[Congressional Record Volume 150, Number 97 (Wednesday, July 14, 2004)]
[House]
[Pages H5682-H5687]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
URGING THE GOVERNMENT OF PEOPLE'S REPUBLIC OF CHINA TO IMPROVE ITS
PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
Mr. BALLENGER. Mr. Speaker, I move to suspend the rules and agree to
the resolution (H. Res. 576) urging the Government of the People's
Republic of China to improve its protection of intellectual property
rights, and for other purposes, as amended.
The Clerk read as follows:
H. Res. 576
Whereas in 2001, the People's Republic of China agreed to
implement a set of sweeping reforms designed to protect
intellectual property rights;
Whereas since 2001, China initiated a series of measures
and a comprehensive review of its intellectual property
rights laws to bring itself in compliance with international
standards in patent, trademark, copyright, trade secret, and
other intellectual property laws;
Whereas central and local Chinese Government officials
continue to work with their counterparts in the United States
to improve China's intellectual property rights enforcement
through regular bilateral discussions, roundtable meetings,
and numerous technical assistance programs;
Whereas China has initiated campaigns to seize illegal and
pirated goods, closed or fined several assembly operations
for illegal production lines, seized millions of illegal
audio-visual products, and expanded training of law
enforcement officials relating to intellectual property
rights protection;
Whereas although China has made significant improvements to
its framework of law, regulations, rules, and judicial
interpretations regarding intellectual property rights, its
intellectual property rights enforcement mechanisms still
face major obstacles, which have resulted in continued
widespread piracy and counterfeiting of film, recorded music,
published products, software products, pharmaceuticals,
chemical products, information technology products, consumer
goods, electrical equipment, automobiles and automotive
parts, industrial products, and research results throughout
China;
Whereas such widespread piracy and counterfeiting in China
harms not only the economic development of China but also the
economic and legal interests of United States business
enterprises that sell their products or services in China,
whether or not these United States business enterprises have
invested in China or ever will invest in China;
Whereas United States losses due to the piracy of
copyrighted materials in China is estimated to exceed
$1,800,000,000 annually and counterfeited products to account
for 15 to 20 percent of all products made in China,
approximately 8 percent of the country's gross national
product;
Whereas the market value of counterfeit goods in China is
between $19,000,000,000 and $24,000,000,000 annually, causing
enormous losses for intellectual property rights holders
worldwide;
Whereas the export of pirated or counterfeit goods from
China to third country markets causes economic losses to
United States and other foreign producers of patented,
trademarked, and copyrighted products competing for market
share in those third country markets;
Whereas current criminal laws and enforcement mechanisms
for intellectual property rights in China by administrative
authorities, criminal prosecutions, and civil actions for
monetary damages have not effectively addressed widespread
counterfeiting and piracy;
Whereas administrative authorities in China rarely forward
an administrative case relating to intellectual property
rights violations to the appropriate criminal justice
authorities for criminal investigation and prosecution;
Whereas China currently has high criminal liability
thresholds for infringements of intellectual property rights,
with an unreasonable proof-of-sale requirement totaling
approximately $24,100 for business enterprises and $6,030 for
individuals (according to current exchange rates) that makes
criminal prosecution against those enterprises or individuals
that violate intellectual property rights extremely
difficult;
Whereas seizures and fines imposed by Chinese authorities
for intellectual property rights violations are perceived by
the violators to be a cost of doing business and such
violators are usually able to resume their operations without
much difficulty;
Whereas China has the second largest number of Internet
users in the world, it still has not acceded to the 1996
World Intellectual Property Organization (WIPO) Internet-
related treaties that reflect international norms for
providing copyright protection over the Internet;
Whereas China's market access barriers for United States
and other foreign cultural products such as movies, music,
and books
[[Page H5683]]
stops or slows the legal entry of these legitimate products
into China, in turn increasing the demand for pirated
products; and
Whereas United States Trade Representative, Ambassador
Zoellick, and Secretary of Commerce Evans co-chaired an
