The United States on Friday named China and Russia as among the worst protectors of intellectual property rights, flooding global trade with counterfeit items such as DVDs, designer bags, medicines and software. In an annual report on intellectual property rights protection, the US Trade Representative's office singled out China and Russia for allegedly failing to respect US patents and copyrights.

The Special 301 Report, named after the section of US law on which it is based, spotlights "one of the central challenges facing the global economy," USTR Susan Schwab said.

"Pirates and counterfeiters don't just steal ideas; they steal jobs, and too often they threaten our health and safety," the top US trade official said.

The report said US authorities still see "serious" concerns with respect to China and Russia, in spite of some evidence of improvement in both countries.

Schwab's office announced it would once again retain China on its priority watch list and continue monitoring China under Section 306 of the 1974 Trade Act in a bid to maintain pressure on China to improve its intellectual property rights (IPR) situation. "While the United States continues to seek cooperative channels to work with China to strengthen that country's IPR regime, high levels of copyright piracy and trademark counterfeiting remain serious concerns," her office said.

Meanwhile, the federal government is also using the World Trade Organization's dispute settlement process "to address a number of specific deficiencies in China's IPR regime," the statement said. The USTR said the Bush administration continues to work for improvements to Russia's IPR regime, and some progress has been made, for example in the raiding of unlicensed factories.

It noted, however, that large-scale production and distribution of IP-infringing optical media and Internet piracy in Russia "remain significant problems that require more enforcement action." China and Russia are among the nine countries on this year's priority watch list that includes Argentina, Chile, India, Israel, Pakistan, Thailand and Venezuela.

Those countries will be the subject of "particularly intense" bilateral dialogue during the coming year, the USTR said. The world's largest economy and China, its emerging Asian rival, already are at loggerheads over copyright protection at the WTO, the international trade watchdog. The WTO agreed in September to hear a US complaint filed in April 2007 against China alleging that Beijing's legal structure for protecting and enforcing copyright and trademark protections is unfairly deficient and does not comply with WTO rules.

Washington claims that US companies have lost billions of dollars due to copyright theft and piracy in China while Beijing insists it is doing its best to stamp out the problem. In a conference call with reporters Friday, the assistant USTR in charge of intellectual property, Stan McCoy, indicated a ruling from the WTO dispute settlement panel could come within months. "If things proceed in line with current expectations, a decision from the panel would be possible this fall," McCoy said.

The Special 301 Report covers 46 countries. Four were moved from last year's priority watch list to the less-severe watch list due to their improvements in IPR protection: Egypt, Lebanon, Turkey and Ukraine.

The watch list also includes Algeria, Belarus, Bolivia, Brazil, Canada, Colombia, Costa Rica, Czech Republic, Dominican Republic, Ecuador, Greece, Guatemala, Hungary, Indonesia, Italy, Jamaica, Kuwait, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Romania, Saudi Arabia, South Korea, Spain, Taiwan, Tajikistan, Turkmenistan, Uzbekistan and Vietnam.

Two other trading partners -- Belize and Lithuania -- were being removed from the report.