Taiwan's cabinet has ordered a crackdown on factories producing pirated compact discs in a bid to safeguard relations with key ally and trade partner, the United States. Premier Yu Shyi-kun issued the order after talks on intellectual property rights with Washington, which has Taiwan on a "priority watch list" for copyright piracy and has threatened to revoke trade benefits.

"The illegal commercial acts of CD pirates have become an obstacle to Taiwan's foreign relations," Yu said in a statement issued by the cabinet late on Monday.

U.S. movie, software and music companies urged the Bush administration on Friday to crack down on foreign CD piracy, which they said cost the U.S. economy an estimated US$20-$22 billion in 2002.

The United States is Taiwan's second-largest export market, taking 21 percent of its $131 billion in exports last year.

Washington is also a key guarantor of Taiwan's security in the face of longstanding political rivalry with mainland China, which regards the island as a renegade province.

Taiwan's premier ordered the creation of a taskforce to help customs inspectors stamp out exports of pirated CDs and called on the economics ministry to revise anti-piracy laws and step up supervision of CD manufacturing plants.

Yu said the economics ministry had two weeks to submit revised intellectual property rights laws to the cabinet.

The government might also hike the reward for tip-offs of factories producing pirated CDs to T$10 million (US$287,400) from T$1 million, he said.

The International Intellectual Property Alliance, which represents U.S. music, movie and software companies, submitted its complaints to the Office of the U.S. Trade Representative, which prepares an annual report on intellectual piracy.

The alliance said CD pirates in Brazil cost the U.S. industry an estimated $771 million in 2002, followed by only slightly lower figures for Taiwan and Russia.

CD piracy is common throughout Asia and Taiwanese pop stars have also complained about the effect on their incomes.