America’s Unknown Competitive Edge

Believe it or not, America not only has not lost its competitive edge in the world, but, in at least one key sector, has achieved an advantage. For Pfizer, Inc., which employs 85,000 employees, intellectual property (IP) “is the foundation of [their] ability to discover and develop innovative new medicines,” the company CEO Jeff Kindler told a congressional committee. A generation ago, according to Kindler, Europe produced eight out of ten drug innovations. Today, however, America produces eight out of ten.

Kindler encapsulated the importance of IP in a formula: IP = innovation = competitiveness = jobs. But, in order for America to keep its economic edge, Kindler made specific suggestions for Congress: enforcement, strong IP and anti-counterfeiting provisions in trade agreements, and lengthening data exclusivity.

On July 15, the Senate Committee on Finance met to discuss “International Enforcement of Intellectual Property Rights and American Competitiveness.” Chairman Max Baucus insisted that “America’s creative ideas can succeed” by innovation, competitiveness, protection of ideas, fair application of laws, and the fostering of future ideas. But part of the problem, explained Baucus, is that global patent and copyright laws are “uneven at best” and “all-too-frequently go unenforced.” This is particularly disturbing for America’s economy since intellectual property (IP) industries account for “18 million…high-paying jobs” and “40 percent of [America’s] economic growth.”

Baucus was not alone in his concern. Andrew Lack, Chairman of Sony BMG Music Entertainment, addressed the problems of “piracy wars.” Both the “physical marketplace” and the “online marketplace” have created a “piracy phenomenon.” According to Lack, “multinational criminal syndicates” produce and distribute “counterfeit products” while “avoiding punishment” through “bribery and other forms of corruption.” Sony BMG has implemented strategies to combat the illegal activity. However, Lack’s appearance before the Finance Committee was a plea for Congressional intervention. He even warned Congress to “pay close attention to Russia’s accession to the World Trade Organization.” Lack argued that effective measures could only happen if the U.S. government and the private sector “work together.”

Walter Cahill, Vice President of IATSE, a union of professional stagehands, testified on behalf of artists and technicians within the film and theatre industries. Much like Sony BMG, said Cahill, the film industry has suffered from counterfeiting and online downloading. As much as 200 to 1,000 people are “employed on any given movie.” Most of the workers are not “high profile”—they make money by negotiating “residual payments.” According to Cahill, in 2007 his industry lost $6 billion. That is “only a fraction,” though, “of the $250 billion that copyright piracy costs the overall U.S. economy every year.” Economic concerns, however, are only the tip of the iceberg. Individual employees lose millions of dollars in health and pension benefits each year. Cahill, too, requested Congressional intervention. He only added that “first we need to educate ourselves, our families, and our friends” and “recognize piracy and who it actually hurts.”

Daniel Smith is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.