U.S. Rep. Howard L. Berman, the Ranking Democrat on the House Foreign Affairs Committee, delivered the below remarks as prepared for delivery at today's committee hearing, "Unfair Trading Practices Against the U.S.: Intellectual Property Rights Infringement, Property Expropriation, and other Barriers"
The statement follows:
Madam Chairman, thank you for scheduling this hearing.
Violations of intellectual property rights in international trade are an important aspect of a large global problem. According to a study commissioned by the International Chamber of Commerce, piracy and counterfeiting cost legitimate businesses $455 billion in 2008. By 2015, that number is expected to increase to 1.2 trillion. And, nearly three-quarters of global IPR theft winds up in world trade flows.
The latest USTR Special 301 Report lists 40 countries on our IPR watch lists. Of these, notable on the Priority Watch List, are countries such as Russia, where we are currently evaluating the extent of their enforcements efforts in conjunction with our review of their status under PNTR and Canada, where we acknowledge important improvements recently, but they continue to lag behind international norms for a developed economy.
Not surprisingly, though, China dwarfs other countries in violations of U.S. intellectual property rights. USTR reports that Chinese violations run the gamut of all forms of IPR: patents, trademarks, copyrights and trade secrets. Worse, USTR reports that the Chinese government is abetting some of these violations by compelling foreign companies to transfer intellectual property to Chinese companies as a condition of licensing and regulatory approvals. These policies exacerbate patent infringement, trademark counterfeiting and outright theft of trade secrets.
IP violations also are a national security threat. The Defense Department's procurement system is being inundated by counterfeit and pirated parts. To deal with this problem, DOD, NASA and other agencies have launched a drive to root out these illegal and dangerous items from the government's supply chain.
To me, strengthening the protection of American intellectual property must be a top priority. IPR plays a critical role in our economy, in employment and in our global leadership. While every industry depends on IPR to some extent, a recent Commerce Department report identifies 75 industries that are "IPR-intensive". These account for $5 trillion in annual U.S. output, or about one-third of the entire U.S. economy.
As the report indicates, companies in these sectors directly employ 27 million American workers, or about one in five of the entire U.S. workforce. In addition, suppliers to these companies employ another 13 million workers. Thus, IPR-intensive companies employ, directly and indirectly, 40 million Americans, or 28 percent of the entire U.S. workforce.
In 2010, the U.S. Chamber of Commerce reported that California's IPR-intensive companies account for $923 billion of our state's annual economic output -- fully 58% of our total state economy. These companies and their suppliers employ 7.4 million Californians, 55% of our state's total private-sector workforce.
For America's future, it is essential that our government ensure protection of our intellectual property abroad. Our trading partners must provide higher levels of protection for our intellectual property, including effective enforcement tools and more open markets.
We have an opportunity now to further our efforts in this area. The US is currently negotiating an ambitious agreement with countries in the Asia Pacific region - the Trans Pacific Partnership. It is critical that this agreement reflect and prioritize the contribution of the US IP industries to the US economy by including strong protections for IP and robust enforcement provisions. This will benefit both the US and our trading partners' creative and innovative industries and economies.
Madam Chairman, thanks again for calling this important hearing. I look forward to the testimony of our witnesses.