CBP Developing Request for Additional Authority to Manage IPR in E-Commerce

CBP needs more authority to combat counterfeiters, an agency executive told the Senate Finance Committee March 6. But Brenda Smith, executive assistant commissioner in the Office of Trade, said it would take a few months of consultation with the private sector to say exactly what's needed. Ranking member Ron Wyden, D-Ore., pressed Smith for a deadline, and when she demurred, asked her to report back within 60 days. "I will do my best," she responded.

Smith said Congress might also need to increase penalties for counterfeit goods. Finance Committee Chairman Orrin Hatch, R-Utah, told her, "We'll see what we can do to back you up and help you." The hearing highlighted a recent Government Accountability Office report that found that 20 of 47 items ordered by GAO auditors from online sellers were counterfeit (see 1802270033). CBP reported that intellectual property rights seizures rose again in fiscal year 2017, though the dollar value fell (see 1803060018).

Wyden noted in his opening statement that solving the counterfeiting issue "isn’t going to be as simple as putting a few more policy tools in CBP’s kit." The agency's hiring difficulties have also hurt its ability to protect "U.S. consumers and businesses from illegal and unfairly traded goods," he said. "The internet has transformed" commerce and "CBP is too often playing catch up ball tracking these fake products down."

Smith said that CBP seized more than 34,000 counterfeit goods in fiscal year 2017, an increase of 8 percent from the previous year. About 16 percent of those shipments contained potential threats to consumer safety. More than 90 percent of the seizures were express carrier or international mail shipments -- and the volume of express carrier deliveries has climbed 50 percent over the last five years. "The scope of the challenge is tremendous," she said. Cooperation from package shippers is improving, she told senators. The agency receives advance electronic data from Chinese and Hong Kong mail services -- important because 88 percent of all counterfeits originate from those locales. CBP gets that kind of advance data on 50 percent of all mail service shipments. Among express carriers, the vast majority of shipments are covered by advance electronic data.

Even after the passage of the Trade Facilitation and Trade Enforcement Act, CBP has limits on the kinds of information it can share from seized goods with intellectual property rights holders. "Our intent is to address the issue of sharing through additional regulatory framework," Smith testified. The Commercial Targeting and Analysis Center (CTAC) is working on a Joint Importation Safety Rapid Response Plan, which is still in the review and clearance process. "Once published, the JISRRP will ... provide CTAC members an opportunity to identify and close any current gaps in the joint efforts to address the growing threat of unsafe products imported into the United States," her prepared testimony said.