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From the Detroit Insider:

Carmakers: Stop flow of phony parts

U.S. automakers, suppliers push Bush to demand China's help in fighting counterfeiters.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- When President Bush meets with Chinese President Hu Jintao at the White House today, automakers and auto suppliers are hoping for some arm-twisting on a nagging problem: the growing counterfeiting of auto parts in China that end up under the hoods of U.S. vehicles.

The auto parts industry estimates counterfeit parts has become a $12 billion problem worldwide, with $3 billion in phony auto parts sold in the United States.

The Motor and Equipment Manufacturers Association -- a trade group representing suppliers -- says Chinese companies are responsible for 80 percent of fake auto parts in the United States.

At an annual trade show in Las Vegas last year, nine companies were kicked out by the trade association for displaying counterfeit parts, including eight from China.

"China is by far the biggest problem in the United States when it becomes to counterfeit parts," said Neal Zipser, a vice president for the association. "When people buy a fake Rolex or Gucci handbag, they know they aren't getting the real thing. But when people get an oil filter or brake pads, they don't want to take a chance on buying a knockoff."

Fake oil filters have destroyed car engines and phony brake pads have been linked to accidents, Zipser said.

General Motors Corp. has seized more than $250 million in counterfeit auto parts in the past two decades, shutting down hundreds of counterfeiting operations, spokesman Tom Henderson said Wednesday.

Last September, Dubai destroyed 500,000 counterfeit GM spark plugs, which had been manufactured in China. As many as 20 percent of spare parts in the Middle East are counterfeit.

A study in India suggested that 37 percent of aftermarket parts in India were counterfeit.

"We've put quite a few resources behind fighting the problem globally," Henderson said. "We work aggressively with law enforcement and stop counterfeiters where we find them."

Delphi Corp. -- the largest U.S. auto supplier -- said the company also has seen a growing number of different auto parts counterfeited -- like shocks and compressors. "We are working with our trade organization to get our arms around the problem," said John Anderson, a company spokesman.

Last month, President Bush signed the Stop Counterfeiting in Manufactured Goods Act, whose chief sponsor is U.S. Rep. Joe Knollenberg, R-Bloomfield Township.

The bill stiffened penalties for violating trademark laws by requiring the destruction of equipment used to make counterfeit goods and makes it illegal to traffic in counterfeit trademarks such as labels, patches and medallions. Previously, the law only forbid trafficking in trademarks when the labels are physically attached to goods.

Knollenberg says Bush can use the meeting to remind the Chinese to respect trademarks. "It's an excellent opportunity for the president to make a point about protecting intellectual property rights," he said Wednesday.

U.S. Rep. Mike Rogers, R-Brighton, has made the issue a priority, and even displays pictures of counterfeit oil filters and spark plug wire sets on his congressional Web site.

"The global auto parts market is flooded with fake, Chinese made parts, which claim to be genuine, American-made auto parts," Rogers says.

The FBI and U.S. Customs officials have taken an interest in stopping the flow of counterfeit parts. Last July, the FBI held a briefing for the auto parts industry on the counterfeiting issue and has opened investigations into the sale of counterfeit auto parts. Last year, auto parts companies got a crash course in the legal system in China at a seminar in Dearborn.

GM emphasizes it works to keep bad parts out of its supply chain and that no fake parts have shown up at its dealerships.

"Make sure you go to a trusted source to buy your parts," GM's Henderson says. "If someone is selling you oil filters out of the back of a truck, they probably aren't the real thing."
 
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