Rep. Steve King Decides American Consumers Should Pay For Chinese IP Violations

from the robbing-constituent-A-to-pay-constituent-B dept

Iowa Congressman Steve King has had enough of China’s blatant abuse of American intellectual property and has decided that something needs to be done. And that “something” is to introduce a bill that would reward American rightsholders with money taken from the wallets of other Americans:

King’s legislation, H.R. 3375, directs the President to impose duties on merchandise from China in an amount equivalent to the estimated annual loss of revenue to holders of United States intellectual property rights as a result of violations of such intellectual property rights in China. Under King’s bill, the revenue raised by the imposition of duties on Chinese merchandise will be proportionally distributed to provide compensation to holders of United States intellectual property rights.

This is all well and good except that it’s actually neither. Imposing a duty on goods just adds to the cost of the product, a cost that will be borne by Americans. China is not just going to swallow the tariff and feel chastened for its misbehavior. Targeting manufacturers who sell to the US with a “you must be a thief tax” is hardly going to improve trade relations with one of our biggest suppliers. And really, this bill is nothing more than barefaced favoritism which seeks to reward certain industries at the expense of American citizens.

Topping it all off is the fact that this tariff will be based on faulty assumptions and faultier math:

“The creative genius of Americans, protected by our copyrights, trademarks and patents, is systematically being pirated by the Chinese whose government appears to be complicit,” said King. “My bill levies a duty on all Chinese imports in an amount necessary to both pay U.S. property rights holders for their stolen intellectual property and to administer the program. In short, it says to the Chinese: ‘Go ahead and steal U.S. intellectual property-we will do what you have refused to do and pay American innovators their due from the duties on Chinese goods.‘”

Are we Americans (you know, the ones who will be ultimately paying for all of this) also invited to “go ahead and steal U.S. intellectual property?” I mean, we’re being assured that the Chinese are footing the bill, or at least forwarding it to us. By King’s logic, it should be open season on IP once the bill passes, because the rights holders will still be getting their cut, one way or another.

And as for the numbers? King’s bill quotes a Congressional Research Report, which would seem to indicate some sort of fact-finding has occurred. But sadly, no. The report (at least what’s quoted on King’s site) simply regurgitates inflated numbers provided by the industries themselves:

• The U.S. International Trade Commission (USITC) estimates that U.S. intellectual property-intensive firms that conducted business in China lost $48.2 billion in sales, royalties, and license fees in 2009 because of IPR violations in China.

• The International Intellectual Property Alliance (IIPA) estimated that business software piracy in China alone cost U.S. firms $3.4 billion in lost trade in 2009.

• The Business Software Alliance (BSA) estimates the commercial value of illegally used software in China in 2009 was $7.6 billion, a $900 million increase over 2008 levels.

The USITC report? Oh, you mean the one that was based on pure speculation? The IIPA? Sure, those numbers are solid if you decide to ignore the fact that the IIPA is a lobbying group composed of lobbyists for the RIAA, MPAA and the BSA (among others). And if anyone who regularly reads this site hasn’t already laughed off the BSA’s “contribution” to the inflated numbers, perhaps this set of posts might shed some more light on the subject.

What we have here is bad legislation based on bad numbers which aims to reward certain Americans while punishing other Americans. Politicians seem to be oblivious to the fact that imposed tariffs and subsidies is just another way to take money out of your constituents’ pockets and the end result will be absolutely zero change in the way China handles American intellectual property. This bill is nothing more than King offering to hold down American citizens while IIPA members go through their pockets.

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Comments on “Rep. Steve King Decides American Consumers Should Pay For Chinese IP Violations”

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crade (profile) says:

Here we have been trying to compete with China’s production when all we had to do was charge extra for it, it’s genius. Bound to solve all the economy’s problems!
Why not take it the next step and not allow any imported goods from any country, then everything would have to made locally. It would create so many jobs! There is nothing wrong with that plan in any way! 🙂

Socialist joe says:

This might the first glimmer of bold new paradigm in how “artists” get paid: make everything they produce available for free, the levy a general tax on everything and divvy up the proceeds to the content creators! Brilliant! I’m surprised a sitting Congressperson would propose such a radically socialist idea in today’s political climate.

