• History
• Structure
• Opportunities
  • Arts Residencies
  • Events
    • Upcoming Events
    • Past Events
    • Subscribe to Access Asialink
  • Fellowships
  • The Asialink Leaders Program
• Asialink Staff
• Asialink in Asia
• Asia at the University of Melbourne

• Contact Us
• |
• Search our Site

ASIALINK -May 13th 1999

INTRODUCTION by PETER MARES, presenter of 'Asia Pacific'

Good evening ladies and gentlemen and welcome to the ABC Southbank Centre. I'm Peter Mares and I am the presenter of Radio Australia's regional current affairs program 'Asia Pacific' which is broadcast six days a week by short wave, satellites and internet and is also re-broadcast in many countries around the world by the world radio network. For those of you who don't know, Asia Pacific is also heard on the Radio National network of the ABC weeknights at 8:05 and Saturday mornings at 8:05.

It is my great pleasure to welcome you here this evening on behalf of Radio Australia and of course Asialink as well for this Asialink Seminar on Crime, Corruption and Business in Asia. It's certainly a very timely topic in most analyses of the Asian Financial Crisis. Unchecked corruption has emerged as the key factor behind the regional collapse and popular anger at corruption - most notably in Indonesia - remains a cause of continuing social unrest and tension.

As a former Radio Australia and ABC correspondent in Vietnam, I certainly experienced the insidious and corroding influence of corruption on a daily basis, stretching from the top to the bottom of society. For example, the police would continually demand routine bribes from small street traders. So you might have a farmer who would cycle 30 Ü 40 kilometres from 3 o'clock in the morning into Hanoi from his village with two huge baskets attached to either side of his bicycle probably peddling along in thongs with no brakes and no gears of course. Peddling an old steel bicycle with huge wire baskets loaded up with probably a 100 kilograms of watermelons and evenly balanced of course. They would have a little wooden stick so that if they stopped they could prop it up and keep the bike standing still.

So they would arrive in town early in the morning and then find they had run into a policeman who would demand a fine or fine them for something or the other. It's easy to find a reason and if they did not pay the fine the policeman would confiscate one of the baskets full of watermelons. Now that of course left the poor farmer completely unable to move because the bike would be totally unbalanced and he couldn't move it anywhere. So he would have to go to the local police station and pay the fine in order to get his watermelons back.

At a higher level there was one of the notorious cases when I was there was the case of the Telstra cars. If there is anyone from Telstra in the audience they probably would have heard this story but Telstra brought six new vehicles into Vietnam and they were impounded on the docks by a rogue customs department. Telstra was accused of illegally importing these vehicles because there were some minor technical problems on the paper work and despite intervention by Government Ministers from Australia and from the Central Government in Vietnam they found they were unable to get their cars back.

Essentially the local customs officer was holding out for another kind of solution to the problem, in other words an enveloped solution. Telstra, to their credit, held out but it meant that their vehicles were stuck on the docks, $ 200, 000 worth of vehicles, stuck on the docks for two years. While there is plenty of outrage over corruption there is also plenty of complicity too. My twenty-three year old assistant in Hanoi happily explained to me that it was much easier to pay $ 10 to get your motor cycle licence than it was to actually ride the figure 8.

Now that might help explain some of the traffic problems in Hanoi today. Crime of course is also an issue. From the petty ride-by bag snatchings on the streets of Saigon to the highly organised heroin smuggling rackets which were shown reached right into the senior ranks of the interior Ministry in the police in Vietnam and it hardly needs to be said that when you have Crime and Corruption on that scale, it severely undermines the social contract between government and citizens, it weakens the overall level of trust in society and so ultimately it poses a serious threat to social stability and order.

Clearly these are issues that must concern Australian Investors, Professionals and others whose business takes them to the Region and hence the importance of a Seminar like this. So to get the ball rolling I'd like to hand over to the man who is going to chair the proceedings tonight Mark Craig.

