Confessions of a Hoosier Democrat

Blogging Indiana Politics and the 2008 Presidential Race.

Friday, February 24, 2006

Brazen Piracy by Sen Evan Bayh

Brazen Piracy

Intellectual property theft by foreign companies is hurting the U.S. economy and undermining crucial support for global trade.

By Evan Bayh

A South Bend, Ind., company that makes industrial adhesives and lubricants, ABRO Industries Inc., lost more than $10 million in business to a Chinese competitor in 2004. When the final tally is in for 2005, the company expects to see even greater losses.

The problem is not that ABRO doesn't work as hard as its competitor, or that it isn't as innovative. The problem is that the Chinese company, Hunan Magic Power Industrial Co., steals ABRO's ideas and sells knock-off products in virtually identical packaging with little threat of punishment. Repeated attempts to stop the Chinese company through trade complaints have proven fruitless.

Unfortunately, ABRO's story is not unique. Across the country, American businesses are losing work and American workers are losing jobs because of intellectual property theft by foreign companies. This brazen piracy hurts our economy, threatens our public health and safety, and increasingly weakens our national security, but little is being done to stop it.

The idea that through hard work, ingenuity, and persistence, every American has an opportunity to get ahead is at the heart of the American promise. But when we allow foreign countries to steal our ideas at the cost of American jobs, that opportunity to succeed disappears, too.

In my travels across the country, I've sensed a growing anxiety about the future and a deep concern about the loss of this promise. As our capacity to innovate increasingly determines our competitive position in the global economy, the risk of intellectual property theft will continue to grow.

The American people have a right to expect their government to do something about that. We must address the issue of intellectual property theft to reassure the American people about the future and to restore the promise of America.

If we can stem the flow of counterfeit goods, we can make a material contribution toward correcting our budget deficit and our current trade imbalance, strengthening our national security, and protecting American jobs.

Intellectual property theft is costing American jobs and undermining crucial support for global trade. Statistics show that the United States has lost 750,000 jobs because of intellectual property theft; the FBI estimates that it costs American businesses between $200 billion and $250 billion per year. The global trading system isn't going to work very well if we buy from other countries when they have a competitive advantage, but they simply steal our ideas and hard work when we have a competitive advantage.

Intellectual property theft also threatens our public health and safety. The Federal Aviation Administration estimates that more than 500,000 parts installed on airplanes each year are counterfeit. Counterfeit drugs make up 10 percent of the pharmaceutical market, endangering thousands of patients who depend on sensitive doses of medication to maintain their health. Recently, U.S. Customs and Border Protection officers in San Francisco seized 51 shipments of counterfeit Tamiflu pills. Lab tests revealed that the counterfeit drugs contained only trace amounts of the active ingredients for Tamiflu, the drug that may help fight outbreaks of avian flu.

The fight for America's economic future is also a fight against global terrorism and terrorist financing. There is alarming evidence that al Qaeda, Hamas, and other regional terrorist organizations are deriving an increasing part of their financing from intellectual property theft and counterfeiting. According to U.S. News and World Report, the 1993 bombing of the World Trade Center was partially financed through the sale of counterfeit goods, particularly fake Nike T-shirts sold by a store on Broadway in New York City. Interpol has reported that seized al Qaeda training manuals are recommending the sale of fake goods as a revenue source for the organization's illegal activities.

The Bush administration's strategy for combating intellectual property theft has produced few results and offers little encouragement for cooperation among agencies in charge of intellectual property investigations. Most importantly, the current initiative doesn't include key agencies that could help us combat the threat that intellectual property theft poses to our national security.

To treat this threat with the urgency it deserves, I have introduced legislation with Sen. George Voinovich (R-Ohio) that will aggressively fight the intellectual property theft that hurts American businesses and costs American jobs.

First, our legislation calls on the federal government to create a coordinated response to intellectual property theft. Essentially, we're going to give this the same priority and determination that we have already brought to the battle against money laundering and terrorist financing. We will create one organized task force to coordinate activities to stamp out intellectual property theft by the Departments of Commerce, Justice, State, and Treasury, with the leader of the task force working in the White House to ensure that this problem gets the attention it deserves. We will add Treasury's Office of Terrorism and Financial Intelligence to the task force, in recognition of the danger intellectual property theft poses to our national security.

We will also bring that same focus and determination to our global efforts. Under our legislation, the United States will be charged with taking the lead in bringing the world community together to fight global intellectual property theft, in the same way we already fight money laundering. Finally, we are going to require an annual report to Congress, with updates on the progress of this coordinated effort.

From terrorism to lost jobs, intellectual property theft affects Americans in almost every aspect of their lives. It's not often that in a single step you can help strengthen the U.S. economy, protect Americans' health and physical safety, and dry up terrorist financing. But the Intellectual Property Rights Enforcement Act would do exactly that. Globalization and trade can be good things. They offer new economic opportunities for American businesses and workers. But no country should be allowed to compete with an unfair advantage. The Intellectual Property Rights Enforcement Act will help restore a level playing field and renew the promise of America.

Evan Bayh is U.S. senator from Indiana.

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