Effects of Chinese Piracy on U.S.

a. Introduction

Apart from the piracy phenomenon, product counterfeiting has resulted to major risks and a damaging problem for most businesses in the world (Lessig, 2005:page 40). There are links that organize the piracy crimes, which has made it a skilled entrepreneur operating in any part of the globe. The experts who deal with piracy and counterfeits invest in the best modern technology that will assist in producing the most fake product in the market (Johns, 2009: page 14). Originally, the problem used to affect the film, music products, fashion and luxury goods. However, the piracy problem affects industries dealing with electronics, technical equipments, toys, medicine, vehicle spare parts, foodstuffs, hygiene products and cosmetics.

b. Definition and background of the problem

Consequently, the risks to safety and health increases without forgetting the risks that customers face because they can hardly differentiate between the original and vague product. Counterfeiting and pirating the intellectual property has increased and that calls for action from all the states in the world. The country faces the challenges while trying to punish and prevent the counterfeiting and piracy of intellectual property on its own and requires the assistance from other countries. For instance, in the United States, there are numerous unscrupulous vendors who make and distribute the copies that are not authorized to be circulated in the market (Albanese, 2007: page 121).

i. History of the dispute

Surprisingly, the law enforcement of U.S. fails to reach these vendors and the ignorance of the government contributes to this failure. As a result, the vendors continue supplying the pirated products to the market where they make higher profits through stealing the intellectual properties (Lambert, 2009: page 156). Since the vendors supply the pirated products at lower prices than the original ones, the demand increases. Alternatively, the cost of producing a counterfeit product is lower than that of an original commodity. This reduced cost increases the supply and demand for products in the market. The major discussion here is, should the vendors and customers continue supplying more products and buying them respectively?

 Supply, demand and market equilibrium

The increased supply and demand does not imply that the firms should proceed to produce and supply the same pirated products (Lessig, 2005: page 40). Instead, the U.S. government should come up with laws that protect all the intellectual properties. In the 21st century, China has become a force that affects the global economy. This is evident through the fact that it was a major issue in the American 2012 election (Albanese, 2007: page 121). Barack Obama and Mitt Romney had strong feelings about its power in the economic economy and how it had a direct effect on the Americans economy.

 Do U.S. firms/individuals pirate intellectual property rights?

Yes, where the illegal actions of intellectual property rights cost the firms in U.S. many dollars. Apart from Chinese selling and pirating the products, local citizens do the same where they contribute to the loss of tax revenues and jobs.

ii. Relevant Economic Concepts - The cost of piracy on U.S firms

The intellectual property rights theft by the Chinese firms has cost the United States industries a lot especially in the reduction of revenues and redundant of the economy. For instance, a report shows that in 2009 China piracy cost the U.S. companies around 48 billion dollars. The International Trade Commission report continued to state that the job opportunities would increase by 2.1 million jobs if China enforced and protected the rights to intellectual property. The service and information sector lost the largest amount totaling to 26 billion dollars; while the industries dealing with heavy and high tech manufacturing lost over 18 billion dollars. As seen, the Chinese piracy of intellectual property did not only cost the U.S money, but also jobs. Surprisingly, the Chinese government discriminates most of the American industries and violates the rights to intellectual property. The demand and supply of pirated and counterfeit products in U.S. increase each day.

 What percentage of pirated products are sold in U.S. markets?

In 2011, the rate of software piracy from China dropped to 23%. This was an improvement compared to the previous years like in 2003 which settled to 92%. The economy of U.S. loses around 12.5 billion dollars due to software piracy in output every year. The output consists of economic performance measures and revenue in the state. In addition, the country looses around 71,060 job opportunities.

The Intellectual property rights are those rights that individuals get in relation to their mind's creation. Such rights guarantee he creator his use of own creativity within a certain duration. This is done to protect individuals and provide exclusive right over his creation of a specific timeline. An example of these can be a business idea, a specific product and service (Albanese, 2007: page 121). This will also identify where the country is developing country or a devolved country. They can also be identified the direction of the economy whether it's growing or not.

The Intellectual property right will have an effect on the gross domestic production. This will mean that more industries and service are providing employment to the unemployed (Johns, 2009: page 14). Intellectual property right has been seen to incite the reactivation of industries and service industries. These rights are found under two major groups we have the copyright and rights related copyrights and industrial property. It is important to give inner details for each of the rights to intellectual property.

* Industrial property - Trade regulation and industrial policy

There are two major sections of industrial property as the paper discusses that help in regulating trade. The first section relates to the allocation of protection to specific designs. This will mainly include trademarks that will identify certain goods and services to a particular organization. This will also identify the product within the area where it is used (Albanese, 2007: page 121). The protection of these signs and banners will protect the brand created by this organization. It will also protect its consumers through the clear identification of these products. This will also ensure fair competition between the identified companies.

This will also help clients to make more informed decisions as they can identify which company meets their needs and wants.