SPECIAL 301 REVIEW

UNCLAS GUATEMALA 000431

SIPDIS

DEPT FOR EB/IPC WILSON, DEPT PLS PASS TO USTR BPECK, DOC
KSCHLEGELMILCH, USPTO JURBAN/DLASHLEY-JOHNSON, AND LOC
STEPP.

E.O. 12958: N/A
TAGS: KIPR ETRD ECON WHA
SUBJECT: SPECIAL 301 REVIEW

REF: A. SECSTATE 29549

B. NATIONAL TRADE ESTIMATE


1. Summary: Guatemala recently concluded negotiations of the
US - Central American Free Trade Agreement (CAFTA),which
includes a strong chapter on IPR. The obligations undertaken
in the agreement, along with commitments of the new
government, should strengthen Guatemala's weak enforcement of
IPR protections. Renewed industry support for efforts should
help to fend off further challenges to Guatemala's relatively
strong legislative framework. Post recommends that Guatemala
not be placed on the Special 301 list. End Summary.

Updates to the National Trade Estimate
--------------


2. Legislation passed in 2003 improved IPR legislation to
levels similar to those applied in the United States. The
new Berger administration, which took office in January 2004,
has indicated its interest in further strengthening IPR
protection. Pharmaceutical and agricultural chemical research
laboratories, in cooperation with the U.S. and some European
embassies, have worked effectively to counter efforts by
domestic copiers of protected products to undermine
Guatemala's legislation through legal and legislative
challenges. The Constitutional Court rejected in February
2004 the outstanding legal challenge to the 2003 legislation.
Entry into force of the CAFTA will provide a strong legal
obstacle to further efforts to degrade the protections
provided by law.


3. Enforcement remains the weak link in Guatemala's IPR
protection. Pirated material, particularly software, optical
media and trademark violating products are still widely and
openly available. Enforcement efforts have been hampered
primarily by a lack of resources and a lack of will within
the Public Ministry, which is responsible for the prosecution
of criminal offenses. The GOG reportedly still uses pirated
software in many of its offices. However, the new Minister
of Economy, who oversees the national IPR registry, has
committed to catalogue and properly license software within
his ministry and to promote similar action by his cabinet
colleagues. The new government is also eager to root out the
organized contraband and smuggling rings that have
infiltrated the tax and customs administrations and that
control much of the traffic in pirated goods.

Recommendation
--------------


4. Post recommends that Guatemala not be placed on the
Special 301 list. Nonetheless, we are aware that enforcement
is weak and needs to be made a priority by the new
administration. There is substantial optimism in the local
IPR community that enforcement efforts and capabilities will
improve with the new government's interest in successful
CAFTA implementation and tackling organized crime and
corruption surrounding the contraband issue.
HAMILTON