• Frank Vargo, NAM’s vice president for international economic affairs, testified last Wednesday before the House Committee on Oversight and Government Reform at its Subcommittee on Government Management, Organization, and Procurement’s hearing, “Protecting Intellectual Property Rights In A Global Economy.” His conclusion:

If we are to allow counterfeiting and piracy to run unabated, the risks to the American economy are obviously very serious. However, if we are to invest in protecting our nation’s consumers, workers and businesses from IP thieves, the rewards will come back to us six-fold. According to a report commissioned by the Coalition Against Counterfeiting and Piracy (CACP) – which the NAM helped found – investing in stopping counterfeiting is sound economic policy. Authored by Laura Tyson, former Chair of the National Economic Counsel, the report entitled “An Economic Analysis of the Proposed CACP Anti-Counterfeiting and Piracy Initiative” concluded that:

• For every dollar invested, federal tax revenues would increase significantly with an intermediate range of $4.9 to $5.7;
• Each dollar would increase U.S. economic output approximately between $64 and $75;
• The increase in output would result in the creation of between 174,000 and 348,000 new jobs during the third year of the program; and
• State and local governments can expect to receive incremental revenues between $1.25 billion and $1.50 billion, in present value terms over three years.

The Report also concludes that by aggressively going after counterfeiters and pirates as laid out by the PRO-IP Act and recommendations included in S. 1631, Congress’ efforts could reasonably be expected to reduce losses attributable to piracy and counterfeiting somewhere between five and ten percent over three years.

S. 1631 is Customs Facilitation and Trade Enforcement Reauthorization Act.

On Friday, President Obama nominated Victoria A. Espinel to serve as U.S. Intellectual Property Enforcement Coordinator, Office of Management and Budget. From manufacturers’ perspective, protection of intellectual property is a priority in trade and international law enforcement. The White House summary:

Victoria A. Espinel is the founder and President of Bridging the Innovation Divide, a not-for-profit foundation focused on addressing the “innovation divide” and empowering all Americans to obtain the full benefit of their creativity and ingenuity. From 2007-2009, Ms. Espinel was a Visiting Assistant Professor at the George Mason University School of Law. Her areas of teaching and research were intellectual property and international trade. She has acted as advisor on intellectual property issues to the staff of the Senate Judiciary Committee, Senate Finance Committee, House Judiciary Committee and House Ways and Means Committee. She also served as an advisor to Romulus Global Issues Management and is a member of the Brain Trust of the Global Innovation Forum. In 2005, Ms. Espinel was asked to serve as the first ever Assistant United States Trade Representative for Intellectual Property and Innovation at the Office of the U.S. Trade Representative, serving as the chief U.S. trade negotiator for intellectual property and innovation. She testified on numerous occasions before the House Judiciary Committee and the Senate Committee on Homeland Security and Governmental Affairs. Ms. Espinel also served as Deputy Assistant USTR for Intellectual Property and as Associate General Counsel at USTR. Before joining USTR, Ms. Espinel was with the law firms of Covington & Burling in London and Washington, D.C., and Sidley, Austin, Brown & Wood in New York. She holds an LLM from the London School of Economics, a JD from Georgetown University Law School, and a BS in Foreign Service from Georgetown University’s School of Foreign Service.

The U.S. Government Accountability Office on Monday released a report assessing the impact of the U.S. free trade agreements that were negotiated and went into effect with Singapore, Chile, Jordan and Morocco, “International Trade: Four Free Trade Agreements GAO Reviewed Have Resulted in Commercial Benefits, but Challenges on Labor and Environment Remain.”

While varying in details, the FTAs have all eliminated import taxes, lowered obstacles to U.S. services such as banking, increased protection of U.S. intellectual property rights abroad, and strengthened rules to ensure government fairness and transparency. Overall merchandise trade between the United States and partner countries has substantially grown, with increases ranging from 42 percent to 259 percent. Services trade, foreign direct investment, and U.S. affiliate sales in the largest partners also rose.

The U.S. trade agreements with Panama, Colombia and South Korea will also eliminate import taxes, lower obstacles to U.S. services, increase protection for U.S. intellectual property rights abroad and strengthen rules to ensure government fairness and transparency. History, in the form of a GAO report, tells us those changes bring substantial economic benefits.