expanded Joint Commission on Commerce and Trade Meeting
during Chinese Vice Premier Wu Yi's visit to the United
States in April 2004 that led to the Chinese Government's
commitment to an action plan to address the piracy and
counterfeiting of American ideas and innovations: Now,
therefore, be it
Resolved, That the House of Representatives--
(1) commends the Government of the People's Republic of
China for the steps it has taken to improve its legal
framework for intellectual property rights protection and for
efforts to bring itself toward compliance with international
standards for intellectual property rights;
(2) recognizes Chinese Government's renewed commitment
through an action plan presented at the 2004 United States-
China Joint Commission on Commerce and Trade to significantly
reduce intellectual property rights infringement levels by
increasing penalties for intellectual property rights
violations, cracking down on violators, improving protection
of electronic data, and launching a national campaign to
educate its citizens about the importance of intellectual
property rights protection;
(3) further recognizes, despite the steps referred to in
paragraph (1) and paragraph (2), the continued existence of
widespread intellectual property rights violations in China;
(4) urges the Chinese Government to closely adhere to its
action plan referred to in paragraph (2) in undertaking a
coordinated nationwide intellectual property rights
enforcement campaign, and to further eliminate the high
criminal liability threshold and procedural obstacles that
impede the effective use of criminal prosecution in
addressing intellectual property rights violations, to
increase the criminal penalties provided for in its laws and
regulations, and to vigorously pursue counterfeiting and
piracy cases;
(5) encourages the Chinese Government to fully and
comprehensively implement a legal framework and effective
enforcement mechanisms that would protect not only
intellectual property rights held by United States and
foreign business enterprises with or without investments in
China, but also Chinese intellectual property rights holders,
which is crucial to China's own economic development and
technological advancement;
(6) urges the Chinese Government to give greater market
access to the foreign producers of legitimate products such
as films and other audio-visual products in order to reduce
demand for and prevalence of pirated and counterfeit goods in
their absence; and
(7) will continue to monitor closely China's commitment and
adherence to its action plan on intellectual property
protection presented during the 2004 United States-China
Joint Commission on Commerce and Trade, and work with the
Administration to further encourage China's efforts to bring
its framework of laws, regulations, and implementing rules
into compliance with international law and to create and
maintain effective intellectual property rights enforcement
mechanisms capable of deterring counterfeiting and piracy
activities.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
North Carolina (Mr. Ballenger) and the gentleman from California (Mr.
Lantos) each will control 20 minutes.
The Chair recognizes the gentleman from North Carolina (Mr.
Ballenger).
General Leave
Mr. BALLENGER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and include extraneous material on H. Res. 576.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from North Carolina?
There was no objection.
Mr. BALLENGER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of House Resolution 576, urging the
government of the People's Republic of China to improve its protection
of intellectual property rights, and I would like to thank the
gentlewoman from California (Ms. Watson) for introducing this
resolution.
Mr. Speaker, the unprecedented scale and speed of China's ongoing
modernization commands the world's attention. Given the immensity of
that country, its transformation cannot but have a profound effect and
impact well beyond its borders. All of those witnessing China's rebirth
understand that its actions and ambitions will become increasingly
central factors in determining the fortunes of the 21st century.
As China assumes an ever more prominent role in the international
system, it remains uncertain if this will be matched by an acceptance
of responsibilities commensurate with the increasing power it has. Of
immediate importance is its willingness to abide by a network of
agreements and rules that underlie the international trade system,
which operates by consensus and relies heavily on voluntary compliance
with its many provisions.
If this system is to work, cooperation cannot be restricted to
selected areas of individual advantage but most extend across the
whole. For that reason, China's entry into the World Trade Organization
was a milestone in the country's development and signaled a welcome
commitment to adopting and enforcing its comprehensive rules and
agreements.
