AT a critical public hearing of the United States Trade Representative (USTR) held in Washington D.C. on November 30, the International Intellectual Property Alliance (IIPA), a coalition representing US copyright-based industries, recommended that an investigation to withdraw Pakistan’s GSP benefits be terminated since substantial progress has been made on curbing piracy of optical discs like CDs, DVDs, VCDs and CD ROMs.

The IIPA had petitioned the GSP review of Pakistan’s intellectual property practices in 2004 seeking that the country’s GSP benefits be suspended since the government fails to provide adequate intellectual property rights protection.

The IIPA estimated that Pakistan’s piracy caused $143 million in losses to US copyright industries in 2004. The Generalized System of Preferences, or GSP, is a programme that provides for duty-free imports from developing countries, providing they provide among other things adequate intellectual property rights protection.

The IIPA submitted testimony on November 9 in which it was argued that the investigation be suspended on account of less piracy of discs and recommendations were made for how to improve intellectual property rights protection in areas such as book piracy and cable television piracy.

According to the testimony, the problems of piracy were so severe that in the 2005 Special 301 filing, they recommended that Pakistan be identified as a priority foreign country, the worst ranking for intellectual property right protection.

If the IIPA had held to their position that Pakistan should lose trade benefits under GSP, the country would have risked not only trade-related losses but a significant worsening of already troubled image problems.

“The U.S. government was soliciting comments at the public hearing and taking note of the fact that major beneficial developments had taken place in the last 12 months, we said we would reverse our position and recommend that the GSP subcommittee terminate its investigation,” Joseph Papovich, senior vice president international of the Washington-DC based Recording Industry Association of America (RIAA) told Dawn in an interview.

Papovich, who is a former USTR official, submitted testimony to the USTR as an expert witness on behalf of the IIPA.

There were three major developments which led to the change of position by the IIPA. First, was the action taken by the FIA in May to seal five illicit CD manufacturing plants, seize 400,000 pirated discs and 11,000 master discs from which pirated discs are made, and arrest the operators of the plants.

Then was the enforcement by Pakistan Customs of a 2004 directive requiring customs agents to monitor the illegal export of optical discs of all kinds and crack down on illicit exporters of pirated discs. This process also involved the suspension of some customs agents who did not comply with the directive.

“It is rare that such decisive action is taken,” said Papovich. “So while we still have major concerns, the fact that this was done so definitively made us feel it would not be appropriate to let Pakistan lose its trade benefits.”

The third positive development was the creation of the Pakistan Intellectual Property Rights Organization (PIPRO) as a coordination entity. “I have spent months dismissing the utility of PIPRO because it seemed like the equivalent of chairs being moved around on the deck when the Titanic was sinking,” said Papovich.

“So while it has potential value- added, we would not be advocating termination of this GSP investigation unless these other [FIA and Customs] actions had been taken. PIPRO is not as important.”

Big violations: According to the IIPA, Pakistan was always a violator of intellectual property rights of all kinds from music CDs and DVDs to book piracy and cable television piracy, which cumulatively cause trade losses of $140 million per year (see table).

However, optical disc piracy that affects the music recording the motion picture industries is the biggest and most contentious problem for the producers of original content, accounting for half of the total trade losses.

Worse still, the problem in this segment “exploded” in 2003-04 when Pakistan became one of the world’s leading ove-rproducers and exporters of pirated optical discs. In 2004, there were 10 known facilities producing 230 million discs, more than 200 million of which were exported. And even though the trade losses to the recording industry stemming from Pakistan’s piracy of discs (estimated at $70 million in 2004 out of global losses of $2.4 billion) were not of the same quantum as countries like Russia (losses of $400 million per year), Brazil ($300 million) or China ($200 million), the problem intensified in 2004 when the production of pirated pre-release music CDs and movies escalated in Pakistan.

“This mushrooming had made us very unhappy,” Papovich said. “And the fact that most of the production was being exported was infuriating because it was ruining our markets.” He said the export of pirated optical discs has fallen 90 per cent since the Customs action and no pre-release English merchandise has been detected since the raids. But that does not mean all problems are solved. “We still worry that piracy will return,” he said, adding “We recommend that the US government use means other than GSP such as TIFA and Special 301 to enforce intellectual property rights.”

Domestic proliferation of pirated CDs, still continues however. Papovich said RIIA’s sources show that most locally available CDs and DVDs are now burned onto blank writable CDs rather than produced in a factory.

Other forms of piracy: Moreover, the IIPA continues to harbour major concerns about copyright infringement in other areas, especially books and cable television. “Book piracy is accepted as routine by all but a few legitimate importers with little or no recognition of its criminal nature,” the IIPA testimony said.

“Anyone visibly working on book piracy issues in Pakistan is threatened with violence. It is past time for the authorities to work to legitimize their book markets through strong and continual enforcement rather than putting the burden on right holders to “negotiate” a reduction in piracy.” The losses from this are estimated at $52 million in 2005.

Similarly, cable television piracy is an area of concern since many companies producing motion pictures distribute them through this channel and piracy accounts for 94 per cent of the market according to IIPA. Signal theft and stripping of advertisements by cable TV operators are also problems. “While signal theft remains a concern, we do note that the government has taken steps to improve its capacity to attack this problem in recent months, though the actions have yet to yield position results,” the IIPA testimony said.

The way ahead: The IIPA recommends that the sessions court pursue outstanding prosecutions, the judiciary follow up thoroughly on those arrested (and then released on bail) after the raids on CD manufacturing plants, and the government amend copyright legislation, especially where books are concerned and provide extensive intellectual property rights training.

“Staying the course with respect to preventing a re-emergence of optical disc piracy including tight regulation and prosecution, action against book publishers and addressing problems of cable TV piracy are our recommendations,” Papovich said. He also said a key to meaningful law enforcement will be to keep the FIA at the forefront of the issue of intellectual property rights protection.

If this is done, Papovich said foreign direct investment inflows will improve. “Companies are reluctant to bring sophisticated technology into a country if they think it will be duplicated and exploited,” he said. “By mid-2003, major record-producing companies had left Pakistan because it was a fruitless market. And now we’re trying to get them to come back.”

If they do and bring with them significant investment, the rewards for enforcement of copyright protection will be sizeable. Even without it, analysts agree that it is steps such as these concrete endorsements that do far more for the improvement of country image than any lofty statements from the government could ever do.

Still, the hope will now be that Islamabad does not turn complacent and allow the positives to unravel but will intensify their fight against piracy by hitting all the areas yet untouched in this battle.