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.