Mark Craig is Managing Director of International Strategic Management Services (ISMS). He is also a Lecturer in Intelligence Studies at Queensland University of Technology Law Faculty. He has ten years experience in working the field in criminal intelligence in Asia. He is a graduate of the National Academy of the FBI and a specialist in Chinese Underworld Operations within the legitimate economy. Mark has worked for six years in Tokyo and Beijing and recently led a high level delegation of organised crime experts to China, so it is my pleasure to introduce Mark Craig.

MARK CRAIG

Thank you, Peter. Good evening ladies and gentlemen. Thank you very much for turning out this evening and giving us your valuable time. This short seminar will canvass issues relating to crime, corruption and other important matters affecting the Australian in business community doing business within the region. Particular attention will be paid to organised crime, economic espionage, corruption, IP issues, counterfeiting, and this kind of thing.

Now the subject matter is very complex and we have a very short time this evening so what we propose to do is allow 10 minutes for each speaker who will basically address the issue in terms of an introduction, therefore allowing for about 30 minutes of questions at the end of the program.

Our first speaker tonight is Dr Peter Chalk from the Rand Corporation in the United States. Peter works for the National Security Division of the Rand Corporation and is a specialist in national and international security, paying particular focus on non-military threats such as trans-national organised crime, terrorism and marine piracy. Educated to doctorate level and active in policy think tanks throughout America and the Asia Pacific, please welcome Dr. Chalk.

PETER CHALK

Thank you Mark and good evening. Tonight I am presented with a daunting task of giving you an overview of non-traditional security in South East Asia in about 10 minutes. So without further ado I am just going to crack right into it. When the Soviet Union collapsed towards the end of the 1980s it was confidently assumed that the international system was on the threshold of an unprecedented era of peace and stability. The assumption was liberal democracy was going to take root and that was going to occur within the context of an integrated global economy based on the principles of the free market and the assumption was that as this order emerged, threats to national and international security would decline.

However, that initial euphoria has now been replaced by a growing sense of unease that new non-traditional or non-military security threats may soon begin to assume greater prominence. I refer to these as grey area phenomena. Some refer to them as soft security issues or non-military security issues. Now many of these issues are not new in themselves, but what is new is the new global context that is working to exacerbate the threats posed by these types of issues. Four in particular stand out and these four I am going to relate to South East Asia.

Firstly, the dollarisation of the globe. This is a product of the success of capitalism and its accompanying system of materialism and this has provided powerful incentives in many parts of the world to achieve wealth, often by whatever means possible.

And this is especially true in those regions where perceptions of relative deprivation are particularly great or legitimate economic opportunities are lacking. A second major factor is the resurgence of so called atavistic forms of identity. Here I am referring to ethno-nationalism, which has driven some communal conflict often based on specific ethno-nationalistic identities. That has emerged largely as a result of the failure of regimes that define themselves on the basis of secular unifying ideologies such as pan-arabism, pan-africanism, and communism. It is also to a certain extent a a result of the lifting of the super-power net that has allowed ethno-nationalistic issues to assume greater prominence in their own right.

Third is weapons proliferation as a result of the privatisation and globalisation of the international arms trade. Two sources of weapons are of prime importance in the current international system. Stocks that have been left over from former cold war conflict zones such as Mozambique, Angola, Cambodia, Afghanistan. The second one are ammunitions that have been smuggled out of the leaky weapons arsenals of the States of the former Soviet Union.

Finally, the last major factor is globalisation which has essentially shrunk the international system to such an extent now that one can easily travel from one part of the world to another in an very short period of time and if you remove the word physical, the world has shrunk to an even smaller scale. As estimated one trillion dollars for instance is bounced around the world everyday in terms of financial transfers. Now how do all of these factors impact on South East Asia? Well dollarisation, the emphasis on prosperity, is as strong in South East Asia, as anywhere else in the world.

