'The Theft And Destruction Is Real': Brad Knott Accuses China Of Stealing U.S. Intellectual Property

Forbes Breaking News

During a House Judiciary Committee hearing in July, Rep. Brad Knott (R-NC) accused Chinese companies of stealing American intellectual property.

Transcript

00:00...statement be placed in the record. Without objection, Mr. Knott will be permitted to

00:05participate in today's hearing for the purpose of questioning the witnesses if a member yields

00:11him time for that purpose. And we welcome the gentleman. Thank you. I now recognize the

00:17chairman of the full committee, Mr. Jordan. Pursuing to the rules, the gentleman is recognized.

00:25Thank you, Mr. Chairman. It's my privilege to be here. I'm familiar with one of the

00:29witnesses in the company that he comes from, Charlotte Pipe and Foundry. I've had the

00:33privilege of touring their facilities. I know them well. And this is a company that does it the right

00:38way. They put their heads down. They do great work. They deliver world-class products that will

00:43compete against anybody. But what any company cannot compete against is fraud, manipulation,

00:49unfair markets, lack of free markets. And Mr. Mueller, thank you for coming to the test,

00:55to come and testify today. And I want to be quick and to the point. What legislative proposals are

01:01you familiar with that could protect industries like yours that benefit not only just North Carolina,

01:07but the entire country and then the world by extension? Thank you, Congressman. In addition

01:12to the Fighting Trade Cheats Act, which I mentioned, which would impose stiffer penalties on these bad

01:19factors, take import licenses away, and allow us a private right of action to enforce U.S. trade law.

01:26There is also the Protecting American Industry and Labor from International Trade Crimes Act.

01:31And I urge the Congress to pass and fund that, which would stand up a trade fraud crime unit at the

01:39Department of Justice. The bill calls for $20 million in funding. As I mentioned in my testimony,

01:46on our two products alone, we believe more than $40 million has been uncollected in duties by customs.

01:55So if they just had been able to collect on our products, we could double the funding of this trade

02:00crime unit to $40 million. We believe that in order to stop this behavior, we have to start prosecuting

02:08some of these bad actors because they continue to set up these shell companies. When confronted,

02:14they dissolve them, and they're right back in business with a new shell company.

02:18And in your experience, sir, how do these foreign entities gain entry into the United States? Do they

02:24have participants in the United States? Are they blind actors? Are they willing and knowing? What's your

02:29experience? There are U.S.-based importers that engage in this fraud, and we know some of those.

02:35Glendale Fire in California is one. Wells in Chicago. Wells Plumbing is another. These are U.S.-based

02:43importers that are engaged in this illicit activity, and those are the companies that we should be

02:51targeting with something like the Pail Act. And in regards, with your experience, sir, given the

02:56amount of fraud and sort of the suppressed pricing that the Chinese Communist Party engages in,

03:02how responsive have the United States authorities been fielding your complaints in this area?

03:07Well, we tip our hat to customs. In fact, we met with them last week, our trade association,

03:14and we have engaged very cooperatively with customs, and they do their best to enforce the law.

03:21We try to educate them on our products, how to spot the fraud, fraudulent products coming in.

03:27And so we are very pleased with customs. They just don't have enough tools to stop this behavior.

03:33Right. Professor Ku, let me transition to you quickly. What are ways that we can disincentivize

03:38the Chinese Communist Party on a macro level from continuing to engage in this? Because it's not

03:43just Charlotte Pipe and Foundry, obviously. It's everything from biopharma to engines to computing.

03:49The theft and obstruction is real and across every sector. How do we dissuade them from continuing this?

03:54Thanks. You know, there's no easy answers here. I wish there was a silver bullet. I think passing

04:01the legislation could certainly help. I do think that making clear that the first and foremost that

04:09we take these things seriously and that we force bad actors to disclose the network of funding,

04:16the problems in transshipment is some of the bigger problems we see is the way the Chinese

04:20party states intertwined with each other. We have to assume, unfortunately, that a lot of

04:25what looks like normal private companies we want to welcome here to the United States

04:28have to, unfortunately, play by different rules because we can't trust them because they're

04:33intertwined with the party state at home. And I think it's just unfortunate that's the way

04:37it would have to be tough. We have to demand greater disclosure of connections between Chinese

04:45companies and the party sort of or partnership groups that they're involved with.

04:51Is there a way to separate doing business with Chinese companies from the Chinese Communist

04:55Party?

04:57I mean, I think there is. I mean, I think we do business with, we should do business with

05:00whoever. But I think we have to assume that those companies, which are private much of the

05:06time, can be co-opted very quickly in a way that we can't in the United States force a private

05:11company to do something that the government wants us to do, wants it to do. Whereas, so

05:15you have to proceed cautiously. It's really just, it's not the United States government's

05:19fault. It's China's government's fault for creating this weird web of influence and control

05:24that makes, unfortunately, even honest Chinese companies suspect.

05:28Yep. To the witnesses, thank you. Mr. Chairman, I yield back.

05:32I thank the gentleman. I would note for everyone in attendance the reference to H.R.

05:371284, which is a bipartisan bill for the private right of action. Just to make sure everyone

05:44can look that up. I thank you, Mr. Roller, for mentioning it.

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