Profitable fake goods

Press, 31 March 1981, Page 16

Profitable fake goods

From The “Economist.” London

The big Western countries are trying to put a stop to the booming trade in counterfeited industrial goods. For years, pirate plants, usually in developing countries, have been turning out imitation Levi jeans, fake car parts or copied microchips. Individual Governments have banned shipments of fakes on their own initiative — when they find them. Now the United States, the E.E.C., Canada, Japan and Australia have banded together to impose heavy penalties on pirates. Developing countries, worried that rich countries will use counterfeiting as another protectionist excuse, are starting to curb their illegal industrialists. International counterfeiting

is big business. Textiles manufacturers estimate that cheap copies of designer fashions, particularly jeans, have sales of almost 32 billion a yea. worldwide. Car-part piracy is booming too: it is easy and companies have been slow to resort to law. Pirates have now entered the world of microchips, making cheap copies of the world’s most famous calculators. The strictest section of the new. agreement will permit companies who can prove that their (trademarked) goods are being copied to ask the treaty’s signatories to seize the contraband and destroy it, or give it to charity. In the past, Governments often resold such goods once the lawsuits were over.

But the injured companies suffer, they say, as much from the damage to reputation caused by the poor quality of imitations as from the sales they have lost. The issue surfaced within G.A.T.T., > during the Tokyo round of trade negotiations, but got nowhere, thanks to Third/ World suspicion of rich countries’ motives. The new effort speaks more softly but carries a big stick: if a pattern of piracy can be found in any one country the agreement provides for the imposition of import restrictions on other exports. America’s car-parts manufacturers are jubilant. They claim that one in five parts sold in America is a fraud from Taiwan. * •