By Kevin D. Williamson
Sunday, December 22, 2019
President Donald Trump’s incompetently executed trade war
is set to cost U.S. companies something like $316 billion through the end of
2020, a conservative estimate, and the indications from the tentatively
emerging trade armistice with Beijing is that it has accomplished donkey squat
on the biggest beef U.S. firms have with China: the theft of intellectual
property, particularly in the form of counterfeit goods.
The effort to control counterfeit goods is a lot like the
effort to control the use of firearms in violent crime: Government is willing
to try almost anything short of doing its job.
The gun-control case and the counterfeit-goods case
contain important parallels. A significant one is the government’s attempt to
outsource hard law-enforcement work to businesses. That’s a textbook example of
the paradoxical fact that it is far easier to enforce the law on people and
institutions already inclined to obey it, e.g. federally licensed firearms
dealers and the (by definition) law-abiding types who do business with them.
Chasing illegal gun dealers working out of the trunks of their cars through the
streets of Chicago is exhausting work, whereas leaning on a
multi-billion-dollar sporting-goods company with a fixed address, regular
hours, and business records is a piece of cake.
In April, President Trump signed a memo — he signed a
memo! — expressing the president’s presidential displeasure with the fact
that counterfeit goods are sometimes sold on Amazon and Alibaba and directing
those companies to do . . . something . . . about it. Amazon already
takes proactive if imperfect measures against counterfeit goods at a cost it
estimates around a half-billion dollars a year. That is why you do not see a
lot of items such as fake Rolexes on Amazon. (Fake here meaning
counterfeit, not cheesy knockoffs that borrow the design cues of the real thing
but not its brand name.) The memo also directs the Department of Homeland
Security, the Commerce Department, and the Justice Department to come up with
recommendations for reducing the sale of counterfeit goods. Donald Trump has
been bitching about trade since I was in elementary school — you’d think he’d
have one or two ideas of his own by now.
I have a recommendation: Enforce the law. Get off your
asses and do your jobs.
The United States has robust anti-counterfeiting laws,
which would be even more robust with the implementation of Counterfeit Goods
Seizure Act of 2019, a bipartisan bill (from Senators Bill Cassidy of
Louisiana, Thom Tillis of North Carolina, Chris Coons of Delaware, and Mazie
Hirono of Hawaii) that enjoys the support of the International Trademark
Association. The U.S. government already has the power to seize certain
counterfeit goods; the bill would expand the category of goods eligible for seizure
to include those that infringe “design patents,” which is to say, counterfeits
that replicate the real thing in everything but name.
That’s a good idea, but it won’t work unless the U.S.
government gets serious about doing its job when it comes to law enforcement.
As it stands, only about 3 percent of the shipping containers entering U.S.
ports are inspected. The U.S. government manages to seize only about $1.4
billion a year in counterfeit goods, almost all of that being goods sent
through the mail, mostly fake watches and handbags. All the statutory power in
the world will not do any good unless Uncle Stupid puts in the grunt work:
inspecting, investigating, indicting, seizing goods and financial assets,
making it impossible for offenders to access shipping and banking services,
etc. There is not a lot that we can directly do about what happens inside China
and other countries, but somebody in the United States is receiving U.S.-bound
counterfeit goods, and we could prosecute the heck out of them — if somebody
were willing to put in the work.
It’s a funny old world: Federal agents will birth bovines
if you try to bring a Diet Coke through airport security, but the vast majority
— nearly the entirety — of the shipping containers entering U.S. ports do not
get so much as a peek. We could hire a lot of port inspectors with what we’ve
just pissed away on the trade war.
Lawyers, too. Some people bitch and moan about their
intellectual property, but the big boys do something about it. The Scotch
Whisky Association, for example, is a tireless defender of the intellectual
property of its defenders; it has just sued a U.S. distillery over using the
word “highlands” in its marketing material, which, the whisky police insist,
falsely suggests an association with Scotland and its famous potables. More significant,
the Scotch Whisky Association also has been successful in defending its members
intellectual property in China, working through Chinese institutions. But that
kind of work is not easy or cheap — it requires investigators, litigators,
lobbyists, and that most precious of all commodities: time. A few other trade
associations have had similar success, the Swiss watchmakers among them.
Businesses will have to help themselves to some extent.
(And they do.) But protecting our rights is the reason we institute governments
to begin with. It is the reason we have those great big heaving public
payrolls. (In almost every federal agency, personnel is far and away the
largest expenditure.) But even with all that money and manpower, it can be
difficult to get the U.S. government to focus on its job. There are reasons for
that — laziness, bureaucratic inertia, the dread of substantial accountability,
etc.
Rather than take meaningful discrete steps with definable
goals on the matter of counterfeiting, the Trump administration (like its
predecessors) has chosen to lump counterfeit goods in with a slop-bucket of
other trade complaints ranging from the substantive to the farcical. Properly
understood, counterfeit goods aren’t even really a trade question at all: There
are counterfeits produced right here in the United States, too.
Diplomatic efforts have been incompetent under the past
three administrations: The proposed Anti-Counterfeiting Trade Agreement failed
for reasons that should be familiar to those who have followed other
multilateral trade negotiations, and attempts to revive an international accord
on counterfeiting through the Transatlantic Trade and Investment Partnership
were torpedoed by the Trump administration. No such accord will be effective
unless China is a party to it and agrees to some reasonable enforcement
protocols.
Sounds like a job for a great negotiator, some peerless
practitioner of the art of the deal.
If one of those comes along, he’ll have his work cut out
for him.
In the mean time, we should understand that fighting
counterfeiting with tariffs and other taxes is dancing about architecture.
There are a lot of guns being put into the hands of felons because our police
and prosecutors refuse to do the work of enforcing the law on straw-buyers, and
deputizing some $8-an-hour clerk at a sporting-goods shop is no substitute for
police work. Throwing memos at Amazon isn’t going to get it done when it comes
to counterfeit goods, either.
We know what needs to be done. Do it.
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