Forbes Business Policy The ITC Empowers Special Interests To The Detriment Of U. S. Prosperity Wayne Winegarden Contributor Opinions expressed by Forbes Contributors are their own.
Following Feb 13, 2023, 02:24pm EST | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin Herbert C. Hoover Building getty Policies have consequences, both good and bad. The right policy environment improves our living standards and makes it easier to address the many problems facing the country – from underfunded public pensions to global climate change.
The opposite is also true. Anti-growth policies decrease our well-being, impoverishes families, and turns our current difficulties into outright crises. The current weak economy and growing turmoil is a vivid demonstration of the consequences from errant economic policies.
It is not simply Congress and the President driving the current anti-growth environment, either. Too many regulatory actions from agencies, such as the U. S.
International Trade Commission (ITC), contribute to the anti-growth policy environment that reduce our economic vibrancy. In the case of the ITC, as I discussed here , the agency continues to offer patent trolls the ability to litigate their often frivolous claims in its own alternative, more favorable, legal venue, instead of the more balanced court system. Officially called non-practicing entities, patent trolls obtain patents for the sole purpose of using the legal system to extract money from innovative companies who they claim are using the innovation in question.
Because companies accused at the ITC can’t afford to risk losing access to the entire US market over a minor patent dispute, they often succumb to the trolls’ excessive demands. Recommended For You 1 Meet The Unknown Immigrant Billionaire Betting Her Fortune To Take On Musk In Space More stories like this Fewer stories like this 2 New Marburg Virus Outbreak Confirmed In Equatorial Guinea More stories like this Fewer stories like this 3 SuperBowl LVII Delivered Wins For Inclusion. Almost None Came From The Ads More stories like this Fewer stories like this In other words, the patent troll income model is based on exploiting the legal system for personal gain.
The ITC’s more favorable environment increases their chances of successfully obstructing innovative companies and, consequently, improves their expected returns. Higher patent troll returns lead to less innovation as firms must divert time and limited resources to legal fights and away from productive activities. Since the ITC’s “Section 337” cases target importers specifically, these cases also drag down the benefits we get from international trade.
Despite the growing rhetoric, international trade has significantly improved the well-being for the average American family. One study found that the payoff to U. S.
residents from expanded global trade between 1950 and 2016 equaled $18,131 per household – about one-quarter of the current median household income. These gains occur because international trade increases our ability to consume more goods and services at lower prices and provides large income and employment opportunities. In total, around 40 million Americans depend on global trade for their jobs.
As the Office of the US Trade Representative pointed out , “imports … provide high quality inputs for American businesses, helping companies and their U. S. employees become or remain highly competitive in both domestic and foreign markets.
” The U. S. manufacturing industry, which has seen an 80% increase in real output over the last 25 years - it is not in decline as urban legends might portray - owes around one-half of all manufacturing employment to the exports of manufactured goods.
The imports being threatened by trolls at the ITC make important contributions to these manufacturing jobs. A recent study showed that companies accused of infringement in Section 337 cases supported far more U. S.
jobs than the troll complainants did - by orders of magnitude. With respect to the recent bout of inflation, a recent Brookings Institution report makes the case for expanding trade arguing that, not constraining it needlessly as the ITC is doing. The report argues that, an often-overlooked benefit of free trade agreements is that they can ease inflationary pressures by streamlining trade between nations, thus increasing the supply of goods and reducing prices.
That is, rather than curb demand as interest rate increases do, free trade works through the supply side. Because the current inflation spike can at least partly be attributed to stresses on supply chains, a free trade agreement inducing greater supply would be one step to help ameliorate the magnitude of inflation. There are near-term opportunities to build on these benefits from international trade.
For instance, the U. S. is hosting the 2023 series of APEC leaders meetings.
APEC, the Asia-Pacific Economic Cooperation forum, offers opportunities for the U. S. to expand trading opportunities with major economies in the Pacific including Japan, Korea, Taiwan, and Australia; as well as in the Americas including Canada, Mexico, Peru, and Chile.
Reducing trade barriers with these major partner nations offers the opportunity for greater economic efficiencies that will lower prices for families at a time when the cost of living is becoming ever-more unaffordable and create more income earning opportunities at a time when economic growth may be faltering. Congress and the Administration should seize the opportunity to expand international trade. Unfortunately, the ITC is standing in the way.
By skewing the legal environment in favor of patent trolls and creating de facto trade restrictions that disadvantage importers, the decisions of an unelected bureaucracy are creating trade obstacles. As a rule, trade obstacles should be minimized but if some trade restrictions are desired, these decisions should be made by elected leaders, not career employees. A comprehensive supply-side policy mix can effectively counter the current stagflationary pressures and help the U.
S. economy achieve the desired “soft landing”. An important component of this package is expanding international trade; consequently, removing unnecessary obstacles is imperative.
This includes reining in the ITC while still ensuring that legitimate patent infringement cases are adjudicated through the judicial system where they belong. Follow me on Twitter . Wayne Winegarden Editorial Standards Print Reprints & Permissions.