Anonymous coward (profile) says:

This might the first glimmer of bold new paradigm in how “artists” get paid: make everything they produce available for free, the levy a general tax on everything and divvy up the proceeds to the content creators! Brilliant! I’m surprised a sitting Congressperson would propose such a radically socialist idea in today’s political climate.

Anonymous Coward says:

U.S. intellectual property-intensive firms that conducted business in China lost $48.2 billion in sales, royalties, and license fees in 2009 because of IPR violations in China.

OK, so let’s assume the numbers are right (don’t laugh!)

If these businesses lost so much money there, maybe they should simply pull out of China, right?

If they’re losing billions of dollars in a market, why would they continue doing business there? Unless they see the amount of money they *do* make, and it’s more than they would be losing by not being there, right?

Anonymous Coward says:

I think it is a great idea. Think of how much prices will drop as china can just use anything out of the united states. They just have to make sure the wholesale price + tariff is lower then the wholesale price of american manufactures. Also since it is all legal now, no more made up BS from “Groups representing the average american”. Woot Woot

Andrew (profile) says:


If we go along with the assumptions and figures given to justify this bill, then all I have to say is thank you very much.

I don’t live in the US, so I’m not going to be subject to these tariffs, but I’ll still benefit from cheaper Chinese products because of their reported ca. $60bn ‘theft’ of US IP. Plus this tax will make US businesses less competitive, as they have to pay more for Chinese-made (but probably US-branded) goods than companies based elsewhere, helping to boost my local economy at the US’s expense.

Sounds perfect for anyone not based in the US.

A Guy (profile) says:

IF it causes greater investment in the US economy, I’m fine with a tariff on Chinese products. The real problem with China is currency manipulation. Anything that offsets that can benefit us as a whole.

However, how these funds are divided is ridiculous. If we are to impose an increase in prices across our economy, the money should be mandated to do something useful for all of us, like paying off the government bonds already foolishly issued by the US government.

Raising taxes on products that hurt the US economy seems like a good national strategy.

Just John (profile) says:

Re: Re:

The ironic part is, I am an American living in Taiwan currently. People wonder why I do not wish to go back to the US.

Lets see, I would probably be criminalized for all the movies, music, and books I download, but then again, since the ones I download are not available for purchase here, how else can I enjoy them? The good part is, here, I do not worry at all, seeding torrents to give as I have received, for those like me, who have no other option, to be able to get the media they want and may not otherwise have access to.

So, I benefit here by being an American, and I can avoid the stupidity currently going through congress, the courts, the bi-lateral trade agreements, and everything else, because I am here, not in America.

TheComicWatcher (user link) says:

The reverse should be true

This just gives credence to wikileaks when it asserted that corporations interest’s were being exported thanks to US embasies and other means of “”Globalization”.
Did you know that in Spain and other EU countries they imposed a tax on CD’s and digital blank media “cause it COULD be used for Piracy”?
Then the profits went to an agency that recently has been involved in a multimillion dollar malfeasance scandal.

I want to know who do we speak to that will introduce a bill/amendment to the law that will REDUCE copyright years, and release the IP to the public in… say 5 years.
The argument is that these long terms protections stiffle creativity and competition, and make companies and artist believe they can produce something for public consumption and then keep sucking on the same tit for years on end…

After all, the US is a capitalistic economy. We don’t want leaches mooching off the same items and being lazy and unproductive, do we?
The reasonable amount of time for them to monetize is something like 5 years. Anything else is protectionism and anti-capitalist, and anti-competitiveness.

Anonymous Coward says:

Of course Steve King’s plan makes perfect sense, let me explain it to you nice and simple.
-Kids in China illegally upload copies of Hollywood movies (in English since Hollywood didn’t bother translating it into Chinese, since those darn China kids will steal the movies anyway!) to file sharing sites, and a bunch of Chinese citizens watch the movies without paying Hollywood a cent.
-China starts up it’s own Hollywood, and creates original movies, translates them to English, and sells the movies in America
-You pay triple the cost to see Chinese made movies to pay for the ticket prices that Chinese citizens didn’t pay to watch a movie that America Hollywood never sold to China or translated to Chinese for China customers.

See everyone in America wins! Well, unless you aren’t part of America Hollywood. And then Chinese citizens still don’t get Chinese translations of American movies, but they don’t pay the bill either for their pirated movies, we do, so they kind of win to, just like the Wall Street bankers who got tax payer bailouts.