Oh, but challenges remain!

Challenges always remain. That’s their nature. Members of Congress who always point to remaining challenges do so to support continued inaction. And as the GAO study proves, inaction is bad for the United States. FTAs have accomplished what they were meant to accomplish: improved access for U.S. products, more exports and economic growth for the United States.

The United States is in a recession, free trade agreements stimulate economic growth and jobs, and yet Congress refuses to act on the Panama, Colombia and South Korea. Challenges remain, but here’s one that Congress can speedily overcome: Enact the agreements.

Warning: Clip Contains Profanity, Irony

Rap Rock/Southern Rock/Country Rock/Nu Metal aficionados will appreciate the Detroit Cowboy’s special attention to the moral health of American kids.  Intellectual property holders will cherish his satirical take on the crisis of counterfeiting and piracy afflicting the nation, if not his colorful language.

UPDATE:  Humorless software execs, angry fashion designers, seen headed towards Michigan.  Check back often for breaking news.

This year is halfway over. So this week “America’s Business with Mike Hambrick” will take a look back at some of our favorite guests so far in 2008.

We’ll re-air excerpts of our June interview with former Speaker of the House Newt Gingrich about his push to help America find alternative energy. Gingrich is now general chairman of American Solutions for Winning the Future, a bipartisan group that is trying to solve some of our nation’s most pressing issues.

The group’s online petition asking citizens whether they want more oil drilling has attracted more than 1.2 million signatures. “We believe that the American people deserve to have the least expensive energy possible in an environmentally sound way and in a way that strengthens national security,” Gingrich said.

Europe is way ahead of the United States when it comes to developing nuclear energy. This week you can listen to our February interview with Tennessee Republican Rep. Zach Wamp. Wamp say the United States should be the No. 1 nation when it comes to developing nuclear and other alternative energy sources.

The news media and the government tend to fan up hysteria about issues ranging from asbestos to global warming. Back in April we talked about this phenomenon with Christopher Booker and Richard North, authors of the book “Scared to Death.” We’ll play some of that interview.

“America’s Business” will also re-air parts of a February interview on the state of the nation’s manufacturing sector with Assistant Commerce Secretary William “Woody” Sutton. And we’ll take you back to January when we talked with NBC Universal General Counsel Rick Cotton about a campaign to battle intellectual property theft. Cotton is chairman of the Coalition Against Counterfeiting and Piracy.

In our regular segment, Renee Giachino of American Justice Partnership gives us the latest on tort reform. And the National Association of Manufacturers President Gov. John Engler will close the program with “The Last Word.”

For more information on “America’s Business with Mike Hambrick” check out www.americasbusiness.org.

The Senate Judiciary Committee held a hearing today on the consumer benefits of protecting intellectual property. Two NAM-member companies were represented by witnesses, who offered testimony:

From Mr. Thurnau’s testimony:

Counterfeit parts and components for cars, trucks, buses and commercial vehicles pose a critical problem to the American economy and the supplier industry because of the wide range of counterfeit products manufactured and trafficked worldwide. Counterfeit goods cost motor vehicle suppliers at least $3 billion in the United States and $12 billion globally in lost sales. These losses correlate to at least 250,000 fewer motor vehicle supplier manufacturing jobs nationwide. Please note that these are conservative numbers based on a 1997 Federal Trade Commission study.

About 80 percent of all pirated goods seized at U.S. borders originate in China. And while it is clear in our industry that more pirated parts come from China than any other nation, we do face significant challenges from Russia, India and many other nations. The temptation might be to criticize the Chinese government for lack of intellectual property enforcement but our experience would say that is inaccurate and counterproductive. The counterfeiters that we deal with are for the most part rogue operators, criminals. The Chinese government pursues those criminals when our company presents evidence of our trademarks being violated. Enforcement issues are often caused by a lack of resources, particularly at the provincial and city level.

Wang Qishan, vice premier of the State Council of the People’s Republic of China, has an op-ed in today’s Wall Street Journal, “No More Chinese Knock-Offs,” detailing the government’s efforts to protect intellectual property rights. There’s a lot of work to do, that’s for sure.