can meet, each with a video cassette player now costing only a few hundred dollars. The cinema house and commercial TV station of course remain vital to us both here and abroad. But practically all of our outlets are in flux, as are we in our relationships with them. We are struggling to take advantage of the opportunities offered by these new technologies, and to find technological answers to certain of the security risks which they entail. As but one example, Universal and two other major producers granted a license for cable transmission of our motion pictures on a tape delay basis in Panama many months ago. More recently, we have authorized this same type of cable service in license agreements for Costa Rica, El Salvador and Honduras. It is thus Panama which will now become the exception as entities duly licensed under copyright enhance their operations elsewhere in the region. The Panamanian system which has the necessary authorizations, Video Cable Comunicaciones, S.A., cannot yet go forward and apply the expertise in legitimate cable which it has gained from its operation in Buenos Aires. It could not possibly compete with REXSA, the already installed pirate system which honors the policy of no government and takes a license from no copyright proprietor. It has been made painfully clear that even in the best of circumstances, we are going to need help from those an end to it. Please require that Panama make a choice between protecting the small but rich group of elitists which is REXSA on the one hand, and receipt of CBI trade benefits on the other. Not only does this type of satellite signal piracy deprive owners of fair compensation for the use of their property, but it also runs directly counter to three major and pressing U.S. policy goals: (1) the protection of intellectual property; (2) the legitimate economic development of the Caribbean basin; and (3) the promotion of positive U.S. trade growth. Indeed, in the Administration's Statement on International Trade Policy, issued in September 1985, it was emphasized that "an important new trade priority will be to reduce and to eliminate barriers to and distortions in U.S. trade arising from inadequate foreign protection of U.S. generated intellectual property--patents, copyrights, and trademarks." Please advise Panama that it is ineligible for further discretionary benefits from this country unless and until it acts as it has promised to act. Thank you for your attention. Mr. GUARINI [presiding]. Thank you very much, Mr. Morgan. Mr. Schulze has another meeting, and he wanted to ask a question before he leaves. Mr. Schulze. Mr. SCHULZE. I thank you, Mr. Chairman, for the opportunity. The question is for Mr. Alexander. In your testimony, you describe the dramatic decline in Jamaica's exports of bauxite and aluminum, and you, in your testimony, you also talked about the opportunity to attract new capital. What steps, in your opinion, could we take to assist you in attracting investment capital. I know that's essential for your economic growth, and with the problems from the other area, it would be helpful to us if you have any concrete suggestions in this area? Mr. ALEXANDER. The steps that could be taken is to enable us to have stability in the program, so that the investors can have the ability to plan, and that they can know exactly what will happen on the program, and any assistance that can be given in that area will certainly, in our view, enhance the plan. At the present time, the private sector is very much geared up to make the plan work. And as I said, on the basis of a good partnership, we need capital, we need markets, and we at home have the labor. Mr. SCHULZE. Mr. Alexander, the President's original proposal was for a 10-percent investment tax credit for investment. Mr. ALEXANDER. Yes. Mr. SCHULZE. Would that have made a significant difference, in your opinion? Mr. ALEXANDER. Yes, sir, it would have, and we understand your restraints at the present time. But I have always been of the firm belief that if that had been passed, the CBI would have-there would have been more progress. Mr. SCHULZE. Suppose we put it in now and phased it out. If we put it in at 10 percent, and then phased it out, would that give you a shot in the arm? Do you think that would Mr. ALEXANDER. I believe so. You could give it and put it over a period, so that we have a chance to really get it moving. But I think it would encourage U.S. investors to come in and look at the area. Mr. SCHULZE. I thank you, Mr. Alexander, and I thank the Chair's indulgence. Mr. GUARINI. Thank you, Mr. Schulze. Mr. Alexander J. Burke, McGraw-Hill, Inc., representing the International Copyright Protection Group, the Association of American Publishers. We welcome you. I understand you come from New Jersey, my State, Mr. Burke; is that correct? Mr. BURKE. Yes, Mr. Chairman. Mr. GUARINI. Well, you have an extra welcome. [Laughter.] Do you want to proceed with your statement and your remarks. STATEMENT OF ALEXANDER J. BURKE, SENIOR VICE PRESIDENT, MCGRAW-HILL, INC., AND CHAIRMAN, INTERNATIONAL COPYWRITE PROTECTION GROUP OF THE ASSOCIATION OF AMERICAN PUBLISHERS Mr. BURKE. Mr. Chairman and members of the subcommittee, my name is Alexander Burke. I appear before you on behalf of the Association of American Publishers and my own company, McGraw-Hill. The AAP is a trade association of