The Bush administration on Thursday accused South Korea (search) of failing to halt the piracy of American movies and music that it said was costing U.S. companies millions of dollars in lost revenue.

The administration announced that South Korea was being added to a priority list of countries that are subject to special monitoring and consultations aimed at making sure the foreign government acts to address the copyright piracy (search) issues that have been uncovered.

If South Korea fails to comply the United States would have the ability to bring a case before the World Trade Organization (search). If the WTO ruled in America's favor, the Bush administration would have the power to impose economic sanctions on South Korea equal to the lost revenue from the copyright piracy.

"The administration is committed to protecting American creativity and intellectual property, one of the most dynamic sectors of our economy," U.S. Trade Representative (search) Robert Zoellick said in announcing the decision to target South Korea.

In targeting South Korea, the administration said that a special review completed late last month found that the growth of on-line music piracy in the country was causing serious economic damage to both U.S. and other foreign music companies as well as South Korean recording companies.

The administration said the review also found continued piracy of U.S. motion pictures in South Korea that U.S. trade officials estimated were costing millions of dollars in lost revenue for U.S. and South Korean companies who held the copyrights to the movies.

"The pirating of U.S. intellectual property robs Americans and hurts those countries whose economies rely on innovation, technology and investment," Zoelleck said in a statement. "Open markets and the protection of intellectual property are critical to the continued growth of our economy and we'll vigorously press our trading partners to follow the rules."

The administration said it had had been encouraged by some steps taken by South Korea including the granting of police authority to inspections teams responsible for investigating the piracy of computer software.

But the U.S. complaint said the South Korean government had failed to move on two priority issues, submitting legislation to improve the protection of sound recordings and resolving film piracy issues related to the Korea Media Rating Board.

The administration is required by Congress to do an annual review of copyright right problems around the world. The last review in May had highlighted a number of concerns about South Korea but the counry's status on a watch list was not changed at that time.

The action on Thursday to elevate South Korea to the priority watch list will mean it will be subject to greater scrutiny by Zoellick's office.

South Korea becomes the 12th country or trading group already on the U.S. priority watch list because of U.S. allegations that the nations are not doing enough to halt the piracy of intellectual property.

The 11 other nations on the list are Argentina, the Bahamas, Brazil, the European Union, India, Indonesia, Lebanon, the Philippines, Poland, Russia and Taiwan.