For some you could even argue that it is one of the defining characteristics of the region. In many respects, this emphasis on dollarisation has served the region well and it has certainly powered a number of the tiger economies within South East Asia at least until 1997 when the ramifications of the Asian financial crisis started to hit.

But on a more negative note with respect to non-traditional non-military security issues, it has also provided a fertile ground for the growth of more insidious non-traditional security issues. The craving for instant material gratification has encouraged a number of groups to engage in activities to basically fulfil their material aspirations in whatever means possible and the result has been the evolution of a parallel underground economy throughout South East Asia which has been run by so called black dollar organisations.

The types of activities they engage in would range from piracy to loan sharking to prostitution rings to drug trafficking. Now these black dollar organisations have been quick to recognise certain features of South East Asia that are conducive to their designs. Relatively porous land and maritime borders that facilitate smuggling, large and essentially unmonitorable coastlines which facilitate illicit maritime activities such as piracy. Extensive hinterlands that have been made virtually impenetrable as a result of jungles, valleys and mountain ranges and this has helped with the creation of no go grey areas that essentially exist beyond formal government control.

Now the scope of organised criminal activity in South East Asia should not be under estimated. About 40 percent of all known acts of piracy that are currently recorded in the international system take place in South Est Asia with the vast majority of those taking place in Indonesian waters. Indo-China represents one of the most prolific regions in the current international system in terms of the heroin trade and the organised sex trade. We have seen money-laundering schemes that have affected financial institutions from Hong Kong right down to Cambodia. We have seen organised immigration rings that have similarly affected many of the States of South East Asia with the ramifications also coming down as far as Australia.

South East Asia has also been affected by the resurgence of ethno-nationalistic forms of identities. WeÍve seen new strains of ethnic violence boiling over in Indonesia. Islamic fundamentalism has emerged as a powerful force in Indonesian, Malaysia, parts of the Philippines and Thailand. Ethno-religious tension as opposed to separatist tension has boiled over and surfaced in Burma. And armed separatist groups continue to pose significant problems for a variety of states, particularly the activities of organisations in Irian Jaya, Aceh, Mindanao, Yala, Narithawan, and so forth.

Now while the momentum of modernisation has served to deflect internal tensions in certain areas, in others it has merely exacerbated regional alienation by undermining traditional authority in socio-economic structures. And this is especially true in outlying regions that have been affected by the introduction of development programs whose prime purpose has been to benefit the interests and purposes of the dominant community.

For these regions which include particularly Southern Thailand, Southern Philippines, the outer wings of the Indonesian archipelago, the uniifying ethos, if you like, of secular modernisation has not only acted as a major stimulant for a new sense of communal identity, it has also worked to reinforce the separatist credentials of established local groupings and increase their legitimacy at the same time.

Now compounding those factors are the instrumental variables, if you like, of weapons proliferation and globalisation. There is certainly no shortage of combat weapons in South East Asia both of the advanced and basic variety, thanks largely to stocks that have been left over in Cambodia as well as in Afghanistan. Many of the Afghan weapons have been chanelled into South East Asia. The extent of these weapon sources should not be under-estimated particularly from Afghanistan.

By 1989 it has been estimated that enough weapons have been transferred to Afghanistan to enable every single male within the country to be armed in one sort of or another. And many of these weapons have not been accounted for and have now fallen into ammunitions trafficking rings that have been operated both by Pakistani and Afghani and Russian crime syndicates, a number of which have also found their way into South East Asia. The impact of weapons proliferation has been seen in organised criminal activities, sub-communal conflict that is becoming increasingly lethal in nature.

Finally, South East Asia has also emerged has a fairly important transportation, communication and financial hub. It has a system that connects South East Asia not only locally but also internationally with the major centres of Europe, the wider Asia Pacific and North America. More than one third of the world's merchant fleet currently utilise sea lanes of communication that pass through South East Asia making the region one of the most important maritime trading corridors in the world.