the U.S. book publishing industry and is a cofounder of the International Intellectual Property Alliance, whose members include trade associations representing virtually the entire U.S. copyright industry. As members of this subcommittee know, piracy in all its forms is a problem of unprecedented dimension, accounting for billions of dollars in trade losses to the United States each year. Recent estimates prepared by the alliance have shown that book piracy in the 10 countries selected for study have resulted in losses of over $400 million annually and of all copyrighted works, about $1.3 billion. We come to this committee out of a sense of deep frustration, not unlike Mr. Morgan's. Despite the efforts of our company, of our coalition, and AAP and of the Congress and the administration, we must report to you that book piracy in the Dominican Republic continues on a grand scale. When this committee put final touches on the Caribbean Basin Economic Recovery Act in 1983 and the President signed it into law, we were hopeful that the actions that we all had taken would be sufficient to remove that country from the list of international pirate nations. While this Government continues to enjoy the trade benefits that the CBI provided, American authors and publishers continue to suffer estimated losses of $7 to $10 million per year from the continuing theft of our intellectual property, of which this is one recent example purchased in a bookstore in the Dominican Republic. Your committee was the first to recognize the importance of intellectual property protection to the United States and to the world economy. Without adequate and effective protection, a company whose business is based on intellectual property simply cannot do business. We can't compete with the pirates. They don't have all the cost that we do. And a country cannot expect open access to our market while effectively closing theirs. I wish briefly to recount to you the recent history of our efforts in the Dominican Republic and the reasons for our frustration. The story begins with the CBI itself. Under its provisions, countries within the region are asked to meet certain criteria in the act as a condition of receiving trade concessions. Your committee supported the addition of new mandatory and discretionary criteria which dealt specifically with copyright protection. Both our industry and the U.S. Government insisted in 1983 that without changes in the law and practice of the Dominican Republic, that country could not qualify for designation under these criteria. In the end, in order to obtain beneficiary status, that government made us a number of solemn promises and declarations with regard to book piracy and copyright protection. These commit ments and declarations are contained in a November 1983 letter from Foreign Minister Imbert to Secretary Shultz and Ambassador Brock and is contained with my testimony. It briefly outlines the commitment of the Government to introduce a new copyright bill in its next legislative session at the end of February 1984. The bill was to contain provisions which would not only make piracy unlawful, but would have severe monetary and penal sanctions and substantive procedural improvements. We were agreed upon those things at that time. In summarizing my testimony, a new copyright bill was introduced in February 1984, and continued delays led to even the terrible condition that in February 1985, the Government merely reintroduced a previous, admittedly inadequate bill. Again, we urged substitution of an improved version, got their agreement, but delays went on and on. Due to our deepening frustration, we went to the new U.S. Ambassador to the Dominican Republic, Lowell Kilday, but even the Ambassador, when he brought this matter to the attention at the highest levels of the Government, was told that no action could be taken until after the upcoming elections. Mr. Chairman, the continuing damage to American authors and publishers and the very integrity of U.S. trade laws and administration policy demand that this piracy be stopped. Our objective is not to have action taken which would provide the Dominican Government of trade benefits, but to ensure that copyright protection is assured for our works. We therefore urgently seek the help of the subcommittee, in cooperation with the appropriate administration officials at the highest levels, in taking every possible action to have the Dominican Republic live up to its commitments. In this regard, any extension to the Dominican Republic of concessions of imports of textile products and apparel, a new initiative announced by President Reagan on February 20 and highlighted by Ambassador Yeutter and Ambassador Santaella during these hearings would be completely inappropriate until their new copyright law is adopted. We made agreements with them on which they got those benefits. We think that no new benefits should be given to them until they have fulfilled those commitments. Mr. Chairman, in closing, your committee has been unanimous in its support of copyright rights, intellectual property rights, so has the Congress, so has the administration, and we hope that we could find a way to convince the Dominican Republic that its interests lie with ours in halting piracy and living up to its past agreements. Thank you, Mr. Chairman. [The prepared statement follows:] |