The launch of the investigation comes after the U.S. Trade Representative put Ukraine on the top of its annual watch list of countries that it says fail to crack down on online piracy and intellectual property violations.
The list is part of an annual report, known as the Special 301, that USTR publishes to put a spotlight on websites and countries where it believes online piracy is rife.
“The United States has identified serious concerns with Ukraine’s treatment of intellectual property rights, as described in our Special 301 Report,” Acting U.S. Trade Representative Miriam Sapiro said in a statement.
“We will consult with the Government of Ukraine on the practices that led us to initiate this investigation.”
In the report, the trade regulator argues that the Ukrainian government has not cracked down on online pirate sites and illicit groups that profit from collecting royalties payments that are based within the country.
USTR also calls out the country's failure to take action against ExtraTorrent.com, which it says is one of the most highly trafficked pirate sites in the world.
The Ukrainian has government has admitted to using pirated software, USTR says, and has not taken steps to rectify the problem although it's previously committed to do so.
"The government of Ukraine acknowledges that a significant percentage of the software used by the government itself is unlicensed," the Special 301 report states.
As part of its investigation, USTR has started collecting comments from stakeholders about Ukraine's performance on protecting intellectual property rights and will hold a public hearing in July.
The Recording Association of America (RIAA), which represents top music labels in the U.S., cheered the trade regulator's decision to launch the investigation into Ukraine.
“For far too long, Ukraine has tolerated, and in some instances even encouraged, the establishment of conditions that undermine the protection of legitimate property interests to the great detriment of U.S., Ukrainian and other cultural communities,” Neil Turkewitz, executive vice president at the RIAA said in a statement.
The music industry lobby has lobbied hard over the years for stronger rules against websites that illegally offer copyrighted songs.
It has also pushed for royalties rules that would fairly compensate its labels and recording artists.
"We of course have no interest in punishing Ukraine through the imposition of trade sanctions, but it is long overdue for the Ukrainians to promote the rule of law and live up to their international obligations," Turkewitz added.
Source: The Hill