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It also has been claimed that, because of doubts as to whether the Berne Convention is self-executing, U.S. adherence would mark the first step towards unchecked extension of moral rights protection through expansive judicial interpretation of the treaty, irrespective of whether a moral rights provision appears in implementing legislation. This would not be possible under any of the proposed bills. All three bills expressly state that the Convention is not self-executing and that U.S. obligations may be met only by appropriate domestic law.

Mr. Chairman, we in the Department of Commerce look forward to working with your Subcommittee on fashioning a consolidated legislative package that will fulfill the wish expressed by Numa Droz, the chairman of the Diplomatic Conference at which the Berne Convention was adopted 101 years ago. He hoped that "when the pending questions concerning the rights of authors shall have been settled by the Congress, the United States will be able to join the contracting countries, and that they will occupy the place which rightfully belongs to a country that is distinguished by so active and enlightened intellectual activity." Mr. Chairman, the time is now ripe to act upon this offer.

This concludes my prepared statement. I will happily respond to any questions you or your colleagues on the Subcommittee may have.

Mr. KASTENMEIER. Next I would like to call on our trade representative, Mr. Clayton Yeutter.

STATEMENT OF HON. CLAYTON YEUTTER

Mr. YEUTTER. Thank you very much, Mr. Chairman, and members of the subcommittee. It is a pleasure to be back for my second appearance before this subcommittee. As Congressman Moorhead indicated, we were here for the debate on the manufacturing clause a year ago at this time, and certainly we are pleased with the outcome of that discussion within the U.S. Congress.

In fact, I commend the members of this subcommittee and the Congress as a whole for exercising the good judgment to terminate that clause and that very positive action, of course, accounts for our being here this morning because it now gives us the privilege of qualifying for membership in the Berne Convention, a privilege that heretofore has been denied us.

With respect to the basic issue at hand, Mr. Chairman, I would like to paraphrase from my prepared statement which I would like to offer for the record and simply proceed.

Mr. KASTENMEIER. Without objection, it will be received. [Statement follows:]

STATEMENT OF AMBASSADOR CLAYTON YEUTTER
UNITED STATES TRADE REPRESENTATIVE

BEFORE THE SUBCOMMITTEE ON

COURTS, CIVIL LIBERTIES AND THE ADMINISTRATION OF JUSTICE

COMMITTEE ON THE JUDICIARY

U.S. HOUSE OF REPRESENTATIVES

JULY 23, 1987

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:

1

I appreciate this opportunity to appear before this Subcommittee to express the Administration's strong support for United States adherence to the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention). I would also like to express my thanks to the Chairman for introducing his bill and holding these hearings. A full and open discussion of these issues is long overdue. Currently, three bills are pending before Congress that provide for implementation of the Berne Convention. These are H.R. 1623, S. 1301 and H.R. 2962, which was introduced on July 15th, by Representatives Moorehead and Fish at the request of the Administration.

As my colleagues and I will testify, the Administration is strongly in favor of adherence to the Berne Convention. In my remarks, I hope to bring out some of the problems we encounter in trade discussions because the United States does not adhere to the Berne Convention, as well as some of the advantages we would enjoy if we were to join.

Trade in goods and services protected by intellectual property is increasingly important to the U.S. and world economies.

2

U.S. industries relying upon copyright protection for their creative efforts represent a wide diversity of activities including traditional publishing interests, the motion picture industry, music publishing and recording industries, and computer software producers and distributors. These industries have an important place in the U.S. economy and international trade. In 1982, for example, trade in goods and services produced by these industries resulted in a trade surplus of over $1.2 billion. Providing strong copyright protection and enforcement of those rights rewards creative activity and provides recognition and incentives for future work. Inadequate protection simply fosters piracy.

The United States recognizes the tie between increased trade and providing adequate and effective protection of intellectual property rights. Funds to support creativity and innovation come from trade in goods protected by intellectual property rights. Failure to provide and enforce such rights will in the future diminish trade in new and creative products.

In recent years, the Administration has engaged in an all out effort to attain the highest levels of protection and enforcement of copyrights, as well as other forms of intellectual property, internationally. Armed with legislation amending Section 301 of

the Trade Act of 1974 and the Generalized System of Preferences (GSP) program, we have initiated four investigations of copyright policies and practices in Brazil, Korea, Indonesia and, just last week, Thailand. In addition, during my tenure at USTR, we have had bilateral discussions concerning copyright issues with more

than 15 other countries.

In all of these bilateral negotiations, we have been operating under a handicap because we had to explain and defend U.S. nonadherence to the Berne Convention. Too often we have found that our non-adherence to Berne is the basis for foreign resistance to making changes in their inadequate laws. Non-adherence to Berne

allows trading partners to view the United States as something of a "second class citizen" in the copyright world, and question our commitment to attaining high levels of copyright protection internationally.

Achieving meaningful results in negotiations requires leverage. In this area, the leverage comes from setting the right example for the rest of the world, and that requires adherence to the Berne Convention.

Recently, we were involved in tough negotiations with Brazil over improvements in their copyright law. We presented forceful arguments in favor of strengthened copyright protection as being in the best interest of both Brazil and the United States. However, we found ourselves in difficulty when the Brazilians asked why the United States was not a member of the Berne Convention. Brazil has been a member of the Berne Convention since 1922.

U.S. adherence to Berne has become an important issue in our free trade area talks with Canada. We are asking the Canadians to make major improvements in their intellectual property regime, including implementation of the obligations of the most recent text of the Berne Convention. Acceptance of new Berne obligations is at the heart of important improvements we hope Canada will