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January 27, 2020

US takes new steps to combat sale of fakes online

The Trump administration has unveiled efforts to crack down on counterfeit and pirated goods sold over the internet via major e-commerce sites, a move applauded by the textile and garment industry.

By Hannah Abdulla

The Trump administration has unveiled efforts to crack down on counterfeit and pirated goods sold over the internet via major e-commerce sites, a move applauded by the textile and garment industry.

A 54-page report for the attention of President Trump was rolled out on Friday (24 January) by the Department of Homeland Security, on the back of Trump’s Memorandum on Combating Trafficking in Counterfeit and Pirated Goods issued in April, with the watchdog saying: “The flood of counterfeit and pirated goods now being trafficked to American consumers through online third-party marketplaces is threatening both the public health and safety as well as national security.”

It adds law enforcement will be seeking out any and all fake products and using “all available statutory authorities to pursue civil fines and other penalties against these entities.”

The report says over 90% of all intellectual property (IPR) seizures occur in the international mail and express shipment environments, a common method of shipping by e-commerce sites.

The report has been welcomed by the US textile and garment industry which has for some time been vocal about the damage caused to the industry from the entry of fakes via third-party marketplaces.

According to the US National Intellectual Property Rights Coordination Center (IPR Center), clothing and footwear are among the top five most highly pirated goods. In October last year, US border police seized over US$22m in fake Nike shoes.

In the same month, the  American Apparel & Footwear Association (AAFA) took aim at Amazon for the way handles counterfeits and intellectual property infringement, and called for more of the retail giant’s sites to be added to its Notorious Markets list. At the end of last year, reports surfaced that the Trump administration is reportedly mulling a move to place some of Amazon’s overseas websites on a list of global marketplaces known for counterfeit goods.

In response to the DHS report, Steve Lamar, president and CEO of the AAFA said: “The administration’s report is the latest in a string of government research that has highlighted the growing counterfeit crisis, a crisis caused by counterfeiters taking advantage of third-party online marketplaces that service the needs of millions of American families. This is about more than just lost sales and damaged brand reputation. Counterfeit products that are unknowingly purchased – whether a winter coat for yourself or pajamas for your newborn – can put Americans in direct contact with materials that do not meet federal safety regulations, support unsafe working conditions, or enable illegitimate factories to ignore sustainable best practices. It is past time that we attacked this pervasive problem head-on. 

“We are pleased that the administration incorporated many of the concerns and recommendations we submitted on behalf of the apparel and footwear industry, and look forward to working with the executive branch, Congress, and the appropriate agencies to turn common-sense recommendations from this report into real, effective action to target counterfeits without hindering legitimate trade.”

The National Council of Textile Organisations also welcomed the report.

“This is a very important and long overdue move on the part of the administration to increase enforcement activity and penalties against counterfeit goods sold online and imported into the United States,” said NCTO President and CEO Kim Glas. “We commend the administration for making a commitment to bolster efforts to crack down on counterfeits, particularly in the textile and apparel sector, which has been hit hard by fake imported products for decades.”

According to the NCTO, Nearly two million shipments of goods are exported to the United States duty-free each day– often from countries with poor labour, human rights and environmental track records—under a provision known as Section 321 de minimis. This provision allows goods valued below an $800 threshold to enter the US duty-free when imported directly to an individual on a single day.

“This massive increase in de minimis shipment trade poses significant security risks and threats to public health and safety, while incentivising customs fraud and creating a loophole to our entire tariff structure,” Glas said. “Our concerns regarding the de minimis loophole are exacerbated by the belief that the domestic textile industry and other US manufacturing interests are directly and negatively impacted, particularly since e-commerce sites like Amazon and others are using de minimis as a duty-free portal into the US for products under $800.

“We think this is an important step forward by the administration to deepen the analysis on de minimis products— that are often not thoroughly examined and undercut our domestic manufacturing industries. We don’t know what the products are, where they are coming from, whether they meet US safety requirements, who is making them or the country of origin. We believe it is long past time for the administration to address the issue of de minimis shipments and counterfeiting head-on.”

The National Association of Manufacturers vice president of labor, legal and regulatory policy Patrick Hedren comments: “Manufacturers have always had to deal with counterfeit goods, but the issue has become much more widespread in recent years, resulting in a better understanding of the challenge ahead and what must be done to overcome it. This report lays out proposals to deal with gaps in enforcement and the role of online platforms, which are two important pieces of the puzzle. The administration’s breakthrough “phase one” deal with China included strong, enforceable intellectual property protections to help counter the import of fake goods, and as the report recognizes, we need additional effective tools and better agency coordination with the private sector to fight back. At the end of the day, this is about as bipartisan an issue as you can find—and the solution should be, too. We look forward to reviewing the details of the report and working with members of Congress, the administration and private-sector stakeholders to better protect the public from the threat of fake goods.”

Click here for the full report.

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