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Q&A: Global Counterfeiting

May 13, 2016
Senator Chuck Grassley , Traer Star-Clipper

Q: Why should Iowans worry about global counterfeiting?

A: As a fundamental principle of commerce, consumers ought to get what they pay for. Like many Iowans, I shop for bargains that give me the most value and bang for my buck. I bring that fiscal sensibility with me to Washington to protect the taxpaying public and integrity of the free marketplace. With that in mind, I conducted a Senate Judiciary Committee hearing in April to raise awareness about global counterfeiting and to examine solutions for better enforcement and consumer protections. At the hearing, we discussed the growing size and scope of counterfeiting, especially with the rapid globalization of commerce and trade through online sales traffic. The impact of global counterfeiting means increasingly serious consequences along the entire supply chain, but particularly for everyday consumers. From misbranded food and cosmetics to bogus medicine and fake electronics, the reality is that shoppers need to be vigilant, conscientious consumers to protect their hard-earned money and personal well-being. And it's always good to remember the simple fact that if a deal seems too good to be true, it probably is.

Q: How big is the problem?

A: One estimate of the value of global counterfeiting exceeds $400 billion annually. That's an alarming increase of 85 percent since 2005. What's more, witness testimony at my Judiciary hearing exposed inadequate global enforcement to thwart counterfeiting, suggesting less than 1.5 percent of counterfeit trade is seized each year. This puts consumers at risk for spending money on products that aren't authentic. Counterfeit products eventually will dilute a brand's value and diminish the profitability for trademark holders, as well. They also put a heavy toll on the economy by requiring businesses to plow tremendous amounts of financial resources into legal fees and liability insurance instead of investing in research and development and hiring more workers. Companies divert tens of millions of dollars to fraud protection that would otherwise boost innovation, generate tax revenue and create jobs.

Counterfeiting poses serious consequences to troop safety and national security. Imagine the risk when faulty, counterfeit military equipment finds its way into the hands of our men and women in uniform. What's more, organized crime rings and terrorist groups use sophisticated counterfeiting channels to finance their illicit organizations. So, cracking down on counterfeiting is becoming increasingly important to public safety and U.S. economic and national security interests.

Q: What can be done to strengthen enforcement and curb counterfeiting?

A: Innovation is the secret sauce to the U.S. economy. More than 200 years ago, the Founders recognized the entrepreneurial spirit as a fundamental aspect of free enterprise. That's why the U.S. Constitution enshrines copyright and patent protections as a founding principle of our nation's economic landscape. Protection from trademark and copyright infringement drives innovation, growth and investment in the economy. Stronger enforcement of patent protections and copyright laws are essential to keeping our system of free enterprise robust and stable. The sophisticated nature of counterfeiting butts up against a broad range of criminal laws, including mail and wire fraud, money laundering, and conspiracy. That means enforcement requires effective coordination among federal agencies, from the Customs and Border Protection to the U.S. Trade Representative and the Department of Justice. That includes working with U.S. trading partners and enlisting the private sector to join forces against counterfeiting. Connecting the dots on counterfeit merchandise will take extensive cooperation, information sharing and enforcement on an international scale to rein in wrongdoers and restore trust in the marketplace for consumers, innovators and job creators. I'm working to keep these issues on the front burner in Washington. Left unchecked, they will continue to pose dangerous consequences for daily life, from defective airbags, to faulty smoke detectors and counterfeit prescription drugs. Raising awareness among the public is an important piece of the solution.

 
 

 

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