WASHINGTON (Reuters) - The U.S. Trade Representative's office on Wednesday pinned a badge of shame on Ukraine for failing to protect U.S. copyrights, starting a process that could lead to revocation of U.S. trade benefits for the country.
USTR designated Ukraine a "foreign priority country," the worst label in its annual report on how well countries around the world protect U.S. patents, copyrights and other forms of intellectual property rights.
No other country received the black mark.
The trade office previously designated Ukraine a foreign priority country in 2001 and repeated that designation through 2005. During that period, Ukraine was suspended from the U.S. Generalized System of Preferences (GSP) program, which waives imports duties on thousands of goods from developing countries.
"We can't prejudge what would happen this time, but GSP revocation is certainly one of the possible actions," a senior USTR official said in a briefing before the report.
Ukraine earned its opprobrium this year "due to its severely deteriorating climate for IPR protection and market access," Acting U.S. Trade Representative Demetrios Marantis said. "(I) and call upon that government to reverse recent backsliding and swiftly resolve the problems identified today."
The two countries developed an action plan in 2010 to address U.S. concerns. Those include use of illegal software, Internet piracy and market access barriers - specifically actions that have prevented "copyright collecting societies" from collecting royalty payments from users of copyrighted material and distributing them to the owners.
"Instead of making progress, all of those problems grew worse over the past year," leading to the decision to revert to the "priority foreign country" label, the senior U.S. trade official who briefed on the report said.
U.S. media companies hailed the USTR move.
"Software piracy (in Ukraine) remains rampant, including significant unlicensed software use by government agencies," said Eric Schwartz, counsel for the International Intellectual Property Alliance, a U.S. business group.
Another big problem is the high-quality camcording of films in Ukraine's theaters that are uploaded to top pirate sites and distributed across the Internet, Schwartz said.
Reporting by Doug Palmer; Editing by Doina Chiacu