Economic growth has facilitated the growth of prominent banking structures which has contributed to a free wheeling stock exchange and the development of financial institutions which are fully integrated with the major centres of North America, Europe and the Asia Pacific. Now all of that has helped with the international diffusion and dissemination of non- traditional security issues in grey area phenomena influences allowing threats such as terrorism, organised crime to both emanate from and disseminate to South East Asia.

We've witnessed Middle East terrorist groups planning and carrying out operations in the region. We've seen Burmese Narcotics cartels bouncing dollars between Europe, Asian and North American money markets. We've seen the growth of a very vibrant South East Asian underground economy which has often been referred to as the Cancer of South East Asia's legitimate capitalist system.

The challenge I guess is enacting policies that will enable the states of the region to deal with these very complex issues, most of which are very inter-connected. That will require innovative thinking at both the level of regional-national co-ordination particularly with respect to inter-agency operations and an increased commitment towards greater international cooperation at the regional level. Thank you very much.

Thank you Peter. I'd like to now introduce Dr. Nicholas Chantler, Dr. Chantler is the Manager Strategics for Control Risk Pty Ltd, here in Melbourne. He has lectured and consulted all over the world on matters of intelligence and security and is regarded as a world expert on computer hacking and information warfare. Tonight Dr. Chantler will cover issues of IT, crime and corruption in Asia.

Dr. Nicholas Chantler

Thanks Mark, thanks ladies and gentlemen. The cultures which we experience over in Asia, if we are blind, we need to be aware of. Different cultures present to us opportunities but also different dangers in comparison to our own. I am talking about economic espionage tonight, it's a relatively new term to Australian businesses and the executives who run them and counter-measures which are using public and corporate resources are now being developed through the sharing of ideas and experiences.

In the US, economic crime and corruption now drain an estimated 260 billion dollars a year out of US based companies and somewhere around about 140 billion dollars US out of overseas operations. That works out to being about 9.3 billion for Australia. I'll explain later on what exactly that includes. Corporate leaders have a critical need to review their own situation. They need to identify their own vulnerabilities as well as strategies for protecting the technology and information most being at risk to this rising epidemic.

Now when we think in terms of information technology, the first thing that comes to mind, the theft of IT data equipment. The relabelling of integrated circuits, the copying, pirated software, reverse engineering, perhaps even software sabotage being used i.e weapons to be used on internet to bring your business down.

But let's think about fraud and the way that that's conducted on the internet. We've already had some insight into that. ThatÍs up 400 % on the worldwide basis on internet alone in this last twelve months. What about the intellectual aspect in a society with different cultures there are different rules and it is now accepted by intelligence professionals that virtually every traditional espionage technique used in time of war is being employed in todayÍs business sector.

We know that many non-US companies and countries routinely insert people into American firms, compromise key employees or otherwise subvert company operations. The goal is to steal trade secrets, plans, confidential procedures, and the protection of such intellectual property is fast becoming a key issue on the international business activities. So does it happen in Australia. The simple answer is yes and there are many things that do not reach the press which the media never gets to hear about but from our own company that we have to deal with.

How real is this economic espionage threat. Well, according to the American Society for Industrial Security (ASIS), cases of economic espionage directed at American companies have grown 260% since 1985. The FBI industrial espionage case load has jumped to 500, current investigations and the cost of economic espionage to Corporate America is now estimated conservatively to be at least 50 billion a year. That is just the espionage bit.

From my own researches and experiences it is comparable enough in Australia but we have a different outlook and in Australia it tends to be a case of 'well, we'll accept the losses'. Australian businesses, like America's, operate in a legal culture that respects the sanctity of private property ownership. The philosophy is not shared, I say not shared by every country in the world and in some cases these adversaries include our politically friendly nations, countries that were and are military allies.

