Tuesday, May 24, 2005

Bill aims to protect auto parts firms from phonies

With House support, proposal that cracks down on counterfeiters heads to the Senate.

By Jeff Plungis / Detroit News Washington Bureau

Knollenberg About the bill • Gives law enforcement expanded authority to destroy equipment used to make fake products. • The U.S. Senate must still vote on the legislation   The counterfeit parts problem Facts regarding the impact of fake auto parts on the economy and safety: • $12 billion worldwide • $3 billion in the United States in lost parts sales to legitimate parts manufacturers Jobs 210,000 lost auto-related jobs Safety Fake parts not tested to meet safety specifications; could endanger occupants Business Sub-par counterfeit parts can compromise brand reputation and consumer confidence and prevent automakers from growing their parts operations Source: Federal Trade Commission: Comment on this story Send this story to a friend Get Home Delivery

WASHINGTON -- In a bid to protect auto parts companies, other manufacturers and consumers, the U.S. House of Representatives passed legislation Monday that would crack down on counterfeiters

The bill, spearheaded by U.S. Rep. Joe Knollenberg, R-Bloomfield Hills, would give law enforcement authorities new powers to destroy equipment used to make counterfeit products. More aggressive enforcement would help save U.S. jobs, Knollenberg said.

"This legislation will help put an end to the constant cycle of counterfeiting and dampen the fraud within our borders," Knollenberg said.

Knollenberg said he became aware of the counterfeit problem because of the high concentration of parts suppliers in his Oakland County district, which is headquarters to one-fourth of the 100 largest auto suppliers in North America.

Addressing the House, Knollenberg said counterfeit equipment is now being sold as replacements for crucial automotive parts like brake pads, spark plugs and filters.

Beyond the auto industry, counterfeiters are also targeting products in the textiles, appliances, food and pharmaceuticals industries, Knollenberg said.

The bill has strong bipartisan support, and it passed the House on a voice vote.

As global trade has expanded, so has the sophistication of parts counterfeiters. The Michigan lawmaker, citing a U.S. Customs Service estimate, said counterfeit parts cost U.S. companies $200 billion a year, translating into the loss of 750,000 jobs.

Auto parts suppliers by themselves lose about $12 billion a year due to fraud, according to the Motor and Equipment Manufacturers Association, known as MEMA.

The top three countries that serve as sources for counterfeit parts are China, Taiwan and Hong Kong, according to a MEMA report that was published last year.

In one high-profile case in December, authorities in Manhattan and Queens, N.Y., seized $700,000 worth of counterfeit brake parts destined for installation on New York City taxicabs.

"Product counterfeiting undermines U.S. and foreign safety standards, putting consumers at risk," said Paul Foley, president of MEMA's automotive aftermarket suppliers association said.

With the House's approval, the bill heads to the Senate. The measure has little opposition, and Judiciary Committee Chairman Arlen Specter, R-Pa., is a supporter, Knollenberg said.

But the bill's fate may depend on whether it is considered before a bitter debate on judicial nominees concludes. Republicans are attempting to change Senate rules to allow for votes on judges President Bush has nominated, circumventing a filibuster. Democrats have vowed to bring legislative business to a standstill if that happens.

You can reach Jeff Plungis at (202) 906-8204 or jplungis@detnews.com.