Chinese Piracy Costing Millions of U.S. Jobs

China’s failure to protect intellectual property is costing U.S. businesses billions of dollars each year and holding them back from creating nearly a million jobs, according to a new report by the U.S. International Trade Commission.

The report found that in 2009, U.S. businesses lost out on $48 billion – mostly in sales – due to rampant piracy in China.

If China raised its enforcement to U.S. levels, these American businesses could have created 923,000 jobs, according to the report. Using another model, the same study found that the number of potential jobs could be as many as 2.3 million.

“Time and time again, China has failed to protect and enforce American intellectual property rights, and it continues to discriminate unfairly against American businesses. We cannot pretend that there aren’t real consequences to these violations when these numbers show that millions of American jobs are on the line,” Sen. Max Baucus (D-MT) said in a statement.

Of the lost money, $36.6 billion, or 75.9 percent, were due to lost sales. Another $11.6 billion was lost due to royalties and licensing agreements.

“Our nation plays by the rules, so too must China,” Sen. Orrin Hatch (R-UT) said. “I hope the report’s findings spur the administration to deepen their efforts to meet this challenge.”

The issue appears to be one of the few that can galvanize members of both parties into a sense of unity. Both parties say that China must do a better job to protect intellectual property rights and prevent piracy.

“China wants the benefits of an economic relationship with the United States but won’t hold up its end of the bargain,” Sen. Chuck Grassley (R-IA) said. “This report quantifies how extensive the damage is on the American economy. It shows the importance of negotiating strong intellectual property protections in trade agreements and enforcing those rights once the agreements are in place.”

As part of its membership in the World Trade Organization, China was supposed to be meeting international standards on intellectual property rights protections by March 19, but the deadline has come and gone without any change in policy. In 2009, the WTO’s appellate body ruled that China’s restrictions on Western media products were in violation of the organization’s rules.

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