Our companies and those of other nations who share the Australian open, innovative business and legal culture are ill prepared to combat the resources of foreign intelligent services. Our intellectual property law is recognised to be weak by Asian countries and provides little or no protection to Australian companies targeted by foreign agents. The Australian patent system is an open source of information just as it is in England and also in America. Australian Patent Laws have not been revised since the computer revolution.

Currently, digital and bio-technology companies, and when I talk about digital, I am talking about telecommunications, are believed to be at particular risk. The State and Federal Police are severely limited under the law in their ability to help corporations combat economic espionage. They also face vastly expanded missions - street crimes, international money-laundering (weÍve already heard it), narco-trafficking and terrorism are stretching resources that are already thin. Any security provided by the Australian Military that was once in an Asian base, that presence abroad has all but evaporated.

Traditional protection options are not just working as a deterrent to economic espionage, corporate security systems often fail because they are set up essentially to protect people and physical assets and not, not the ephemeral information flooding the worldÍs electronic highways.

Trusting that, conventional resources will protect a company's trade secrets and operations from foreign espionage is out of date and according to emerging legal thinking it may actually border on now managerial and fiscal responsibility. I was speaking with a counter-intelligence specialist who put it this way Ü the problem is that Australian companies are naðve in what is going on.

Australians have such an entrepreneurial spirit that they may see this kind of activity as being good for competition and technology. In America and also in Australia companies have resigned themselves to the fact of losing trade secrets. The Treasurer of a research company who is producing leading edge technology for the wireless communications industry voiced this strategy for combating economic espionage. We assume there is migration of our ideas to other countries, that our research and development engines are just warming up and so we will produce more ideas, take the loss and move one.

It is becoming increasingly unacceptable to shareholders and financial institutions and insurance companies who must bear the losses. Having said that, there is no one easy solution. There are ways to approach this problem and they focus on top management involvement and how many times have we heard that. Few corporate leaders today have military experience nor have they had much contact with intelligent services. In fact there is a tendency to keep government of any description at a distance and in many cases for very good reasons yet understanding the intelligence function and its role in modern economic warfare is absolutely essential to corporate survival.

Countering economic espionage will increasingly demand that corporate leaders arm themselves with a working knowledge of intelligence and counter intelligence. Maybe you know it in a different term "Competitor intelligence". But we are looking now at a much greater scope than ever before. Where are the boundaries for your organisation? How far do the fingers of your impact in your business environment reach and who is doing what to your fingers and where they reach.

The first step to realise that a business counter intelligence system is quite different from a conventional security program and the emphasis is intelligence on information. The collection, analysis and uses of information and on countering the theft of company information through subversion and other forms of espionage.

It is estimated that about 5 percent of major Australian companies have a business intelligence system in place and in contrast estimates by those with intelligence experience in Asia are that 100% of Japanese companies have a system with China, Indonesia, Korea, Singapore and other close behind and note, their cultures promote this Ü ours don't.

Know your people, know who is working for your company overseas. Thank you for allowing me this time to prepare these comments and present them to you.

Thanks very much for that Nick. Moving right along I'd like to introduce Joseph Richardson from the American Embassy in Canberra. Joseph is an Economist and has served in Diplomatic missions in Europe and Africa. He has spent three years in Australia and his term is shortly coming to an end before he returns to Washington. Joseph is an expert on Intellectual property issues and would like to talk to us tonight about an American perspective on these issues in Asia.

Joseph Richardson

Thank you very much. In just under a week's time the most anticipated event in movie history will take place. At midnight on Wednesday, around lunchtime here in Australia, the first reel of Star Wars Ü the Phantom Menace will flicker across the cinemas in the movie houses of North America.

Those audiences will be awe struck by some of the most impressive digital effects ever put on film and thrilled to the heroic ventures of Obi-one-Kanobe in the endless struggle against the dark side of the force. And if past practice is any guide, somewhere in one of those audiences will be someone with a video camera.

