIPS compliance. As part of this effort, Ambassadors should raise the issue at the highest possible levels, and also offer assistance in developing adequate intellectual property laws, regulations and infrastructure.

Conferences: The United States and the other Quad countries should work with industry to develop a series of major regional or international conferences on IPR protection and the proper implementation of the TRIPS agreement.

Special 301: The Administration should continue to use the Special 301 process to identify those countries which do not adequately protect intellectual property rights. In particular, USTR's upcoming annual Special 301 report (to be released in April) provides an excellent opportunity to emphasize the failure of certain countries to make progress toward meeting their TRIPS obligations. The United States should also encourage other countries (particularly the Quad countries) to use their own bilateral trade instruments to ensure proper implementation of TRIPS among developing countries.

WTO dispute resolution: The Administration, together with the Quad countries, should continue to stress to developing countries that non-compliance with TRIPS obligations by 2000 will result in the swift filing of dispute resolution cases against those countries most egregiously in violation of their TRIPS commitments on this date. In addition, the Quad countries should also agree to file, before the end of the transition period, a joint WTO dispute resolution complaint against one or more developing countries which have violated Article 65.5 of the TRIPS agreement by lowering the degree of consistency of their intellectual property laws, regulations and practice with TRIPS during this transition period.

IPR review: The Administration and Quad countries should press for the WTO TRIPS Council to undertake an accelerated review of developing countries' compliance with TRIPs. However, should certain developing countries continue to block the initiation of such a review, the United States should work with the TRIPS Quad countries to develop a score card rating the TRIPS consistency of the intellectual property laws in all WTO members, and should undertake regular reviews of those countries not in compliance with TRIPS to evaluate their progress.

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