President Obama’s Counterfeit Concern about China

In his State of the Union Address President Obama had this to say about China:

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China. There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you – America will always win.

Now, I don’t endorse counterfeit goods, but counterfeit and unsafe products coming from China constitute a very small percentage of the industries that affect US employment. According to the United Nations on Drug and Crime, in FY 2009, mainland China was the source of $205 million worth of goods seized in the United States. However, the size of the U.S. economy is over $14 trillion.

If President Obama really wants to create jobs, he would tackle the bigger issues that has caused severe job losses in this nation which include a tax policy that allows large multinationals to retain profits overseas without being taxed, transfers of taxpayer money to large financial institutions while small- and medium-sized businesses can’t get financing, reforming our public education system so that the nation’s children have a chance to be competitive in a global competition for talent, and a whole host of other serious problems that stall U.S. job growth.

Talking tough on counterfeiting is playing to an audience with symbolic gestures without addressing the tough issues and making the tough choices. Moreover, the unsafe products are imported by US companies, not the Chinese. Many reputable China companies actually prefer to sell goods to European countries because the European companies are willing to pay higher prices to manufacture goods than US companies.  Most US companies, including Walmart, only seek low price products. This encourages manufacturing companies to cut corners. You get what you pay for. Many of the counterfeit goods are actually produced in the same factories where the genuine products are made. China is working hard to enforce laws to prevent patent infringement and counterfeit goods. But as long as there are people who are willing to break the law in order to make a profit, counterfeits will be available.