Within days consumers in Hong Kong shopping malls will be able to watch George Lucas' epic tale on video disk complete with sub titles and all thanks to our charitable friend with his cam-corder. Soon after a second generation will become available, probably copied off of a stolen master from one of the cinema projection rooms.

The fact that consumers in some Asian countries are able to pick up their dry cleaning, do their grocery shopping and pick up pirated copies of the latest Hollywood movies all in the comfort of their local shopping mall is an indication of the perilous state of intellectual property in Asia.

Research by the Business Soft ware Alliance and the software Publishers Association indicates that the software piracy in Asia results in more revenue lost for the software industry than in any other region. In Asia the piracy rate is around 52% although there exists a wide disparity across the region. Vietnam and China have rates above 95%. Korea and Singapore around two thirds of the market. Australia, Japan and New Zealand about one third. The estimated cost to the software industry from this piracy is almost 4 billion dollars and the trend has been rising.

Piracy rates for motion pictures and recorded music are just as high and in some markets approach 100%. Video and film piracy in China formerly accounting for 100% of the market has since fallen to 75% of the market but still costs the motion picture industry 150 million dollars annually, which by the way is exactly the same cost to the industry of video piracy in Japan.

Yet the piracy rate in Japan is only 8%. Lost revenues for optical disk, the CD's and its various states of CDV'S and DVD'S etc also have huge losses. The losses from piracy in Thailand, Indonesia, Malaysia, The Philippines and Singapore alone cost the industry an estimated 819 million dollars a year.

Most of the figures that I have been giving you are the cost to the industry, to the US industry or to the worldwide software industry. Yet the impact of lax intellectual property protection has an even greater impact in relative term on a country's own domestic intellectual property based industries. A recent study by PricewaterhouseCoopers found that if the level of business software piracy in Hong Kong were reduced from its current level of 64% to the US benchmark of 27%, over 5,500 jobs would be created in Hong Kong and an extra 50 million dollars US of tax revenue would be collected.

The Hong Kong film industry once producing over 200 films a year made only 80 films in 1998. It simply cannot exist let alone compete where the fruit of its labour is available in pirated form almost instantaneously with its release. A similar story exists for the music recording companies. To make matters worse there exists anecdotal evidence that recent economic downturn in Asia has seen many formally legitimate producers of music begin to moonlight as pirates. Pirated movies and sound recordings will appear days after a new release and come out at only a fraction of the retail price.

A legal video that costs US $ 20 will be passed over by consumers in favour of a pirated version for $3. Indeed, it is the advent of digital technology and prevalence of high quality, low cost production facilities that have been a boon to the pirate. For example 32 million pirated VCD's were seized in a recent year in Hong Kong compared with a 140,000 pirated VHS tapes. Each of these 32 million VCDÍs were easier to reproduce than taped, was of exactly the same quality as the original master and cost only 35 cents to produce.

It is estimated that CD plant production capacity grew by 40% in 1997, far ahead of the global demand for CD's, generating a 25% increase in optical disk media piracy worldwide. Such equipment is simple to operate, can be switched between different formats from music CD's, VCD's, etc and a single machine can churn out 20,000 disks a day. The role of technological development in the rapid rise of intellectual property piracy in recent years cannot be overstated but it is obviously not the whole story, such technology is available globally and an effective pirating operation can be set up in the area the size of a garage.

This garage could be located in suburban Melbourne as easily as in downtown Hong Kong. Yet currently we donÍt expect to find pirated disks for sale in our local Melbourne shopping centres. The fight against piracy requires effective policy, a legal and regulatory environment and a sustained enforcement effort. Legislation formerly protecting intellectual property exists in most Asian economies. Most are signatories to the various conventions and treaties defining international copyright protection.

Legislation is necessary but not a sufficient condition for the protection of intellectual property. Enforcement is essential. Copyright owners need a strong, effective law enforcement response. They need the means to secure relief against infringement themselves, hence they are often the best placed and most vigilant agents for protection but to do so they need access to the courts and to administrative bodies. They need for example an effective expartite search procedure as a means to prevent the destruction of evidence needed to maintain a court case.

