China and Russia are the two worst foreign infringers of US software and music copyrights and should remain on the US government's priority watch list, a group representing the software, music, books and movie industries said today.

The International Intellectual Property Alliance (IIPA) made the claim as part of its recommendations to the US Trade Representative. It asked government officials to keep both countries on its Priority Watch List when it meets to discuss the annual Special 301 review of copyright piracy. Nations placed on the list are watched closely for signs of improvement and failure to take action can result in them losing certain duty-free trade privileges.

The IIPA said the worst 60 foreign music and software pirating nations cost industry members $15.25bn last year, compared to $15.83bn a year earlier. IIPA estimate the figure could be as much as $35bn if the US and the rest of the world are included.

China topped all rivals on the IIPA most-wanted list by pumping out $2.21bn worth of pirated goods last year, mainly business software. Russia ran a close second at $2.18bn. China's 2006 figure marks a slight improvement over the previous year, when the IIPA estimated its piracy at $2.37bn. Russia took a sharp turn for the worse as in 2005, Russian copyright piracy only cost IIAP members $1.76bn.

Music, software and movie trade groups view the Special 301 process as the best means available for them to encourage greater copyright protection globally, IIAP said.

The group recommended that 16 countries, including Canada, China, Mexico and Russia, be placed on the Priority Watch List, putting them up for the highest degree of scrutiny. Canada and Mexico, border neighbours of the US, are two of its biggest trading partners.

Italy escaped an IIPA recommendation for the priority list despite hosting the third worst copyright infringement problem, by value, on the group's list. According to the IIPA, Italy pirated $1.43bn worth of US software and songs last year, down slightly from $1.62bn the year before. The group said its decision to recommend a country for the top list is based on the total amount and on efforts to improve.

IIPA recommended that Italy be placed on the Special 301 Watch List, along with 27 other countries or territories.