China's stake in the health of the global economic system is readily
apparent. The country's transformation has been financed largely
through direct investment from outside the country and by an ever-
increasing deluge of exports above all to the United States.
Our annual trade deficit with China has grown every year and now
exceeds $100 billion, making the United States the indispensable source
of capital for rapid economic development. Given this reality, it is a
matter of great concern that the extent of China's commitment to
upholding the rules underpinning the system remains ambiguous,
especially in the area of intellectual property rights. The protection
of these rights is of great and growing importance to many developed
countries whose economies are increasingly composed of knowledge-based
industries, with the U.S. leading the list.
The piracy of copyrighted materials is a global problem, including in
our own country, but nowhere is the problem greater than in China. It
is estimated that 60 percent of all goods imported into the United
States that infringe on intellectual property rights originated in
China. In that country, an estimated 20 percent of all manufactured
products are counterfeits. Although the Chinese government has adopted
increasingly comprehensive legislation and regulation to address this
issue, these will remain largely empty gestures unless enforced.
Here the situation is far less positive. One can walk down virtually
any street in Chinese cities and be assaulted by English offers of
pirated videotapes and other illegal products in full view of police
and other authorities. The blame for this open flouting of this law is
often ascribed to laxity or even complicity by local governments over
which the central authorities claim to have insufficient control, but
this assertion is difficult to accept.
Few would point to China as an example of a country in which the
government is too weak to enforce its own laws. We have witnessed
repeated examples of energetic, even harsh measures taken against those
who would defy the central authorities. It is impossible to believe
that if China's leaders decided to rein in this open defiance of the
law that it could not do so and do so quickly.
We are confident that, being rational, the Chinese authorities will
eventually realize that a relentless pursuit of self-interest that does
not accommodate the interests of others cannot be sustained. But until
that acceptance occurs, it is incumbent upon us to maintain sufficient
pressure on China and other countries harboring these illegal
activities to ensure that their costs from tolerating violations are as
tangible as many benefits that they now enjoy.
That is why this resolution is both timely and necessary. It
recognizes the genuine progress that China has made in the area of
protecting intellectual property rights but couples with this the
several specific recommendations that the Chinese government must adopt
if it is to demonstrate its genuine commitment to the protection of
intellectual property rights.
It would be difficult to find a better or more precise issue by which
to judge Chinese leadership, determination on their part to play by the
rules of the game in the international trading system, and thereby
discern the nature of its intended participation in the international
system as a whole.
Mr. Speaker, I reserve the balance of my time.
Mr. LANTOS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of this resolution, and I urge
my colleagues to support it as well.
At the outset, let me pay tribute to my dear friend, the gentlewoman
from
[[Page H5684]]
California (Ms. Watson), the author of this resolution, who has done so
much to protect intellectual property rights across the globe.
Mr. Speaker, a new generation of policymakers have ascended to power
in Beijing and with their growth of influence China has begun to play a
more responsible and constructive role on the international stage. But
as China has assumed its new global commitments, a yawning gap has
emerged between Chinese government promises and the reality on the
ground.
Mr. Speaker, the stark contrast between China's far-reaching
international trade commitments and the harsh treatment afforded
American companies trying to sell to China is just the latest example
of this enormous credibility gap; and, unfortunately, Mr. Speaker,
unless senior Chinese officials recognize that they must live up to
their international trade commitments, hundreds of thousands of
American workers will lose their jobs.
Mr. Speaker, the United States trade deficit with China continues to
grow at an alarming rate. Last year, in 2003, we had a $124 billion
deficit with China, the largest ever posted with any country on the
face of this planet. The deficit further widened this January to almost
$12 billion.
The matter before the House, sponsored by my good friend, the
gentlewoman from California (Ms. Watson), addresses one of the main
reasons for this alarming deficit, the systematic and widespread piracy
and counterfeiting of copyrighted U.S. materials in China. Fully 15 to
20 percent of all products made in China are counterfeited products.
