ALGERIA 2009 SPECIAL 301 REPORT

UNCLAS SECTION 01 OF 02 ALGIERS 000228 SENSITIVE SIPDIS STATE FOR EEB/TPP/IPE (MCGOWAN) STATE PASS TO USTR (GROVES AND BURKHEAD) E.O. 12958: N/A TAGS: ECON ETRD KPIR AG SUBJECT: ALGERIA 2009 SPECIAL 301 REPORT REF: A. ALGIERS 30 ¶B. 08 ALGIERS 208 ¶C. ALGIERS 223 ¶D. ALGIERS 164 ¶1. (SBU) SUMMARY: Algeria's IPR posture remained generally static in 2008, and took a marked turn for the worse in regard to pharmaceutical market access with the imposition of a ban on imported pharmaceutical products that are produced domestically (ref A). Furthermore, it has become clear that WTO accession is not a near-term priority for Algeria, meaning that accession talks no longer offer the leverage that many had hoped as means to encourage Algeria to tighten its IPR regime. We saw no appreciable improvement in fighting optical piracy, but we feel that particular Algerian agencies, notably Customs and the Ministry of Justice, do want to stop the flow of counterfeit goods into Algeria if only for health and safety reasons. Even with the country's recent imposition of certain protectionist policies, we recommend that Algeria stay listed on the Watch List, as we are on the verge of engaging in cooperative agreements and programs that may generate greater attention to IPR enforcement, although these efforts will have little or no impact on the government's position favoring generic pharmaceuticals. END SUMMARY. ALGERIA'S PAST LEGAL EFFORTS -------------- ¶2. (SBU) As we reported last year (ref B),Algeria has developed a legislative framework for IPR protection, even if enforcement efforts remain sporadic. Algeria made legislative progress toward IPR protection with the 2003 adoption of modernized IPR laws and subsequent reinforcing legislation in 2004 to comply with the TRIPs agreement as part of Algeria's WTO accession process. In 2005, the Algerian government adopted new implementing regulations related to copyrights, patents, trademarks and integrated circuits. Algeria is also a signatory to several international agreements such as the Bern and Paris Conventions. Pharmaceutical companies note, however, that Algerian law does not explicitly protect data exclusivity. While the legislative base is relatively strong, implementation and enforcement of these laws have not translated into widespread, systematic practice. NEW HIGH: COUNTERFEIT SEIZURES -------------- ¶3. (SBU) Customs and Ministry of Justice officials do seem sincere when they tell us that they are committed to combating counterfeit products. Commercial law attorneys representing U.S.-based and other foreign firms also told us in 2008 that cooperation is good with Algerian government agencies and the courts regarding the seizure of imported counterfeit products. According to data released by Algerian Customs, 1.5 million counterfeit items worth 150 million dinars were seized in 2008, compared to 2.27 million items worth 100 million dinars in 2007. Of the items seized, 86 percent were cosmetic products, with automotive spare parts and electrical appliances making up two of the next largest categories of seized items. Customs claimed that 70 percent of the counterfeit products were made in China, with 38 percent of them shipped directly from China. Algerian Customs concluded counterfeit product and illegal trade agreements in 2008 with several international companies including Unilever, Phillip Morris International and Nestle. We have concluded negotiations on a Customs Mutual Assistance Agreement (CMAA) with Algeria, and hope to see it signed in the first half of 2009. NEW LOW: PHARMACEUTICAL BAN -------------- ¶4. (SBU) Algeria's imposition of a ban on imported pharmaceutical products that are produced in Algeria (ref A) completely changes the way in which we assess Algeria's commitment to IPR issues. At one point in mid-2008, at least one U.S.-based pharmaceutical company told us that it had been mostly satisfied with both the legal framework and enforcement of patents and trademarks in Algeria, and was instead focused on fighting the ongoing issue of reference ALGIERS 00000228 002 OF 002 pricing according to lowest-cost generics (ref B). Another company was, however, facing a patent threat from several generics allowed to be marketed in the same dosage as the patent. The pharmaceutical ban may be seen as a Special 301 IPR issue as a barrier to market access for those relying on intellectual property protection because it specifically targets non-generics and, until the ban, some 65 percent of the Algerian pharmaceutical demand had been met by imports. With this ban in place, other IPR issues in this domain, such as reference pricing, patent protection and data exclusivity, have become essentially moot. Ministry of Health officials have made no apology for the ban, insisting in late 2008 that the ban is not open for discussion in WTO accession negotiations (ref A),and informing us in February 2009 that the ministry's priorities in terms of medications are quality, price and access for the greatest number of Algerians. WTO ACCESSION NO LONGER OFFERS LEVERAGE -------------- ¶5. (SBU) In the past, we and industry representatives have relied on the notion that WTO accession talks were the best venue to address Algeria's weak IPR enforcement regime. However, it is increasingly clear that Algeria does not feel WTO accession will occur in the near term, and talks over the last 24 months offered little progress on accession itself or on IPR issues. Our new MFA desk officer transferred to Algiers in February from Geneva, where he was responsible for the WTO portfollio. He acknowledged that WTO progress had flatlined for "about a year" and was not optimistic that the accession process would accelerate in the immediate future. While Algeria's legal changes since 2003 regarding TRIPS compliance and other mechanisms were sparked by WTO talks, we see no indication that ongoing, sporadic negotiations will provide the leverage that many observers once hoped for to press Algeria further regarding IPR enforcement. PIRACY EFFORTS REMAIN STATIC -------------- ¶6. (SBU) We saw no noticeable improvement in combating optical or software piracy in 2008, and pirated versions of movies are widely available for sale not only in markets and small storefronts, but in European-based grocery chains as well. COMMENT: WATCH LIST RECOMMENDED -------------- ¶7. (SBU) The recent ban on pharmaceutical imports and the lack of progress on WTO accession talks justify Algeria's continued listing on the Watch List. It has been only one year since Algeria was first placed on the Watch List, and we hope that the signing of the CMAA and possible progress on cooperative efforts pursuant to our bilateral Science and Technology Agreement (ref C) will be vehicles for progress on IPR enforcement in 2009 outside the domain of pharmaceuticals. We had several fruitful discussions in 2008 and early 2009 with officials in Algerians Customs and the copyright and trademark offices regarding efforts to step-up counterfeit detection and interdiction, and several Algerian officials took advantage of U.S.-sponsored IPR training in ¶2008. In addition, the Algerian government has made a series of sometimes conflicting policy pronouncements regarding the overall foreign investment climate in Algeria (ref D). We expect more clarity in the second-half of 2009 (in the aftermath of the April 9 presidential elections) in this regard. Accordingly, we recommend that Algeria remain listed on the Watch List as we continue to engage the government. PEARCE