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USTR’s Special 301 Review Report Calls Out Global Counterfeiters

The Office of the United States Trade Representative (USTR) has released its annual Special 301 Review report, adding new countries to its intellectual property watch list and elevating others to high-priority-threat status.

The agency’s report identifies countries that deny adequate or effective protections of IP rights, or deny fair and equitable access to U.S. entities that rely on those protections. Belarus, added to the watch list this week, recently passed legislation legalizing unauthorized use of copyrighted material from nations that are currently sanctioning the country for its support of Russia’s war on Ukraine. Meanwhile, USTR found that Bulgaria did not adequately address concerns about online piracy, making it No. 29 in a list that includes Algeria, Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Mexico, Pakistan, Paraguay, Peru, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, Uzbekistan and Vietnam.

Argentina, Chile, China, India, Indonesia, Russia and Venezuela have been placed on the priority watch list. “China (together with Hong Kong) continues to be the largest origin economy for counterfeit and pirated goods, accounting for more than 85 percent of global seizures of counterfeit goods from 2017 to 2019,” USTR wrote.

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On Wednesday, The American Apparel & Footwear Association (AAFA) spoke out in support of the report’s findings. “As we celebrate World Intellectual Property Day, AAFA appreciates the constructive dialogue between USTR, AAFA, and our members to ensure that we protect the creative and innovative contributions of our members and other entrepreneurs around the world while simultaneously supporting American jobs,” president and CEO Steve Lamar said. The trade group champions “American innovation and brand protection, consumer safety, worker safety, and responsible product manufacturing,” he added. The release of the report “aligns with those important drivers of success and the process offers an opportunity to raise vital issues for our industry.”

The group in January submitted written comments to USTR, nominating Bangladesh, China, and the European Union to the priority watch list. AAFA cited trends in behavior, including “bad-faith trademarks” as causes for concern. Calling Bangladesh “an important legitimate sourcing country for the industry,” the organization said that the country has nonetheless engaged in promoting the sale of fake goods, which are “being seized at an increasing rate globally as counterfeit production is growing.”

AAFA member products—apparel, footwear, and related goods—continually remain at the top of the counterfeit items seized by U.S. Customs and Border Protection (CBP) year after year,” AAFA director of brand protection Jennifer Hanks said. The sale of counterfeit apparel, footwear and travel goods are harming U.S. companies, their employees and consumers, she said.

“In many cases these goods are unsafe, causing harm to American consumers and their families,” she explained. “Further, counterfeit goods are also produced in potentially unsafe and environmentally unfriendly conditions, hurting the workers and communities that make them.” Hanks stressed the importance of policy in helping to “incentivize best practices for vetting sellers and goods, addressing repeat counterfeiter sellers, and ensuring that shoppers have access to relevant information at the time of purchase.”

“USTR’s report is key” to holding bad actors accountable when their actions go against policy, she said.

While the trade group praised the release of the list, Hanks urged the passage of other proposed legislation that AAFA believes would stem the flow of illicit or fake products. “We need Congress to pass the SHOP Safe Act, which will hold those responsible for promoting and selling counterfeit products accountable.” The law would introduce new regulations for online marketplaces like Amazon and eBay, which traffic in goods sold by loosely-regulated third-party vendors. These channels are rife with counterfeits, and have thus far allowed sellers to operate with relative anonymity and impunity, the group has alleged.