The market value of these goods in China is estimated to be at least
$24 billion.
This massive criminal enterprise makes it virtually impossible for
U.S. patent holders to sell their goods in China and causes them
further economic losses when China exports pirated goods to third
countries.
The gentlewoman from California's (Ms. Watson) measure demands that
China undertake a coordinated nationwide intellectual property rights
enforcement campaign as well as implement a legal framework to protect
both American and Chinese intellectual property.
Mr. Speaker, I strongly urge the regime in Beijing to pay attention
to this demand. The U.S. Congress will not tolerate the continued theft
of American intellectual property on a massive scale by the Chinese,
while the United States is exporting good manufacturing jobs to China
by the millions. I urge all of my colleagues to vote for this important
initiative.
Mr. Speaker, I reserve the balance of my time.
{time} 1315
Mr. BALLENGER. Mr. Speaker, I yield 4 minutes to the gentleman from
Indiana (Mr. Souder).
(Mr. SOUDER asked and was given permission to revise and extend his
remarks.)
Mr. SOUDER. Mr. Speaker, I rise today on behalf of the manufacturers
in my home State who already have not been run out of business by
unfair Chinese competition. It is bad enough that China continues to
abuse human rights, that they bully Taiwan, they deny workers' rights
in China; but we have seen a regular manipulation of their currency
that has resulted in unfair competition to the tune of up to 40 percent
in the cost of many goods.
I have manufacturers in my district that cannot get the raw materials
for the goods for the costs that the Chinese are selling it. That, by
definition, is dumping. They are selling in the United States for under
the cost of goods for even just the basic raw materials.
We need not just rhetoric out of this Congress. We need an actual law
passed that says when they manipulate the currency that countervailing
duties are immediately imposed. The administration has been working
with dumping lawsuits, but they take up to 3 years. By that time our
companies are long gone. Many of these manufacturers are very small;
and by the time they steal the private intellectual property rights
over the time that they dump illegally into our country, the
manufacturers are gone. They are the little guys. They cannot afford
attorneys that go for 3 years. They are laying off their employees, and
even then they do not know how to fight or how to get big enough to
fight.
We in Congress need to be more aggressive, or we will not have a
manufacturing base left. We can talk about our national defense, and we
will not have a national defense.
Now, intellectual property is important not only to movies, not only
to music, but to manufacturers. I have a company in my district that
makes the fasteners that go on our containers. We talk about the
importance of international trade and security and how we are trying to
push that security out to Singapore and into China so we have
preclearance before it hits our harbors.
Our security is only as safe as the sealant on the containers. The
American companies will give us the numbers of the seals so we can
trace to see whether people are cheating, but the Chinese manufacturers
will not; and the reason they will not is because they have stolen the
intellectual property rights for, for example, this seal. These are
four Chinese companies that have duplicated this seal even with
``shinning fortune,'' they meant to say ``shining fortune.'' They
spelled it ``shinning.'' They copied it and stole it. We now cannot
track the containers because they have stolen intellectual property
rights. They have put American companies and workers out of business,
and that makes our national security more difficult.
We have to understand that unless we fight for intellectual property
rights, unless we fight for our manufacturers, we cannot talk about
free trade if it is not fair; and it has to be fair, or it is just a
false promise that when we say we are going to have international trade
we are all going to be better by the international trade. Free trade
must be fair. This resolution is a start, but we do not need this
resolution. We need some laws.
Mr. LANTOS. Mr. Speaker, I am delighted to yield as much time as she
might consume to the distinguished gentlewoman from California (Ms.
Watson), the author of this legislation.
(Ms. WATSON asked and was given permission to revise and extend her
remarks, and include extraneous material.)
