Stolen Software? It’s a Big Deal for American Manufacturing.
Any reader of this blog will know by now the impact that China’s currency policies, government subsidies, lax labor and environmental enforcement, state-owned enterprises, and mercantilism have on American jobs and manufacturing. But here’s a startling thing to consider: there’s more.
In this day and age, nearly every American manufacturer utilizes sophisticated intellectual property (IP) like business software to be competitive. Just last week, the Commerce Department released a detailed report that explains how important this intersection of production and technology is to our economy. The presidents of the AFL-CIO and the U.S. Chamber of Commerce helped Commerce Secretary John Bryson release the report, emphasizing its importance.
Now, imagine you are an owner of a small manufacturing shop in our heartland. You play by the rules. You’ve legitimately purchased expensive and sophisticated business software for your firm. But you are facing competition from overseas that may be using stolen IP and software.
Think it’s uncommon?
The fact is, such theft happens every day. According to a letter written by state attorneys general around the nation, 80 percent, and in some cases up to 90 percent, of overseas manufacturing firms are using stolen IP. These attorneys general have asked the Federal Trade Commission (FTC) to explore how this theft of IP may be an anti-competitive practice under federal law. And, their letter has been backed up by an impressive group of bipartisan Senators who sit on the Small Business Committee.
Competing against firms that pay nothing (or next to nothing) for IP is not a level playing field. In fact, one example cited by the AGs showed how an Indiana parts maker must compete against a Chinese firm that has stolen over $5 million in business software.
At the very least, the FTC should adopt an aggressive stance towards this anti-competitive behavior. The Administration’s new trade enforcement initiative seems like it was launched to address an issue like this (along with the surge in auto parts imports from China we brought to its attention earlier this year).
While competing against foreign firms with stolen software is only one of many major unfair trade violations with which American manufacturers must endure, it is a significant one.
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