Opinion: Latin America is ripping off U.S. manufacturers
When people think of American manufacturing, they tend to envision huge factories churning out vehicles, planes, and the like. But there's more to manufacturing than heavy equipment.
American workers also make advanced medications that treat cancer, biodegradable plastics that reduce pollution, and microchips that give the average smartphone more computing power than NASA had when it put a man on the moon.
This high-tech side of our manufacturing sector is under attack. Some of America's trading partners in Latin America are disregarding legal protections for U.S. manufacturers' intellectual property -- and allowing firms within their borders to steal American innovators' ideas. Such practices harm our economy and our workers.
U.S. trade officials must urge their Latin American counterparts to stop this abuse.
High-tech manufacturing supports millions of American jobs. More than 1 million workers help manufacture specialized computer and communications equipment. Nearly 300,000 produce medicines. About 400,000 create batteries and electrical device components.
These jobs wouldn't exist without intellectual property protections. If U.S. manufacturers were unable to patent their ideas, rivals could steal their proprietary technology and processes with impunity. Few companies would risk the years of effort and billions of dollars needed to create new products.
Of course, strong intellectual property protections do more than just sustain U.S. jobs. They also benefit consumers. Everyone who has used a 3D printer, driven a hybrid car, worn a smart watch, or installed solar cells made possible by nanomaterials can thank intellectual property rights for creating the proper incentives for innovators to bring those products to market.
Nations throughout Latin America could bet on innovation to grow their own manufacturing sectors, as the United States has. Unfortunately, many are choosing the opposite course.
Several Latin American nations, for instance, are abusing compulsory licensing laws, which allow domestic manufacturers to infringe on foreign inventors' patents to create copycat products.
Longstanding international agreements set clear guidelines to ensure that compulsory licenses are only employed in public health emergencies, like the outbreak of an infectious disease. If a foreign manufacturer is unable or unwilling to sell the drug in quantities sufficient to bring the outbreak under control, then a government could justifiably permit a local drug manufacturer to produce a generic version for a limited period of time.
But that's not what's happening here. In Brazil, for instance, the government has discussed using compulsory licenses to "promote local production" of pharmaceuticals. The Dominican Republic has tried to issue a compulsory license for a blood thinner. And we see similar things happening across the region, from Colombia to Chile.
Countries like these may see compulsory licensing as a shortcut to reduce health spending and make up for years of underinvestment in their own healthcare infrastructures. But revoking intellectual property rights diminishes incentives for individuals and companies worldwide to invest in the development of the cures of tomorrow -- the very cures on which our children and grandchildren will depend.
And this goes beyond just pharmaceuticals. Defending intellectual property, no matter the form, is important -- and failing to do so hurts countries today. The sale of pirated goods costs Colombia $750 million annually. In Paraguay, counterfeiting fuels $17 billion in illegal trade each year.
It also hurts our country. Counterfeiting, piracy, and intellectual property theft cost U.S. companies in a myriad of industries -- from food and beverage to retail and electronics -- an estimated $600 billion annually. Those losses can't be used to expand industry, create jobs, or invest in future products.
There are several steps that Latin American governments can take to better protect intellectual property. Countries could issue clearer guidelines for compulsory licensing that limit the practice to true public health emergencies with appropriate due process. Governments could also crack down on companies that condone the counterfeiting of manufactured goods.
The health of U.S. manufacturing -- and of the one in ten Americans who work in the sector, and the $9 trillion in economic activity they generate -- depends on moves like these that would safeguard intellectual property.
Ryan Ong is director for International Business Policy at the National Association of Manufacturers (NAM).