Ms. WATSON. Mr. Speaker, I want to thank the gentleman from
California (Mr. Lantos), the ranking member, my good friend and very
distinguished Member of the House, and the gentleman from North
Carolina (Mr. Ballenger) for supporting H. Res. 576, a bipartisan
resolution urging the government of the People's Republic of China to
improve its protection of intellectual property rights, Mr. Speaker. I
would also like to thank them for their leadership and their diligence
in bringing the bill to the floor for consideration.
Mr. Speaker, H. Res. 576 is a balanced and responsible piece of
legislation. It recognizes China's efforts to deal with the serious
problems of intellectual property violations, as well as encourages
China to redouble its efforts to rectify a serious problem that results
in the loss of revenues, according to the USTR's most recent figures,
in excess of $2.5 billion yearly to U.S. companies and manufacturers.
The resolution recommends that the Chinese government implement more
effective customs and border measures to prevent exportation of pirated
goods into the United States and into other countries. It encourages
the Chinese government to fully and comprehensively implement a legal
framework to protect intellectual property rights; and it urges the
Chinese government to give greater market access to foreign producers
of legitimate products to reduce the demand for counterfeit goods.
In crafting H. Res. 576, my staff shared the text of the resolution
with various Federal Departments and agencies, including the State and
Commerce Departments, U.S. Customs, the U.S. Copyright Office, USTR,
and the United States Patent and Trademark Offices. In many instances,
changes suggested by these various entities have been incorporated into
the final version of H. Res. 576.
Mr. Speaker, I will submit for the Record at this point letters that
I have received from Marybeth Peters, register of copyrights from the
United States Copyright Office; and Douglas Lowenstein, the president
of Entertainment Software Association, in support of H. Res. 576.
[[Page H5685]]
U.S. Copyright Office,
Library of Congress,
Washington, DC, March 30, 2004.
Hon. Diane E. Watson,
House of Representatives,
Washington, DC.
Dear Representative Watson: I am pleased to have this
opportunity to respond to your request for the Copyright
Office's views regarding H. Res. 576. I wholeheartedly agree
that consideration of the problem of copyright infringement
in China is especially important and timely.
The Copyright Office has actively engaged our counterparts
at the National Copyright Administration of China (NCAC) for
over twenty years in an effort to foster better understanding
and improve the protection of copyrighted works in China. Our
most recent exchange was earlier this month, when we hosted a
delegation led by Deputy Director General Wang Ziqiang of the
NCAC for a one week symposium on the protection and
enforcement of copyright. The delegation included officials
from the central government in Beijing, officials from
several of China's provinces with authority for the
enforcement of copyright, and judges who hear copyright
infringement cases.
The Copyright Office also plays a crucial role in the
United States' bilateral trade relations with China. We
advise the Congress, the U.S. Trade Representative's Office,
and other federal agencies on copyright protection and
enforcement and we participate in trade talks held both in
the U.S. and in China.
Over the years, we have worked with China as it has
transformed itself from a country that did not even have a
copyright law into a WTO member. But we have also been
dismayed by the persistent and overwhelming problem of
copyright infringement in China. The U.S. copyright
industries continue to report piracy rates of at least 90%
across the board in China. This fact, combined with the size
of the Chinese market and the growing problem of the export
of pirated products from China, threatens, if gone unchecked,
to deluge markets in the region and around the world with
cheap, illegal copies of American products.
Despite these threats, many American companies continue to
invest in the Chinese market. I believe that this is
indicative of the business opportunities in China. Thus, I
see both a crisis of piracy and great opportunity. H. Res.
576 eloquently captures a balanced and realistic assessment
of the situation in China and the Copyright Office supports
it and hopes that it will be adopted. It is important for the
Chinese Government to understand that the United States
recognizes that much has been done, but also that it sees how
much remains to do and how important it is to finish the job.
Please feel free to contact me again on this or any other
copyright matter.
Sincerely,
Marybeth Peters,
Register of Copyrights.
____
Entertainment Software Association,
Washington, DC, July 12, 2004.
