HIGH PRICE OF SHODDY GOODS

May 16, 2007

The selling of counterfeit products is big business, accounting for more than 5 percent of merchandise trade worldwide, according to U.S. government estimates. And it is on the rise in America and globally, says Alfred Tella, a former Georgetown University research professor of economics.

Consider:

  • The U.S. Customs and Border Protection agency reported in 2002 that counterfeit goods brought into this country in one year cost American businesses an estimated $200 billion in revenue and the loss of some 750,000 jobs.
  • U.S. Customs counterfeit-related seizures rose 125 percent between 2000 and 2005, and with new enforcement tools they rose an impressive 80 percent in fiscal 2006.
  • Since the early 1990s, counterfeit trade is estimated to have grown eight times faster than legitimate trade.

Knowledgeable people say that seizures represent only a tiny fraction of the fakes that get through, so one can only guess at the volume of counterfeit merchandise entering the United States. Such products, which use unauthorized trademarks or trade names, get through when sellers use forged or invalid documents, or when the goods are smuggled in, says Tella.

Counterfeit products hurt American business across the board -- small businesses probably the most -- cheat consumers, unemploy workers, cost the government revenue, and can be dangerous to public health and safety. It's part of the downside to globalization, says Tella.

Source: Alfred Tella, "High price of shoddy goods," Washington Post, May 16, 2007.

 

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