They need courts to issue judgements that effectively deter future acts of piracy or infringement and to do so in a timely manner. The framework that we have been building through the WTL trips and the WIPL, the World Intellectual Property Organisation Treaties would require US trading partners to provide these mechanisms. Protecting US intellectual property internationally in copyright in cutting edge technologies and in other industries is critical to US competitiveness in the 21st Century.

Therefore intellectual property protection is one of the highest priorities of the US international economic policy. Our efforts to address the problem of copyright piracy have been broad and aggressive. They have included the following key elements:

• -Active pursuit of multi-lateral framework for the protection of intellectual property.
• - Aggressive bilateral diplomacy for the protection of US rights.
• - Support for capacity building and developing and transition economies.

The corner stone of our approach to piracy is our efforts to engage countries multilaterally to strengthen international IP standards. IP is easily reproduced and transferred across national boundaries. Hence the only truly effective intellectual property regime is one that transcends national boundaries as well. This is the reason we are so vigorously committed to the World Intellectual Property organisation and the World Trade Organisation and to the important conventions and treaties that are under the auspices of these organisations.

Under the Uruguay round commitments, developed country members have been obligated to adhere to the TRIPS standard, that is the Trade related aspects of Intellectual Property rights, The TRIPS Agreement. Developed countries have been required to adhere to these since January 1996. The focus now shifts to developing country members' which must comply with TRIPS as of 1 January 2000. For some time we have been actively engaging our trading partners in the developing world at both a multilateral and bilateral level on the need for them to be fully compliant with TRIP standard by this date.

Frankly, developing countries are finding compliance a difficult task, especially in the enforcement area. We are taking steps to facilitate their compliance effort but the administration has also made clear, we will hold our trading partners accountable under the WTO dispute settlement mechanism. The US worldwide anti-piracy campaign is a key element approach. In 1998 the Vice-President announced an Executive order requiring all US Government agents to use only legal software in compliance in accordance with licensing requirements.

This was a demonstration effort and a means to put our money where our mouth is. The US and other Governments are often the largest domestic users of software. They can also be the largest violators of copyright. US Embassies worldwide are working with host governments to ensure that they adopt some of the regulations. IP protection has been a corner stone of US commercial diplomacy and has been integrated into our dialogues with foreign governments at all levels.

We also support and encourage trading partners to build capacities to address piracy. We actively engage in cooperative efforts on law enforcement, training and assistance. The Department of State funds and coordinates law enforcement and technical cooperation in the IT area. We are expanding the law enforcement training opportunities for our trading partners where the legal environment and the level of political will indicate that technical assistance will lead to a substantial reduction in piracy.

Within state we now have a million dollar budget dedicated to law enforcement training efforts. The ongoing special 301's review is an inter agency effort by the US to determine which countries are failing to provide adequate protection for US intellectual property, based on direct observation and input from US industry. The 1999 special 301 review was announced on April 30 1999 and examined in detail the adequacy and effectiveness of intellectual property protection in over 70 of our trading partners.

This review emphasised three critical issues, proper and timely implementation of WTO Trips agreement, cracking down on pirated production of optical disks and ensuring government ministries use only authorised software. From this review 57 of our trading partners were identified as denying adequate and effective protection for intellectual property or denying equitable access for US rights holders.

Three WTO consultations were initiated bringing to 13 the number of IP-related WTO complaints filed by the US since 1996. While the 1999 special 301 reviews shows progress it also shows there remains much to be done. Hopefully there will be a growing realisation within the regions economy that IP protection is not only necessary to meet the standards of the emerging world trading system but also necessary to strengthen the rule of law and the prospects for their own domestic increased investment and growth. This is the message the US is pressing. Thank you very much.