Hon. Diane Watson,
Hon. Henry J. Hyde,
Hon. Tom Lantos,
House of Representatives,
Washington, DC
Dear Representatives, On behalf of the Entertainment
Software Association (ESA), our member companies, and the
thousands of individuals employed in our industry who are
impacted by the scourge of worldwide intellectual property
piracy, I would like to take this opportunity to voice our
appreciation and to pledge our strong support for your
leadership on H. Res. 576, an important measure addressing
the need for stronger intellectual property protection and
market access in China.
Entertainment software--including video and computer games
for video game consoles, personal computers, handheld
devices, and the Internet--is a rapidly growing industry with
$7 billion in U.S. sales in 2003 and a $20 billion global
market for games. There is a large and growing demand for
entertainment software in China. As an example, in China's
more than 200,000 Internet cafes, where the vast majority of
the Chinese people obtain online access, it is estimated that
60 percent of the activity involves game play. However, also
China has a serious entertainment software piracy problem. We
estimate that 97 percent of all personal computer
entertainment software is pirated, while 75 percent of all
console products, such as those for the Sony
Playstation' and 99 percent of all handheld
products, such those for the Nintendo Gameboy' are
also pirated. Piracy at these extreme levels makes it
extraordinarily difficult to build legitimate distribution
and sales.
Addressing these myriad piracy problems will require high-
level leadership so that china can adhere to its
responsibilities as a WTO member and depart from its past
history of piracy problems. Criminal enforcement, including
raids, must include fines and imprisonment severe enough to
serve as a deterrent to copyright crimes. There must also be
criminal enforcement against criminal associations engaging
in elaborate enterprises in copyright crimes. China should
adopt measures similar to Hong Kong's Organized and Serious
Crime Ordinance (OSCO) and should treat copyright crimes
similarly to other forms of criminal activity. Internet
piracy issues should also be addressed, and China should
adopt the WIPO treaties, including their effective
prohibitions against the circumvention of technological
protection measures (TPMs).
At the same time, entertainment software publishers who
enter the market are hindered in their ability to compete
with pirates. They face growing threats of import quotas and
other market restrictions. Protracted censorship reviews,
often requiring several months to complete, give pirates the
opportunity to sell unapproved pirated product long before
legitimate games are released. Policies such as these only
fuel the demand for pirated product.
Again, we want to thank you for your leadership on this
issue and we look forward to continuing to work with you and
your staffs to shed further light on the I.P. piracy problem
in China and on the need to improve the situation in that
country.
Sincerely,
Douglas Lowenstein,
President.
Both letters have offered unqualified support for the resolution and
for the resolution's recognition that much remains to be done with
respect to addressing the need for stronger intellectual property
protections and greater market access in China.
Mr. Speaker, I represent the 33rd Congressional District of Los
Angeles and Culver City, which contains a number of major entertainment
companies, including Sony Studios, Capitol Records, Raleigh Film and
Television Studios, and the American Film Institute. Each one of these
companies, as well as countless residents throughout the greater Los
Angeles area, are directly impacted by the scourge of IPR infringement.
The protection of U.S. intellectual property rights abroad and at
home is especially crucial to the health and the vitality of the U.S.
entertainment sector, which brings in an estimated $535 billion to the
U.S. economy and remains one of the Nation's largest export sectors.
The loss of revenues from IPR infringement affects the income levels
and pocketbooks of not only my constituents but countless other
Americans across our Nation.
In the case of China, U.S. companies continue to lose more than $2.5
billion a year due to the piracy of copyrighted materials. Amazingly,
counterfeit products account for 15 to 20 percent of all products made
in China, approximately 8 percent of its GNP. Counterfeit and pirated
items that originate in China include, but are not limited to, movies,
recorded music, published products, software, pharmaceuticals,
electrical equipment, industrial products, apparel, auto parts, and
automobiles.
