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Lack of political will is blamed for the surge in product and IP theft

WASHINGTON, DC - 04/11/06 - A bi-partisan group of US legislators have named China and Russia as the worst pirates of American movies, music and software and said Moscow should be denied World Trade Organization (WTO) membership until it does more to end the theft of copyrighted intellectual property.

"Piracy in these countries is largely the result of a lack of political will to confront the problem," charged the Congressional International Anti-Piracy Caucus in a statement released during a recent press conference on Capital Hill.

China and Russia combined were responsible for $4 billion in US business losses in 2005 due to illegal copies of copyrighted material, and, alone, cost the US an estimated 150,000 jobs and $1 billion in lost tax revenue, the 73-member group said.

For Russia the stakes may be high.

The Bush Administration, in addition to demanding that Moscow crack down on rampant video and software piracy, also wants Russia to open its financial sector to foreign banks to help clear the way for the country's accession to the WTO.

Moscow cannot join the Geneva-headquartered global trade group without the backing of all its members including the US.

The group of US lawmakers said Moscow's proposed changes to intellectual property law are "moving Russia even farther away from WTO compliance."

During the press conference, Senator Joseph Biden (D-Vermont) went so far as to call Russian President Vladimir Putin a "dunce" for failing to protect intellectual property. Global leaders do not understand that "this also stymies their own abilities" to develop intellectual property-based economies.

"As one who voted for WTO for China, I feel burned," said Sen. Gordon Smith (R-Oregon). "China had pledged to protect intellectual property. My own view on Russia is I'm not going to burned twice."

Governments, said Smith, "have the obligation to crack down on the systematic theft of intellectual property within their borders. Stopping the hemorrhage of US revenue is critical to successful economic relationships with other countries."

The caucus leaders from the House of Representatives, Bob Goodlatte R-Virginia) and Adam Schiff (D-California), introduced a non-binding resolution urging the US not to complete agreements leading to Russian WTO membership until Moscow enforces anti-piracy laws.

Schiff said piracy particularly impacts his Southern California district.
 
"I see first-hand the toll that intellectual property theft takes on our economy," he said.  "My district ... is home to many hard-working Americans whose jobs are in the movie and recording industries, the software business and science and engineering. Their work product is being stolen and our entire nation is being put at a comparative economic disadvantage."

Many of the Russian facilities capable of producing pirated materials are on military-owned property, protecting them from international scrutiny, the lawmakers said. Russia is also home to "allofmp3.com," an Internet website the congressional group described as one of the world's largest online music pirates.

China, which was admitted to the WTO in 2001, was responsible for $2.3 billion in US piracy losses in 2005, the legislators said.

While Chinese authorities are raiding illegal production facilities, violators face relatively small penalties. The lawmakers urged Beijing to destroy production equipment and boost penalties.

According to the Business Software Alliance (BSA), software piracy in the Asia-Pacific region alone cost manufacturers close to $8 billion in 2004, while worldwide losses due to software piracy were estimated at more than $32 million.
 
The BSA puts piracy rates in China at 90% and Russia at 87%.
 
The Congressional group also named Mexico, Canada, India, and Malaysia as countries on its watch list that must do more to stop violations of US copyrights.

Mexico was responsible for $1.2 billion in copyright losses last year, mainly through 50,000 street vendors selling pirated products, the group said.

The lawmakers generally praised cooperation from Mexican officials but said Mexico should try to shrink demand by emphasizing penalties to customers who purchase the illegal merchandise.

Canada is on the watch list due to "lax border measures" that let in pirated products from East Asia, Pakistan and Russia, the lawmakers said.

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