by Jen-ching Kao
In January the Italian company Allison S.P.A. informed me that every eyeglass frame exported must have “Made in Italy” printed on it before it arrives in a foreign country. But I was fooled by a prestigious optical shop in downtown Taipei, since my cherished NT$6000 Vivienne Westwood frames, whose crystals were falling off too often for a designer product, turned out to be fake. The manager never explained to me where the frames came from or whether they were counterfeit; however, confronted with an integrity crisis, the optical shop finally offered me a new pair that included a certificate of authenticity as a reparation. When shopping in Hong Kong or in China, it is not difficult to find people holding catalogues of brand name bags or watches, asking you to follow them to a dark, hidden apartment where you can find thousands of knockoff items. These appear to be identical to the real thing except for a few hardly visible differences and, of course, they are sold at much lower prices. However, in my case I was ripped off by the optical shop since I had to pay full price and they tried to give me a fake certificate of authenticity when I first questioned their credibility. Counterfeit products are difficult to distinguish unless they are examined with high-tech equipment; they are meant to be sold at the authentic prices and to deceive consumers. In 1994, the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) was initiated at the end of a series of negotiations lasting eight years that led to the establishment of the World Trade Organization (WTO). Under TRIPS, copyright and trade secrets are automatically granted even without registration. It has been a global trend that governments use intellectual property rights as incentives to encourage original ideas in society because with these rights, creators of designs, inventions, books, paintings, etc. can be protected from plagiarism. In recent years intellectual property rights have gained increasing attention in international trade and related organizations. It is estimated by the Paris-based International Chamber of Commerce that approximately 9% of global trade is in counterfeit goods, and the market is worth US$600 billion today. Furthermore, large-scale counterfeiting is usually associated with terrorism or organized crime. It is reported that counterfeiting has been used as a method to raise funds and to launder money for terrorist groups. For example, in September 2002 more than one thousand crates of fake shampoos, perfume, cologne, etc. were shipped from Dubai to Copenhagen and ultimately bound for the United Kingdom; later the sender was proven to be an Al-Qaeda member. More recently, counterfeit CDs, DVDs, cigarettes, and medicine have been smuggled to the southern Philippines and it has also been suspected to be a financial resource for Al-Qaeda-related militants in that region. It is obvious that industrialized counterfeiting is conducted by large organized crime groups as the labor is highly diversified and counterfeit goods are detailed and indistinguishable from authentic ones. Sometimes organized counterfeiting operations are powerful enough to harm commercial relations between countries. For instance, in November 2001 the largest seizure of counterfeit software in U.S. history was made in Los Angeles. Around 31,000 fake copies of the Microsoft operating system — along with fake manuals, holographs, registration codes, certificates of authenticity, and packages — were shipped from Taiwan. After this episode, Taiwan feared there might be economic sanctions imposed by the U.S. The quandary that confronts developing countries is the vicious cycle that can come to an end only if their governments become mature and capable: counterfeiting operations are mainly located in third world countries because of their weak law enforcement and cheap labor. However, the fact that counterfeiting is both a huge and illegal industry is also responsible for hindering the economic and governmental growth in developing countries, because this industry contributes nothing to the government’s tax income, and without enough tax income, the government cannot enhance infrastructure and people’s living conditions. Therefore, the counterfeiting industry will continue to exist as long as a large amount of people continue to live on the edge of survival. On the other hand, consumer demand has helped expand the counterfeiting business during the past decade. Buyers of knockoff items have the desire to “pretend” to belong to a higher social class; sellers of counterfeit goods intend to profit from the low cost of producing counterfeit goods and high retail prices. If consumer demand for counterfeiting can be prohibited, the counterfeiting industry will vanish. Purchasing knockoff and counterfeit items indirectly supports organized crime, child labor, unprotected workers, and insecure working environments; it also endangers social welfare, which consumers might have never thought about. The capital of fakes circulates in both domestic and global trade, and consumption becomes an entirely meaningless activity in terms of its real relationship to the economy. a
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May 2024
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