With respect to entertainment software, one of the most explosive
sectors of growth, the Entertainment Software Association estimates
that 97 percent of all personal computer entertainment software is
pirated in China, while 75 percent of all console products, such as
those for the Sony PlayStation, and 99 percent of all handheld
products, such as those for the Nintendo Gameboy, are also pirated.
That is 99 percent.
As the Entertainment Software Association knows, ``Piracy at this
extreme level makes it extraordinarily difficult to build legitimate
distribution and sales.''
Moreover, many of these counterfeit products end up reentering our
domestic U.S. market in ever-increasing quantities. In fact, the Office
of U.S. Immigration and Customs Enforcement estimates that over 60
percent of all pirated goods it seizes originate in China. This is a
staggering and sobering statistic; and as anyone can see, IPR theft has
reached epidemic levels in China, and its adverse impact is being
directly felt by American producers, consumers, and workers in terms of
loss of revenues and wages.
Mr. Speaker, in closing, I want to briefly note the recent
commitments made by the government of China during the April meeting of
the U.S.-China Joint Commission of Commerce and Trade. While the
government of the People's Republic of China is to be commended for the
steps it has committed to taking to reduce significantly the incidence
of piracy by the end of this year, H. Res. 576 most importantly puts
Congress on record that it will continue to monitor closely China's
commitment and adherence to its action plan and IPR protection and
enforcement and that it will work with the administration to further
encourage China's efforts to bring its framework of laws, regulations
and implementing rules into compliance with international law.
Mr. Speaker, I thank the gentleman for the time.
[[Page H5686]]
Mr. LANTOS. Mr. Speaker, I am delighted to yield 5 minutes to my good
friend, the distinguished gentleman from Oregon (Mr. DeFazio).
Mr. DeFAZIO. Mr. Speaker, I thank the gentleman from California for
his time and the gentlewoman from California for her excellent work on
this legislation.
To echo the words of the gentleman from Indiana who preceded me in
the well, this is a good step but it is not an adequate step. I would
differ only in that he said we need more laws. We do not need more
laws. We need to enforce the existing laws.
I was one who voted against Permanent Most Favored Nation status for
China because I thought the only leverage we had over them to stop them
from this piracy was the annual renewal of that trade status. The
argument of the prevailing side was, well, now they will be in the WTO
and they will have to follow the rules; and in fact, that has been
pursued successfully once.
One time the administration has filed one complaint against the
largest pirate of U.S. copyright patents and materials in the world,
China, which was on a tax benefit extended to semiconductors; and, in
fact, that worked. China backed off, although they are going to phase
out this subsidy. I think they should have them immediately end it, but
in any case that step did yield some results.
The administration is now raising concerns about Viagra, but it is
not raising concerns about Videx. What is Videx? Videx is a little
dream company in my district, started by a former Hewlett-Packard
employee, started up in his garage, now employs directly more than 60
people and hundreds of other people in the production of his product,
all done in the United States of America. Videx produces two different
systems, a coding system that is not based on bar codes, but a
different system, which is very successful, and now a new electronic
locking system.
One day they got a call from their distributor in China. They had
filed for Chinese patent protection, Chinese trademarks, had done
everything according to Chinese law, and they got contacted by their
distributor in China. They were very concerned and they did not
understand why they had chosen to have another distributor. They
thought they had exclusive rights. They said, what are you talking
about? They found out that their entire company had been cloned in
China, including the Web site. In fact, the Chinese went one better.
They had little tiny American flags waving up on top of the building on
the phony Videx Web site.
{time} 1330
Everything. They used the U.S. copyright and even translated U.S.
copyright patent into Chinese in stealing the software. And they made a
crappy product.
So it not only cost them market share because of the counterfeiters,
the counterfeiters also besmirched the name and quality of their
product. And now the Chinese fakes are beginning to market this beyond
China.