Prashanth (profile) says:

Basic Microeconomics

I’m taking an introductory microeconomics class right now, and it’s interesting that I’ve seen this just a week after doing a problem set that had to do with exactly this. We were discussing what the market would look like if there were a few dozen domestic suppliers of some good with a normal upward-sloping marginal cost function versus having a perfectly elastic (essentially infinite) international supply at a given price. We discussed how until the tariff is raised to the point where the total domestic supply equals the domestic demand, all the domestic suppliers will leave in the long-run due to losses, international supply will remain perfectly elastic and will shift up in price by the full value of the tariff, and it will be consumers who lose out entirely. This is essentially the same situation here; there’s an almost infinite supply of IP-violating goods coming from China, so tariffs will just shift the whole supply up and hurt only consumers and not producers at all. Oh, wait, Representative King didn’t take economics, did he?

anonymous says:

how on earth can someone so thick be elected as a congressman? are there actually any senators or congressmen that have a brain or are they all as stupid as him? when China reads what this numbskull is proposing, they will not only be laughing their bollocks off, they will be extending what they have been doing to cover even more goods. absolutely unbelievable!

Just John (profile) says:

Re: Re:

My thoughts are:
Since his name is so close to Stephen King’s, he felt the need to write his own horror.
Since he is a congressman though, all he can write is laws.
Hence, he merged the two, and wrote a horror law.

This should now be referred to as (Pick one):
Kujo’s law, one mans rabid affair.
We could also go with: Misery
The green ($$$) mile, brought to you on behalf Hollywood?
The dark half (of politics)
Dreamcatcher, catch the Hollywood dream
Faithful (To those paying me so much)
The dead zone (Where America is heading if stupid laws keep passing….)

I could keep going >.>

That Anonymous Coward (profile) says:

Iowa… Our liberties we prize and our rights we will maintain.

“After bottoming out in the 1980s, Iowa’s economy began to become increasingly less dependent on agriculture, and now has a mix of manufacturing, biotechnology, finance and insurance services, and government services.”

So your imposing on others liberties to maintain the “rights” of a few businesses with no real ties to your state.

It is lovely how you frame this argument as China is evil, how many American companies outsourced their production to China? Oh thats right none of them are actually American companies any more, they are owned by holding companies outside the US so that they can shelter profits from tax and liability.

How small of a check did it take you to create this diversion of the publics attention? This isn’t to benefit your state by any stretch of the imagination, so something else motivated you and well your in Congress… that means “donations” to help keep you in power.

Josef Anvil (profile) says:

That bill should be dipped in awesome sauce and added to SOPA

OMG what a great idea. Instead of enforcement of IP laws, just let Congress tax the goods and pay the rights holders. This is an AWESOME idea. The content industry doesn’t have to change its business model at all.

Ok so the price of a CD will now be about $32,000 and a song on itunes will be about $2500, but so what, the rights holders will finally get paid and it won’t matter how much piracy is out there.

Vote for Rep. King, he’s a problem solver.

btrussell (profile) says:

Re: China theft of intellectual property

So they can easily afford a $40US movie?
$500US software?

MS can sell them an OS dirt cheap but need to gouge us here?

200 years ago, in a limited market, authors could expect to make their money in 14 years, today, in a global market, they need 95 years+?

How much would piracy drop, I wonder, if copyright was five years in our global market?

Anonymous Coward (profile) says:

Compensate me for my losses too!

A couple years ago someone stole a stereo out of my car, so let’s levy a tax on all pawnshops and use it to pay people who’s stereos got stolen. A roommate stole some CDs from me so lets levy a tax on used record stores to reimburse for that. Oh, but wait, this isn’t about actual theft but about failure to make sales they thought they might have made! So, let’s see, I work in the movie business, last year a major studio considered shooting in my state but ultimately didn’t (went to a different state instead). So let’s levy a tax on all the movie studios to compensate the workers in all the states they didn’t shoot in!

Anonymous Coward (profile) says:

Compensation for lost business

Seriously, though, workers in the movie industry have been complaining for years about “runaway production” by which we mean movies that shoot in Canada (where the wages are lower and the government offers a subsidy) instead of staying in the U.S.. So, following this logic let’s levy a tax on movies shot in Canada and distribute it to all the underemployed film workers here (they could fully find our health insurance for a start). Think it’ll fly?

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