To: Maurice Winn who wrote (1792 ) 11/2/2005 2:48:14 AM From: elmatador Respond to of 220163 The so-called punishment to LDCs which don’t grant patents is plain talking. “Payment of royalties for pharmaceuticals patents wouldn’t amount to more than $6 million. During the period the U.S.. retaliated against Brazilian paper, menthe, eletro-electronics Brazil lost $400 million in exports.” O Estado de São Paulo, Jul. 4, 1990. The US was cunningly using patents to put up tariff barriers. I study this for about 15 years!!! LABEL BUSINESS Another issue concerning intellectual property concerns products whose sole reason for being expen¬sive is due the fact that its produced in an small scale. When products can’t be distinguished from prod¬ucts of the competition, companies emphasize its institutional image rather than the product. The value its not in the product itself but in from where it came from. Industrialized countries strive to sell the image that in their products and companies there is some kind of magic. A piece of garment produced in the Philippines has a chic label sewn on it and become a costly piece of fashion. A computer or peripheral made in Singapore has a label stamped on it, an instruction manual written in an European language and become costly piece of high-tech. Companies from industrialized countries put a premium price in cheap produced goods by giving them a distinctive façade and limiting distribution through approved dealership. BusinessWeek International, Nov. 7, 1988. “...Japanese producers are linking up with such partners as Great River Garment Industries, whose 7.000 workers make clothes under labels such as Arrow, Triumph, and Calvin Klein. Businessweek International, Aug. 27, 1990. Lupo, a Brazilian textile manufacturer Lupo exported $500.000 of clothes sold in North America under the labels: Polo, Ralph Loren and Calvin Klein. Exame, Jul. 11, 1990. NICs are exploiting the profitability of the label business. They are just putting the label themselves and pocketing the profits. Union de Fabricants, a Paris-based international counterfeiting organization, charged that South Korea has become a heaven for protection of fakes and a top world exporter of fakes. Mr. Marc Fransanco, trade specialist for Cartier, said that 95% of fake leather goods in Taiwan are South Korea-made, and that hundreds of eyeglass frames made in South Korea have been sized in the Middle East. In South America, said Mr. Fransanco, not only Korean products are offered there. Even Korean people are going into countries like Argentina, Chile and Paraguay to create counterfeit business in those countries. Wall Street Journal, Jun. 29, 1990. It is quixotic the pictures of faked GM auto parts being bulldozed and Cartier watches being smashed by steam-rollers. Companies which profit from the label business cunningly join the intellectual property bandwagon. The R&D and marketing of these products is capital and knowledge intensive. This can be done only in a high developed country, as really is. But outsourcing is crucial for the survival of industrialized countries’ companies. Existence of original equipment manufacturer (OEM) in the computer industry is an important fact for the existence of an European computer industry. Philips computer business went under because it insisted in manufacturing its computers while its concurrents were importing cheap computers from Asia and putting a label on them. A reason given for the U.S. lead in quality and technology of disk-drivers, is the fact that they have borrowed the Japanese strategy of manufacturing in low-cost countries. BusinessWeek International, Mar. 20, 1989. The global economy will be the gray market. Producers will find the most cost-efficient place to set up manufacturing. The Swiss or Cayman Island Bank, the broker, and the ship forwarder will “grease” the transaction. Why gray market will have significance? Because it will be the way around dumping charges, imposition of quotas —which gives excess of profits to foreigners— tariffs —which rises money for the government that imposes them—and the so called “managed trade”. With more than 1000 compa¬nies now established in 29 countries and the International Labor Office predicting that by the 1990’s all developing countries will be in the Exporting Processing Zones business. South, Feb. 1989. Gray market’s future sure will be brighter