I have contacted everyone I can in the administration, including the
Commerce Secretary and the Special Trade Representative. I have
introduced legislation. I have raised this issue many times. It has
been noted on the Lou Dobbs Report. We have gotten as much publicity as
we can. And the only result is that Videx, in my district, has been
contacted by dozens of other United States firms around the country
saying exactly the same thing happened to us. Our company, our product
was stolen by the Chinese. We had registered it, we had followed all
the rules, and the administration will do nothing, nothing to help us.
And that is the current status we have here. Yes, they have stood up
for the semiconductor giants and got some concessions from the Chinese.
They are going to stand up for Pfizer and Viagra, but not for Videx,
for the American dream, for small business, for dozens of companies
like Videx around America who need the strong support of the United
States Government to fight Chinese piracy.
This resolution is good. It will note the concern of Congress. But
firmer steps are necessary.
I have introduced companion legislation to a bill in the Senate by
Senator Lautenberg that would force the United States Trade
Representative to file complaints against Chinese piracy. It is one
thing that we are losing jobs because they have dirt-cheap labor, they
do not follow environmental rules, and they should fix that, but it is
another thing when they are outright stealing the intellectual
property, the copyrights, and putting Americans out of business through
theft. That has to stop.
This legislation is a start, but we need to take more action and the
administration needs to take action in this area.
Mr. LANTOS. Mr. Speaker, I yield myself such time as I may consume,
and in closing I urge all my colleagues to support this very important
legislation.
Mr. Speaker, I yield back the balance of my time.
Mr. BALLENGER. Mr. Speaker, I yield myself such time as I may consume
to close.
A great deal has been said about the inactivity of our Federal
government with regard to Customs and the inspection of imports, so I
would like to deliver a special knowledgeable story that I know about.
In my own hometown of Hickory, North Carolina, we have 47 hosiery
mills, and they were being worked against substantially by imports from
China and South Korea. We also have a little place called Catawba
Valley Technical Institute, where we invested money to train people as
to how to take apart a pair of hose and find out what the makeup of
that hosiery is; in other words, if it is 60 percent cotton and 40
percent wool, they can find out for sure.
We started checking the imports being brought into our hometown and
found none of them matched what they said on the labels. So I called up
a lady named Ms. LaBuda, who happened to be at that time the new
Customs person in our Federal government, and told her about this.
Within several days, I got a panicked phone call from a person that I
had known for years who happens to own a couple of hosiery mills in
Hickory, North Carolina. He said, ``Cass, you have to do something for
me. I am in real trouble.''
So I asked him what the problem was, and he said, ``Well, Customs has
seized two containers of my goods coming in.'' So I asked where they
were coming from. He said, ``Well, we buy a little bit from China, and
we have hired other people.'' I think personally he hired one or two
people just so he could say that. But, anyway, they had one or two
containers held up and he said that they were making them wait until
they could test the hosiery out.
So I asked him what the makeup of the hosiery was supposed to be. He
said, ``I'm not sure about that. But I wonder if you could check them
and ask them what is the hosiery made of.'' Polyester in China is very
cheap. So he said, ``And find out what the makeup is, the percentages,
and so forth, and we will change the labels.'' I said, well, unless I
am mistaken, that is not quite legal.
So here we have the Customs agents actually doing something positive.
This same lady, because of AGOA, went to Kenya, in Africa, and she
trained the people in Kenya as to how to inspect goods coming through.
Because AGOA was designed to help African people, not Chinese people,
shipping goods through Africa. Well, these people were trained by her.
She reported to me that they caught two container loads of goods coming
from China going through Kenya. They stopped the goods, they checked
the goods out, and they dumped them in the ocean.
What I am trying to say is that our government is doing things. It
may take a little time, but if there were more people like Gladys
LaBuda working for Customs, we would be in great shape.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Miller of Florida). The question is on
the motion offered by the gentleman from North Carolina (Mr. Ballenger)
that the House suspend the rules and agree to the resolution, H. Res.
576, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
[[Page H5687]]
Mr. LANTOS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
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