In less than a week, the United States Trade Representative (USTR) is expected to publish its 2025 “Special 301” annual report. The report reviews the global state of intellectual property (IP) rights protection and enforcement. For reasons that are obvious to anyone that lives here, Pakistan has always been on the list, and this year may mark a worsened ranking in the report. In the past 12 months, foreign investigative journalists have exposed several glaring examples of Pakistan’s regulatory incompetence.
The investigation's revelations and the absence of any regulatory action paints the picture that the state is co-sponsoring IP theft, piracy, and crony capitalism.
American exposés
The day after the USTR published its 2024 Special 301 report, the Daily Dot ran a story alleging that every telecom and Internet services provider in Pakistan was guilty of rampant digital piracy. While these two company categories are meant to be regulated by the Pakistan Telecom Authority (PTA) and the Pakistan Electronic Media Regulatory Authority (PEMRA), the investigative report showed evidence that the regulators know what is happening and choose inaction.
The only tangible outcome to end a slice of the piracy problem was the closure of a digital piracy service that allowed customers of one ISP to access pirated software, pirated movies, and pirated games. The customers expressed their frustrations on various social media platforms (Reddit and more)
Months later, another investigation revealed that Pakistani software companies are stealing jobs meant for American engineers by either using deepfake technology to pose as actual Americans engineers or using leaked social security data. The investigators also named a Pakistani software company that was behind the scam, where whistleblowers claimed the impersonating engineers had impersonated companies like Scale AI.
Again, no action or overt condemnation came in this regard from the Pakistan IT Industry Association (P@SHA) nor from the Ministry of Information Technology and Telecommunication (MoITT). Neither any action of any sort was taken nor the matter persuaded. Also, there have been no attempts to look into which other companies are engaged in deep fake impersonations for jobs stealing.
Five years of warning
On December 14, 2021 as a nominee to be Ambassador to the Islamic Republic of Pakistan, Donald Blome gave a statement to the Senate Foreign Relations Committee, which included an interest to "work with Pakistan to resolve market access issues, including concerns with Pakistan’s digital economy regulations, intellectual property protections, and contract enforcement."
In "Landscape Assessment and Capital Map Report" published on August 15, 2022, the United States Agency for International Development (USAID) Investment Promotion Activity (IPA) team states "counterfeiting and piracy remain present in Pakistan, especially in the pharmaceuticals, printed materials, optical media, digital content, and software sub-sectors."
In April 2023, the United States Trade Representative (USTR) announced that Pakistan had once again been placed on the Special 301 Watch List due to deficiencies in intellectual property enforcement. This designation indicates ongoing concerns regarding Pakistan’s ability to effectively protect and enforce intellectual property rights, which can have significant implications for trade relations, foreign investments, and innovation within the country.
According to the 2023 National Trade Estimate Report on Foreign Trade Barriers, commissioned by the USTR, Pakistan faces several challenges in ensuring robust IP enforcement. The report highlights that a lack of public awareness about intellectual property rights, coupled with budgetary and human resource constraints, continues to hinder progress in enforcing IP laws. These systemic issues have created an environment where counterfeiting, piracy, and patent infringements remain prevalent, impacting both domestic and international stakeholders.
Furthermore, Pakistan’s ongoing but incomplete efforts to align its patent, trademark, copyright laws, and broader IP regulatory frameworks with international standards are still lacking. Despite some progress, these are the key areas that require further improvement, emphasising the need for stronger legal frameworks, enhanced institutional capacity, and more effective enforcement mechanisms to meet global expectations and foster a more secure IP ecosystem.
A month after the USTR's Special 301 Watch List in 2023 was published, Pakistan set up a Special Investment Facilitation Council (SIFC) to attract foreign investment, with the immediate mission of elevating the Foreign Direct Investment (FDI) in Pakistan to the noteworthy sum of five billion dollars.
On March 1, 2024, the USTR commissioned "2024 National Trade Estimate Report" on Foreign Trade Barriers was published. The report repeated the same findings from the previous report in 2023, exemplifying that almost nothing had changed in a year.
Two weeks later, the Ambassador of the United States of America to Pakistan met with the Prime Minister Shehbaz Sharif, who "emphasised the need to maintain the positive momentum by regular convening of existing dialogue mechanisms, focused on trade, investment, energy, health, defence, education, agriculture and climate change".
Then on April 1, 2024, the USTR had once again placed Pakistan on the Special 301 Watch List in 2024 due to poor IP enforcement. The circulations support four years of claims made by the United States Ambassador to Pakistan, the USTR, and the USAID regarding Pakistan's piracy and IP issues.
What will it take?
At this point of time, the way things are being operated, maybe an executive order from the US President Donald Trump will get Pakistan’s decision makers to take any punitive actions against the exposed IP theft companies and the ones operating in the open without impunity. The gentle yet firm approach to persuade Pakistan to take intellectual property enforcement seriously has not worked. Pakistan's egregious apathy towards IP violations has rendered this approach increasingly ineffective.
Given Trump’s track record to protect American interests, we may be at the cusp of a more muscular response. The Trump administration could potentially wield its significant influence within the International Monetary Fund (IMF) to block loans and aid to Pakistan.
By recontextualising Pakistan's inaction as a material breach of international obligations, the US could create a narrative that justifies economic sanctions. This form of employing a form of choice architecture could alter Pakistan's behaviour. By subtly manipulating the economic incentives, the US can nudge Pakistan towards taking IP enforcement seriously. The consequences of inaction would be clear: Pakistan risks facing economic sanctions for indirectly sponsoring the piracy of American media IP.
The clock is ticking. Pakistan must choose between protecting IP rights - be it American or any other - or risk facing the economic consequences of its inaction. The US is poised to apply a gentle yet firm pressure – a nudge that may soon become a shove.
Ali Asad Sabir is working as project manager at Mahbub ul Haq research centre at Lahore University of Management Sciences (LUMS)
All facts and information are the sole responsibility of the author