MEDIA REACTION - CHILE AND THE PRIORITY WATCH LIST

UNCLAS SANTIAGO 000055

SIPDIS

SIPDIS

STATE FOR IIP/G/WHA, INR/R/MR, WHA/BSC, WHA/PDA, INR/IAA

E.O. 12958: N/A
TAGS: OPRC KMDR KPAO KIPR ECON PGOV PREL VE CI
SUBJECT: MEDIA REACTION - CHILE AND THE PRIORITY WATCH LIST


1. Summary: Adding Chile to the "Priority Watch List" on January 8
for its deteriorating protection of intellectual property received
widespread media coverage. The GOC expressed disappointment and
frustration with Chile's placement on the list, claiming that Chile
has gone to great lengths to implement their IPR commitments under
the bilateral Free Trade Agreement. The local pharmaceutical
industry called the USTR action "unilateral," noting that there are
no formal complaints in the judiciary over the marketing of drugs.
AmCham and the U.S.-affiliated pharmaceutical association (CIF)
expressed grave concern over the announcement, stating that it
affects Chile's prestige. End Summary.


2. On January 10, in remarks to conservative, influential
newspaper-of-record "El Mercurio" (circ. 129,000),Minister of
Economy Alejandro Ferreiro voiced the GOC's displeasure: "The (U.S.)
decision is disappointing because the Government has carried out
clear efforts that we believe are convincing and, in our judgment,
are sufficient to fully comply with what was required of us in the
Free Trade Agreement (FTA) with the United States.... We will
continue our contacts with U.S. officials, demonstrating that we are
doing what is necessary, consistent, and what the FTA, in our
judgment, requires.... There is a certain frustration because we do
not believe that it (the USTR's decision) is consistent with what we
have done...."


3. The Director of the Foreign Ministry's International Economic
Relations General Directorate (DIRECON),Carlos Furche, minimized
the damage of such a classification. He claimed that any sanctions
would be a violation of the FTA without going through the dispute
resolution process first. Furche doubted that there would be any
commercial impact or a negative affect on Chile's image as a result
of USTR's announcement. In "El Mercurio" on January 11 Fuche
stated: "There is a difference of interpretation with the United
States over the commitments assumed by our country regarding
intellectual property...."


4. The recording industry ("Federacion Internacional de la
Industria Fongrafica") estimated its members lost $220 million to
piracy in the past year. It stated that the GOC lacks the political
will to stop piracy. Critical of USTR, the local pharmaceutical
industry called the U.S. action "unilateral." The AmCham and the
U.S.-affiliated pharmaceutical association (CIF) expressed grave
concern over USTR's announcement, stating that it affects Chile's.


5. On January 11, conservative, independent Santiago daily "La
Tercera" (circ. 101,000) carried an editorial column entitled
"Intellectual and Industrial Property: Pending Obligations:"


6. "On few occasions had such a measure (Priority Watch List) been
preceded by so many signs.... Therefore all of the responsibility
for not implementing the necessary corrections on time falls on the
Chilean State.... For Chile the consequences are ill-fated. Not
only does the country's international reputation suffer, but it
discourages foreign and domestic research and development in areas
that are critical to the creation of wealth that does not depend
uniquely on the selling of commodities. If forceful legislative,
executive, and administrative actions are not adopted, the latest
USTR measure might not be the last, or even the most serious,
affecting Chile on this matter."

KELLY