Verkhovna Rada fails to approve anti-piracy bill, risking U.S. sanctions (12/02/01)

Verkhovna Rada fails to approve anti-piracy bill, risking U.S. sanctions

by Roman Woronowycz
Kyiv Press Bureau

KYIV - The Verkhovna Rada failed to approve the final version of a bill on the regulation of compact discs on November 29, which now leaves Ukraine subject to possible U.S. sanctions beginning in two weeks.

Proponents of the draft law fell two votes shy of the 226 majority needed to send it to the president for his signature, which would have alleviated strong pressure from the United States to show that concrete steps have been taken in the fight against the piracy of intellectual property rights in Ukraine, chiefly those including music recordings and software.

The United States maintains that Ukraine is one of the largest manufacturers of black market compact disks in the world and has fallen woefully short in its efforts to eliminate illegal producers from the market.

The failed vote came minutes after the parliamentary body had approved the initial wording of the document.

During a press conference the day before, U.S. Ambassador to Ukraine Carlos Pascual said that if Ukraine's Parliament did not pass the new legislation, Washington could impose economic sanctions beginning on December 12.

"If something is not done to redress the problems, the Office of the Trade Representative (OTR) does need to make a decision on imposing sanctions," said Ambassador Pascual.

The U.S. envoy explained, however, that sanctions would not be undertaken automatically, but only after full consideration by the OTR. Therefore, ostensibly there is hope that by passing at least a first reading of the bill, the Verkhovna Rada showed sufficient movement on the issue to forestall the U.S. action - especially since that same day it passed a new Civil Code, which includes a book devoted entirely to intellectual property rights.

OTR sanctions would chiefly involve a ban on Ukrainian steel and chemical products, as well as a whole array of lesser goods. Earlier in the month, Prime Minister Anatolii Kinakh had suggested that Ukraine's economy would suffer $400 million in losses if such a move were undertaken.

The Verkhovna Rada had rejected another version of the bill a week earlier by a much larger margin, but many, including Rada Vice-Chairman Viktor Medvedchuk, believed the latest iteration would pass.

During debate on the legislative floor on November 26, he defended his support for the bill after taking criticism from opponents. He rejected assertions that he was supporting U.S. commercial interests.

"I am lobbying for the interests of the Ukrainian people, for the Ukrainian worker," said Mr. Medvedchuk, who estimated that 40,000 jobs would be lost in Ukraine if the U.S. banned Ukrainian imports.

The law, which now will be reworked in committee and most likely presented for a second reading on December 13, the day after the U.S. action is possible, would require that importers and exporters of CDs and related materials license all equipment and raw materials associated with their manufacture. The standards and norms enumerated in the document are in keeping with established European practices, according to Interfax-Ukraine. CD producers would be required to stamp their products with special identification codes issued by the Ministry of the Economy.

Manufacturers violating the law would be fined 200 percent of the value of the illegal product they have on hand, but not less than 85,000 hrv.

The rejected draft law was criticized not only by the left, for what it considers parliamentary capitulation to pressure from U.S. commercial interests, but also by political forces of the right, who believe the destruction of a Ukrainian black market in CDs would only make room for illegal products from neighboring countries to fill the void.

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