Illicit global trade of counterfeit goods is national security threat

counterfeit goods

By Clay Fuller For The Hill

There is quite literally an army of pirates overseas that is plundering the intellectual property of American and European citizens and businesses. Last week, President Trump issued an executive memorandum about combating pirated goods that calls for a detailed study of counterfeit trafficking and how the United States can better defend its intellectual property. The White House order is one of many initiatives by the United States and European Union to secure our democracies and free markets from the onslaught of authoritarian corruption, kleptomania, and crime.

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Who are the victims of this systematic thievery? A recent report by the Organisation for Cooperation and Economic Development showed that innovators in the United States bear the brunt of the costs, as almost 25 percent of all seized goods have American intellectual property rights. France, Italy, Switzerland, Germany, and Japan are under assault as well. Their total losses represent more than 50 percent of the total seizures of counterfeit goods. In many cases, foreign trade zones are key facilitators. The tidal wave of counterfeit and pirated goods, accounting for more than 3 percent of global trade in 2018 according to the report, comes from, you guessed it, China. In fact, China accounts for over half of total fake goods in the world and more than 75 percent if you include Hong Kong.

Who cares if that designer bag is fake? A healthy academic debate over market economics could be had, but what many do not realize is that it is no longer just luxury items that are being counterfeited. It is now virtually everything, and that is dangerous. Medicines, electrical machinery, and ball bearings are now a large portion of the more than $500 billion a year estimate of trade in fakes. This is where trademarks surely matter. If a counterfeit drug or machine fails, not only can it kill people, it can do irreparable harm to brands built upon patent law.

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