Tariffs Won't Plug China's Counterfeit Pipeline To The U.S.

Counterfeits fly under the radar via Amazon, eBay, Alibaba, and Walmart

May 15, 2019 - Los Angeles, CA – Controversial trade war tariffs may curtail trade barriers, protect industry and intellectual property theft, create jobs and fix an undesirable trade barrier, but the criminal $1.3 trillion counterfeit industry will flourish. Intellectual property theft is a negotiating point in China trade deliberations, but counterfeit products will continue to fly under the radar. Consumers may look to e-commerce websites to blunt the impact of a 25% tariff on legitimate China goods and unknowingly receive a counterfeit from the e-commerce giants; Amazon, eBay, Alibaba, and Walmart.

The 60,000 cargo containers that enter the U.S. each day are no longer the primary transportation medium for China counterfeits. Amazon, eBay, Alibaba, and Walmart are now perfect platforms to flood the consumer marketplace with direct consumer mailings of an inexhaustible supply of cheap China counterfeit, fake and replica products, and without liability. China provides about 85% of the world's counterfeits and receives substantial postal discounts through decades-old trade treaties while the U.S. Postal service loses millions. 80% of eBay sales and 60% of Amazon sales are from global "Marketplace" sellers who exploit this cheap, effective way to deliver goods, including counterfeits. Chinese companies account for about 60% of packages shipped into the United States.

Peter K. Navarro, White House assistant to President Trump for trade and manufacturing policy, wrote a harsh condemnation in the WSJ; "when you purchase brand-name goods through online third-party marketplaces like Alibaba, Amazon, and eBay, there’s a good chance you’ll end up with a counterfeit." Alibaba was publicly condemned by The Office of the United States Trade Representative and landed on the U.S. Notorious Markets List - a designation reserved for the world's most notorious markets for counterfeit goods. The American Apparel & Footwear Association (AAFA), which represents more than 1,000 brands, has recommended that Amazon be added to the list.

The e-commerce giants have not escaped the attention of federal investigators;

• The U.S. Government Accountability Office ("GAO") conducted an undercover investigation of e-commerce websites and reported that about 50% of the items it purchased from e-commerce websites, including Amazon, eBay, and Walmart, were counterfeit.
• In Operation Mail Flex, a 2017 Customs and Border Protection investigation, officers randomly examined more than half of the express-mail packages arriving daily from Hong Kong and mainland China over five days -- and seized 43% of them. These seizures included 1,297 noncompliant imports, such as counterfeit pharmaceuticals (along with controlled substances including fentanyl).

The 2018 Global Brand Counterfeiting Report found that two-thirds of consumers who had unintentionally bought counterfeit goods lost trust and then often avoided the legitimate brand. Brands are tarnished, while companies and jobs are destroyed. The value of counterfeit and pirated goods is forecast to grow to $2.8 trillion and cost 5.4 million net job losses by 2022 states a 2017 International Chamber of Commerce Report.

America was founded on free trade, but that also has to include fair trade. America has the right to protect intellectual property rights and impose tariffs or restrict access to our markets in the same way competitors do to us. America's security and future is at risk -- it's just common sense.