U.s. Observers Back Ustr Move

Observers of worldwide piracy here see South Korea in a technological imbalance. The country has one of the most advanced broadband technology networks in the world but offers little protection for the intellectual property rights of content owners using the technology.

The Jan. 8 decision by the U.S. Trade Representative (USTR) to place South Korea on its top trade-policy warning list stems from that.

"You have a complete disconnect," says Neil Turkewitz, executive VP of international for the Recording Industry Assn. of America. "The Korean government spent a tremendous amount of money and time in creating that infrastructure, but they didn't create the rights to the content that gets communicated."

Steve Metalitz of the D.C.-based International Intellectual Property Assn. says, "If somebody is putting your product online without authorization, that's against the law. Today in Korea, that is not against the law."

Through a separate existing reproduction right, Metalitz says, "songwriters may have a claim for infringement, but not the labels and artists for the transmission of sound recordings. Most of the cases that have already gone to court have been brought by the Korean recording industry—with minimal success."

The Korea decision shows that the U.S is coming to grips with the new problems connected with highly wired internationals.

In the past, U.S. trade decisions based on lack of enforcement have been directed at such nations with hard-goods piracy problems as China and Taiwan.

The so-called Special 301 trade-partner reviews of copyright protection occur each April. Korea was placed on the lower-priority Watch List last year.

At that time, USTR asked Korea for a number of improvements. The most important was for the establishment of an exclusive right of transmission for sound recordings by the end of 2003.

"They didn't do that," Metalitz says. "They've made progress in some other areas, but not that most important one."

Korea is the U.S.' sixth-largest export market; two-way trade in goods was more than $58 billion in 2002. But U.S. copyright industry losses were $572 million the same year.

Countries elevated to the Priority Watch List are subject to sanctions if good-faith negotiations and progress do not occur. Currently, the Ukraine is so designated and is subject to $75 million in sanctions.

Nine years ago, the U.S. was close to leveling sanctions against China for rampant illegal CD production, but a trade war was averted when China made good on promises in a 1995 bilateral agreement (Billboard, June 15, 1996).

China, although not on the Priority Watch List, is still being watched closely by the U.S. in a Section 306 monitoring program. Observers add that China's turnabout is also a result of becoming a member of the World Trade Organization in 2001.

Market access in China for U.S. companies remains a major problem for the record industry. Former RIAA chief Hilary Rosen testified on the subject before Congress in March last year.