IP Law Daily, AGENCY NEWS: USTR’s 2026 Special 301 Report sounds alarms on trading partners’ IP practices, (May 4, 2026)
Annual review of the global state of IP protection and enforcement points to “egregious” shortcomings in Vietnam and harmful market access restrictions in Europe.
For the first time since 2006, the European Union appears on the “Watch List” in the 2026 Special 301 Report on the adequacy and effectiveness of U.S. trading partners’ protection and enforcement of intellectual property (IP) rights, which was issued April 30 by the Office of the United States Trade Representative (USTR). Among the reasons given for putting the EU on the list are the recent provisional agreement on the EU General Pharmaceutical Legislation (GPL), as well as EU policies on geographical indications and the implementation of legislation impacting digital copyright. In addition, Vietnam is designated a “Priority Foreign Country”—denoting the most serious level of concern. Positive developments include Argentina and Mexico being moved from the Priority Watch List to the Watch List and the removal of Bulgaria from the Watch List.
Report’s purpose. “This Report provides an opportunity to put a spotlight on foreign countries and the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers, which, in turn, harm American workers whose livelihoods are tied to America’s innovation- and creativity-driven sectors,” the report’s executive summary states.
Among the concerns identified by the report are challenges with border and criminal enforcement against counterfeits; high levels of online and broadcast piracy; inadequacies in trade secret protection and enforcement; and “troubling” policies on “indigenous innovation” and forced technology transfer.
“For countries failing to address U.S. concerns,” the report says, “USTR will take appropriate actions, which may include enforcement actions under Section 301 of the Trade Act or pursuant to World Trade Organization (WTO) or other trade agreement dispute settlement procedures.”
Vietnam singled out for egregious problems. In this year’s Special 301 Report, USTR identifies Vietnam as a Priority Foreign Country (PFC). According to the report, this is the first time in 13 years that a country has been listed in this category. The PFC designation “is reserved by statute for countries with the most egregious IP-related acts, policies, and practices with the greatest adverse impact on relevant U.S. products, and that are not entering into good faith negotiations or making significant progress in negotiations to provide adequate and effective IP rights protection,” the report explains. “The specific grounds for USTR’s identification of Vietnam as a PFC are: (1) failure to provide persistent and effective enforcement to combat online piracy; (2) failure to provide sufficient enforcement against widespread counterfeiting; (3) lack of effective border enforcement; (4) lack of enforcement actions against unlicensed software use; and (5) lack of criminal measures against cable and satellite signal theft.”
As a result of Vietnam’s identification as a PFC, USTR will decide within 30 days whether to initiate an investigation under Section 301 of the Trade Act of 1974 based on the grounds identified in this report as the basis for Vietnam’s identification as a PFC. If USTR initiates an investigation, USTR will request consultations with Vietnam and seek to resolve the issues that led to Vietnam’s identification as a PFC.
Countries being “watched.” Pursuant to the statute mandating the Report, the USTR has created a Priority Watch List and a Watch List. “Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IP protection, enforcement, or market access for U.S. persons relying on IP,” the report explains. “Provisions of the Special 301 statute, as amended, direct the United States Trade Representative to develop action plans for each country identified as a Priority Watch List country that has also been on the Priority Watch List for at least one year.”
The six countries placed on this year’s Priority Watch List are Chile, China, India, Indonesia, Russia, and Venezuela. Among the shortcomings cited for some or all of these countries is the lack of protections against the unlawful circumvention of technological protection measures; inadequate copyright enforcement efforts; and the lack of mechanisms for early resolution of pharmaceutical patent disputes. With respect to China, the report states, “Concerns remain about longstanding issues, including technology transfer, trade secrets, counterfeiting, online piracy, copyright law, patent and related policies, bad faith trademarks, and geographical indications.”
The countries on the Special 301 Report’s Watch List—indicating less severe problems—are Algeria, Argentina, Barbados, Belarus, Bolivia, Brazil, Canada, Colombia, Ecuador, Egypt, the European Union, Guatemala, Mexico, Pakistan, Paraguay, Peru, Thailand, Trinidad and Tobago, and Türkiye.
Absent from the list since 2006, the EU makes a return, largely because of December 2025 legislation relating to pharmaceuticals. According to the report, “After formal adoption, the GPL will reduce protection against unfair commercial use of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. It also will condition restoration of the term of protection on criteria such as conducting clinical trials in multiple EU Member States or seeking market authorization in the EU within 90 days of first global submission.” The report notes concerns by pharmaceutical stakeholders that these market entry conditions are beyond their control or are otherwise unreasonable. Other aspects of the GPL are said to undermine patent owners’ rights in the EU to prevent potential commercial activities by follow-on competitors. “Without an effective notification mechanism, the expansion could also adversely affect patent enforcement in the EU by making preemptive injunctive relief difficult to obtain,” states the report.
The report also describes feedback received by the USTR regarding the EU’s Digital Services Act, including its adoption of a framework for limitations of liability that may adversely affect IP rights, especially copyrights and trademarks. The report also indicates that the United States is monitoring the EU’s implantation of its Artificial Intelligence Act, which entered into force on August 1, 2024. In particular, the USTR is looking at impacts on copyright and trade secrets.
Another area of concern is regulatory provisions that implement “overbroad protection of geographical indications (GIs),” which adversely affect market access for U.S. products that use common names in third country markets. “These troubling provisions not only adversely affect trademark rights but also undermine access to the EU market for U.S. right holders and producers,” the report warns. “Similarly, the United States is concerned by the EU’s attempts to restrict certain terms for wine in third-country markets. The United States is carefully monitoring the EU’s GI regulations and proposals as well as the implementation and effects of these regulations and proposals on bilateral trade.”
Positive developments. Argentina and Mexico were moved from the Priority Watch List to the Watch List due to important improvements on IP policy. With respect to Argentina, the report cites the February 2026 signing of the Agreement on Reciprocal Trade and Investment, “under which Argentina made commitments that will benefit American innovators and creators by enhancing intellectual property protection and prioritizing enforcement against intellectual property theft.” For example, Argentina repealed “unduly broad” limitations on patent-eligible subject matter, such as examination guidelines that automatically rejected patent applications for categories of pharmaceutical inventions that are eligible for patenting in other jurisdictions.
Mexico was lauded for, among other things, amending regulations to provide for protection against unfair commercial use and unauthorized disclosure of undisclosed test data generated to obtain marketing approval for pharmaceutical products and agricultural chemical products. The report also refers to improvements in border enforcement, as well as progress toward amending the country’s copyright law to address online piracy concerns.
Bulgaria was taken off the Watch List due to its undertaking significant enforcement actions, including criminal prosecutions. In addition, the report clarifies that the USTR suspended review of Ukraine due to the ongoing war.
MainStory: TopStory Copyright IndustryNewsTrends Patent TechnologyInternet Trademark TradeSecrets