27 January 2020Edward Pearcey

US pressures China with crackdown on online counterfeits

US authorities are ramping up efforts to stop billions of fake goods entering the country by increasing searches at ports and making legislative threats, in an effort to pressurise the Chinese government to take more action.

The Trump administration wants to make sure China keeps to its promises to protect US IP rights that were formalised in the first phase of a China/US deal signed a few weeks ago, aimed at bringing an end to a trade war fuelled partly by concerns over IP theft.

As part of that effort, the administration has released a Department of Homeland Security (DHS) report, ‘ Combating Trafficking in Counterfeit and Pirated Goods’, revealing the dangers of large volumes of counterfeit goods entering the US from China.

Listing “immediate actions” to be taken by DHS, the report said US law enforcement bodies will now be actively looking for fake goods and pursuing “civil fines and other penalties against these entities”, with warehouse and packaging facilities being some of the first targets.

The report was prepared following President Trump’s April 2019 Memorandum on Combating Trafficking in Counterfeit and Pirated Goods.

The memorandum provides a “much warranted and long overdue call to action in the US Government’s fight against a massive form of illicit trade that is inflicting significant harm on American consumers and businesses. This illicit trade must be stopped in its tracks,” said Chad Wolf, Acting Secretary, US Department of Homeland Security, in a foreword to the DHS report.

The majority of fake goods seized by US customs officers come from China, according to US government data, with the value totalling billions of dollars.

The rise of online shopping platforms such as Amazon has led to an increase in the sale of fake goods in the US market, as unscrupulous sellers pass on counterfeit products as genuine items. Amazon has strict policies against the sale of counterfeit goods and has stepped up efforts to combat the problem, through tools such as its Brand Registry.

“The US Government Accountability Office (GAO) found that e-commerce has contributed to a shift in the sale of counterfeit goods in the United States, with consumers increasingly purchasing goods online and counterfeiters producing a wider variety of goods that may be sold on websites alongside authentic products,” said the DHS report.

“Today, counterfeits are being trafficked through vast e-commerce supply chains in concert with marketing, sales, and distribution networks,” the report added.

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More on this story

16 January 2020   China and the US have signed the first phase of a deal aimed at bringing an end to a trade war fuelled partly by concerns over IP theft and technology transfer.
3 February 2020   President Donald Trump signed an executive order on Friday, targeting both the sellers of counterfeit goods and the e-commerce platforms they pass through, as his administration seeks to drastically reduce the number of counterfeit goods entering the US.
30 November 2020   A Chinese company has been accused of selling counterfeit Starbucks coffee, in a suit which has made the highest ever compensation demand in a consumer civil public interest litigation in China.