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Cablegate: Cambodia: Comments for Special 301 Review

VZCZCXRO1927
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0180/01 0510126
ZNR UUUUU ZZH
P 200126Z FEB 08
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 9364
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0722

UNCLAS SECTION 01 OF 02 PHNOM PENH 000180

SIPDIS

SIPDIS

STATE FOR EAP/MLS, EAP/EP, AND EB/IPC
STATE PLEASE PASS TO USTR--BISBEE
STATE PLEASE PASS TO USPTO
BANGKOK FOR USPTO--NESS

E.O. 12958: N/A
TAGS: ETRD ECON KIPR CB
SUBJECT: CAMBODIA: COMMENTS FOR SPECIAL 301 REVIEW

REF: A. STATE 9475

B. 07 PHNOM PENH 1438

1. (SBU) Summary: Post believes that Cambodia falls below the
threshold for inclusion in the Special 301 Report Watchlist at this
time. Cambodia is not fully TRIPS compliant and its IPR enforcement
is currently weak. However, senior government officials have
publicly committed to improving the IPR regime, the government has
actively sought USG assistance in this area, and officials are
taking some steps to uphold IPR laws--including confiscating pirated
materials and registering trademarks. While pirated optical media
and counterfeit products are pervasive in the market place,
virtually all of the products (with the exception of copies of Khmer
language movies and music) are produced elsewhere. The local market
is small, with most sales of foreign products to tourists and
foreigners residing in Cambodia, and damage to the U.S. industry is
minimal. After decades of turmoil beginning in the early 1970's and
ending only in 1998 with the surrender of the last Khmer Rouge
units, Cambodia has come late to awareness of the IPR issue. Given
its conflict-ridden past and eagerness to improve IPR enforcement,
post believes Cambodia should be given more time to bring its
actions in line with its intentions. End Summary.

IPR Environment
---------------

2. (SBU) Although not yet a signatory to the Berne Convention,
Cambodia has most of the legislation in place to protect
Intellectual Property Rights (IPR), including laws on trademarks,
copyrights and patents. However, Cambodia's IPR protection regime
is not fully compliant with its WTO TRIPS commitments. In November
2005, the WTO granted a deadline extension until 2013 for Cambodia
and other least developed countries to enforce copyright laws and
begin accepting patents.
Cambodia has not fully implemented its commitments under the BTA in
the area of IPR protection and enforcement.

3. (SBU) Infringements of IPR are pervasive, ranging from the sale
of pirated computer software, music compact discs, and DVDs to the
sale of counterfeit products, including watches and drugs. The
expense and scarcity of books has led to the sale of photocopied
books, including college textbooks and comic books.

4. (SBU) Piracy of domestic media is a growing problem and is
increasingly recognized as such by the government. There have been
occasional police raids on pirated copies of domestic CDs or DVDs,
always at the request of the copyright holder, and rarely, if ever,
leading to prosecution. Cambodian production companies have
increased their complaints about piracy over the last year, and
Culture Ministry statistics show that movie production has dropped
from 61 films made in 2006 to 25 films made in 2007.

5. (SBU) Piracy of foreign movies and music is limited and has
relatively little impact outside Cambodia's borders. Post is not
aware of the existence of plants to manufacture DVDs in Cambodia,
although small shops duplicate copyrighted material on rewritable
CDs. The great majority of pirated discs on the market are produced
in Malaysia or China. Given the small size of the Cambodian middle
class--and the absence of Khmer language voice overs or subtitles in
Western movies--there is very little local demand. Sales are mostly
to tourists and foreigners living in Cambodia. Damage to the U.S.
industry appears to be very small.

Enforcement Actions
-------------------

6. (U) The Royal Government of Cambodia (RGC) has taken some
measures to enforce its IPR obligations. In October 2005, police
officers raided a factory that was manufacturing counterfeit
Marlboro cigarettes. The factory manager was later convicted in
absentia. In October 2007, acting on a request from an independent
bookseller, the police launched a small raid against photocopied
foreign books being sold at local markets. Periodic confiscations
of pirated materials netted 47,000 discs (almost entirely Khmer
music and movies) in 2007. At the January 2008 annual conference of
the Ministry of Culture and Fine Arts, Deputy Prime Minister Sok An
announced that the government would step up its efforts to prosecute
copyright violators.

