Carl Horowitz

Enforceable property rights are the basis of any functioning market economy. Manufacturers and sellers, whether of appliances, books, clothing, software, films or prescription drugs, must have confidence that their merchandise won't be stolen outright or subject to unauthorized copying. The latter possibility is the reason for patent and copyright laws.

But maintaining a high level of confidence has become more difficult in an era of economic globalization. The easing of barriers to trade and information-sharing, despite its many benefits, has resulted in the rise of piracy rings specializing in making copies of merchandise, often of inferior quality, and passing them off as the real thing.

The maypole of this criminality is mainland China, an issue certain to recur in forthcoming U.S.-Chinese trade talks in Washington on May 23-24. As well it should. Store and street vendors in Shanghai, Beijing and other Chinese cities now teem with counterfeit merchandise, much of it made in America. It's one reason why our trade deficit with their country in 2006 reached $232.5 billion. Last month, the U.S. government responded by filing two complaints with the World Trade Organization. The first alleges that the People's Republic of China has failed to modify its legal framework to ensure a sufficient crackdown on piracy; the second charges that China has not removed certain market barriers, a prerequisite for membership in the Geneva, Switzerland-based WTO. If WTO negotiators can't resolve the dispute during a 60-day consultation phase, then the case would be referred to a WTO dispute-settlement panel for a formal ruling.

"Piracy and counterfeiting in China remain unacceptably high," announced U.S. Trade Representative Susan Schwab. "Inadequate protection of intellectual-property rights in China costs U.S. firms and workers billions of dollars each year, and in the case of many products, it also poses a serious risk of harm to consumers in China, the United States, and around the world."

Carl Horowitz

Carl F. Horowitz is director of the Organized Labor Accountability Project of the National Legal and Policy Center, a Gold Partner organization dedicated to promoting ethics in American public life.
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