US trade representative (USTR) Charlene Barshefsky announced on Monday that the dispute had gone on for years and would now be taken to the WTO's dispute settlement panels. The dispute covers measures governing investment in India's automotive industry, such as requiring manufacturing firms to use, among other things, specified levels of local content.

In another development, the USTR placed India and 15 other trading partners on the Special 301 priority watch list, which entails a higher level of monitoring of intellectual property protection. The others are Argentina, the Dominican Republic, the European Union, Egypt, Greece, Guatemala, Israel, Italy, South Korea, Malaysia, Peru, Poland, Russia, Turkey and Ukraine.

The announcements came as the USTR filed the annual reports under the Special 301 provision of US trade law (concerning inadequate protection of copyrights and patents) and under executive orders for "Title VII" (concerning unfair procurement trade barriers) and "Super 301" (concerning other unfair trade barriers).

The USTR found fault with India's intellectual property protection regime, particularly its enforcement machinery, causing annual losses of $66 million to the American motion picture industry due to audiovisual piracy alone. The US estimates that annual losses by the motion picture industry due to India's import authorisation policies and remittance restrictions is in the range of $5 to $10 million, says the USTR 2000 National Trade Estimate (NTE) report on foreign trade barriers. It says cable piracy continues to be a significant problem, with estimates of tens of thousands of illegal systems in operation in India at this time.

The widespread copyright infringement has a significant detrimental effect on all motion picture market segments - theatrical, home video and television - in India, it says.

For instance, pirated videos are available in major cities before their local theatrical release, it adds. The report says India's patent protection is weak and has adverse effects on US pharmaceutical and chemical firms. Many US- invented drugs are widely reproduced in India since product patent protection is not available, it claims. US agrochemical industries have joined other industries in expressing concern about India's inadequate intellectual property protection.

As a result, industries have withheld marketing and production of produce compounds in India, it says. US industry estimates that export sales losses, as a result, range from $5 to $25 million. The USTR document says India also fails to protect biotechnological inventions, methods of agriculture and horticulture, and processes for treatment of humans, animals, or plants. Indian policy guidelines normally limit recurring royalty payments, including patent licensing payments, to eight per cent of the selling price (net of certain taxes and purchases).

Besides failing to meet its immediate obligations, it points out, the Indian government has announced its intention to take full advantage of the transition period permitted to developing countries under TRIPS (Trade-Related Intellectual Property Rights) before implementing full patent protection for pharmaceutical and agricultural chemical products. The U.S. continues to press for passage of a TRIPS compliant regime and to urge accelerated implementation of its patent provisions.

The US will also seek WTO consultations with Argentina, Brazil, the Philippines and Romania on other trade disputes. After consultations, the United States could request WTO panels for any disputes still unresolved. Unlike some previous years, this year the USTR did not officially designate any priority countries or practices for investigation under the statute and executive orders. Instead, the trade representative used the occasion to announce relevant decisions about the WTO actions and to report the status of other related issues.

-- India Abroad News Service