7. (U) Since 1991, the Ministry of Commerce has maintained an
effective trademark registration system, registering more than
30,000 trademarks, including 5,500 for U. S. companies. On several
occasions, the Ministry of Commerce has observed the use of American
trademarks, such as Holiday Inn, Pizza Hut and McDonald's. When
these infringements have become known, the Ministry has obtained
agreement from the violators to change the names of their
establishments, resolving 32 such disputes in 2007.

PHNOM PENH 00000180 002 OF 002

Cambodia Eager for IPR Capacity Building Assistance
--------------------------------------------- ------

8. (SBU) Senior Cambodian officials publicly affirm the importance
of IPR protection, both to protect their country's nascent film and
music industries and in order for Cambodia to participate fully in
world markets. In both the February and November 2007 Trade and
Investment Framework Agreement (TIFA) talks, Commerce Minister Cham
Prasidh talked of creating a link between trade and IPR. At the
November meeting, he proclaimed his ambition for Cambodia to become
a "model country" for IPR in the same way that Cambodia has blazed a
trail in labor rights, and specifically spoke of developing a policy
to ensure that anyone legally producing IP-sensitive goods in
Cambodia would be scrutinized to ensure that they did not export
pirated materials. According to the Minister, draft laws on
Geographical Indicators, Layout Designs of Integrated Circuits, and
Plant Breeders Rights are under review, and the government is
drafting sub-decrees on IP border measures, compact disc production
and trade, IPR enforcement procedures, and collective management
organizations.

9. (SBU) Senior Cambodian officials and heads of IPR-related
government offices publicly evince a strong interest in working with
the U.S. to improve the IPR regime, but a variety of factors make
meaningful progress difficult to achieve at the working level. Like
nearly all Cambodian government agencies, the IPR bodies suffer from
severe human capacity limitations. While Cambodia regularly
participates in USPTO regional IP training, only a small number of
officials can understand English well enough to participate. These
staff members--who are often among the most effective workers--are
quickly promoted out of their IP positions. Poor donor coordination
has led to some wasted efforts (such as separate efforts to
translate the same documents). Some Cambodian requests for TA are
for items that relevant USG agencies cannot provide or typically
find are not effective--e.g. office equipment, long-term
advisors--or to achieve objectives not required under TRIPS
obligations--e.g. establishing a copyright registration system. USG
officials have taken pains, where appropriate, to coordinate these
requests with other donors who are able to provide this assistance.
In some cases there appears to be a real reluctance at the working
level to simplify and rationalize the registration system's
complexity, which provides opportunities for extracting bribes from
rightsholders.

10. (U) Despite the difficulties listed above, U.S. agencies
continue to work with Cambodia to improve its IPR enforcement. In
addition to reviewing requests made during the November TIFA
meeting, USPTO is planning to conduct a copyright seminar in
Cambodia in 2008, perhaps in conjunction with a delegation of IP law
professionals coming in April via the People to People citizen
ambassador program. USPTO is also working with the USTR to fulfill
U.S. Trade Representative Schwab's pledge to send an IP capacity
building team to Cambodia.

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

11. (SBU) Like many developing countries, Cambodia has come late to
awareness of the need to protect IPR. Suffering through decades of
turmoil that began in the early 1970's and which included the
genocidal Khmer Rouge regime, Cambodians only began to establish
political and economic stability in 1998 when the last Khmer Rouge
units laid down their arms. With this turbulent past, it is not
surprising that IPR initially was not a high priority for the RGC.
Nevertheless, there is now growing awareness within the senior ranks
of the RGC and increasing desire to increase its capabilities and to
cooperate with the USG on this issue. Given Cambodia's
conflict-ridden past, recent enforcement actions, and intense
interest in cooperating with the U.S., both bilaterally and in the
ASEAN framework, post believes that the USG should give Cambodia
additional time to fully establish its IPR regime before considering
its inclusion on the Special 301 Watchlist.

MUSSOMELI

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