[Congressional Record (Bound Edition), Volume 151 (2005), Part 21]
[House]
[Pages 27991-27992]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     CHINA--PIRACY OF U.S. PRODUCTS

  The SPEAKER pro tempore. Pursuant to the order of the House of 
January 4, 2005, the gentleman from Florida (Mr. Stearns) is recognized 
during morning hour debates for 5 minutes.
  Mr. STEARNS. Mr. Speaker, counterfeiting is a growing international 
concern that requires international cooperation to defeat. It threatens 
our national security interests in areas of health, economics, and of 
course homeland defense. The Food and Drug Administration estimates 
that counterfeit drugs account for 10 percent of all drugs that are 
sold in the United States. An estimated 14 percent of these drugs that 
are sold through the mail are counterfeit, they are mishandled, or 
expired. Pfizer Pharmaceutical recalled 16.5 million Lipitor pills 
nationwide as a result of an FDA investigation that uncovered evidence 
that these pills were counterfeit.
  Counterfeit technologies have caused immense harm as well. For 
example, in California a 13-year-old boy sustained severe injuries from 
a counterfeit battery that exploded in his cell phone. The phone 
exploded with such force that fragments of the phone lodged into the 
ceiling of his family's home.
  Exploding batteries, doctored medications, foods, dangerous cosmetics 
and skin products, fake shampoos and soaps, doctored teas, substandard 
auto and airplane components, the list of counterfeit goods grows 
daily. Even fake and dangerous baby foods have been reported. In China, 
for example, infants suffered severe malnourishment and a dozen died 
after being fed fake infant formula that contained few nutrients.
  The hazards of counterfeit products have also affected our 
transportation. In 2003, the Motor and Equipment Manufacturers 
Association cited safety violations due to counterfeit auto parts: 
Brake linings made of compressed

[[Page 27992]]

grass, sawdust, or cardboard; transmission fluid made of cheap oil that 
is dyed, and oil filters that use rags for the filter element. 
Additionally, the FAA estimates that 2 percent of the 26 million 
airline parts installed each year are counterfeit, equaling 
approximately 520,000 parts. While still the safest form of travel, a 
Business Week investigation found that bogus airplane parts played a 
major role in at least 166 U.S. based accidents and mishaps during a 
recent 20-year period.
  According to the U.S. Chamber of Commerce, approximately 5 to 7 
percent of world trade is in counterfeit goods. The FBI estimates that 
intellectual property theft costs the United States companies between 
$200 and $250 billion a year in revenue. According to the U.S. Customs 
and Border Protection, counterfeit merchandise is directly responsible 
for the loss of more than 750,000 American jobs, in addition to tens of 
thousands more lost of privacy of software programs, movies, and music. 
The auto industry could hire 200,000 additional workers if sale of 
counterfeit auto parts was eliminated.
  In some cases, the counterfeiters are not only breaking the law, they 
are supporting terrorists. According to Interpol, seized al Qaeda 
training manuals recommend selling fake goods to finance illegal 
activities. One example is the confiscation of $1.2 million of 
counterfeit German brake pads and shock absorbers in Lebanon in October 
2003. The profits from the products were earmarked for supporters of 
Hezbollah. Another poignant example is the 1993 World Trade Center 
bombing, which was financed partially through the sale of fake Nike t-
shirts from a store on Broadway.
  We are currently involved in trade with a country that refuses to 
enforce these laws. Mr. Speaker, I am referring to China, which has 
ignored its own anti-piracy laws on American movies, music, computer 
software, and other products. In 2003, China accounted for 66 percent 
or $62.4 million of all counterfeit goods seized by the U.S. Customs 
Service at ports of entry into the United States. In 2004, U.S. 
industries lost between $2.5 and $3.5 billion due to privacy alone. 
Some reports estimate virtually 90 percent of products in some 
industries sold in China are pirated from the United States.
  In June, Under Secretary John Dudas testified in a hearing I held in 
the House Commerce, Trade and Consumer Protection subcommittee, ``This 
administration has been pressing China to impose prison sentences and/
or stiffer fines on violators, provide little or no deterrence.'' 
Chinese government efforts since have yielded no results.
  U.S. Trade Representative Bob Portman recently announced the U.S. 
would be requesting from China an explanation of the steps it has taken 
to curb privacy of U.S. products. In the announcement he said, ``Piracy 
and counterfeiting remain rampant in China despite years of engagement 
on this issue.''
  In conclusion, requiring accounting ability is an essential first 
step to stopping Chinese abuse of U.S. intellectual property rights. I 
support this request, and I hope the President's trip to Asia this week 
will further convince Chinese officials of the need for enforcing 
intellectual property rights laws.

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