Image caption Ukraine is a "safe haven" for online piracy, the US says

US authorities have named Ukraine as the country with the worst record on protecting intellectual property.

A report by the US Trade Representative says Kiev had failed to fight internet piracy and the use of illegal software.

Such software was even being used by government agencies, it adds. Ukraine has been warned it could lose trade benefits if it fails to act.

The report also raises grave concerns about the alleged misappropriation of trade secrets in China.

This is threat to both US companies and national security, it adds.

In the USTR's annual 2013 Special 301 Special Report, Ukraine is, uniquely, dubbed a "Priority Foreign Country" - the USTR's rarely used, bottom-tier judgement of how countries around the world are protecting US patents, copyrights and other forms of intellectual property rights (IPR).

"I regret that the government of Ukraine has earned the first new Priority Foreign Country designation in 11 years due to its severely deteriorating climate for IPR protection and market access, and call upon that government to reverse recent backsliding and swiftly resolve the problems identified today," said acting US Trade Representative Demetrios Marantis in a statement.

"Rogue" groups with links to the Ukrainian government collect music royalties, falsely claiming they are authorised to do so, the report says. There is no remedial action by the government, which itself is a leading user of unauthorised software, it adds.

'Systematic infiltration'

An IPR "action plan" agreed with Kiev in 2010, the report says, has done little to reverse the deteriorating situation.

"Ukraine has become perceived as a safe haven for online piracy enterprises serving other markets," it notes.

Ukraine's designation as a Priority Foreign Country enables Washington to pursue sanctions under Section 301 of the 1974 Trade Act - either directly or through the World Trade Organisation (WTO).

US media companies welcomed the move.

Meanwhile, China remains among 10 USTR-identified countries given the second-tier ranking of "Priority Watch List" for what the report says is its poor enforcement of intellectual property rights and the "growing problem of misappropriation of trade secrets".

Studies, it adds, "have further indicated that actors affiliated with the Chinese military and Chinese government have systematically infiltrated the computer systems of over 100 US companies and stolen hundreds of terabytes of data, including all forms of trade secrets, such as proprietary technology, manufacturing processes, and confidential business information".

The other Priority Watch List countries named by the USTR are Algeria, Argentina, Chile, India, Indonesia, Pakistan, Russia, Thailand and Venezuela.