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Counterfeiting and piracy exploit Free Trade Zones

20 March 2018

Last week the European Intellectual Property Office (EUIPO) and the OECD published a new report on the potential links between Free Trade Zones (FTZ’s) and the global trade in counterfeit goods.

FTZ’s are effectively duty free areas, which are set up to facilitate lawful, cross border commerce by offering storage and distribution facilities to help smooth the export, transit and shipment of goods and services around the world. In 2015, it was widely reported that well over 3,500 free zones existed around the world, employing around 66 million people and generating over EUR 365 billion (USD 500 billion) in added trade.

However, in a previous report by the EUIPO and the OECD, Mapping the Real Routes of Trade in Fake Goods, the two agencies documented the fact that FTZ’s were being exploited by criminal networks, involved in the international trade of counterfeiting and piracy. The study claimed that a “significant portion of total illicit trade in fakes seem to transit through, or rely upon, FTZ’s, and that this needed further examination”.

This latest EUIPO-OECD report confirms the suspected links between FTZs and counterfeiting and piracy and as a result we can, for the first time, draw a true parallel between the number and size of FTZ’s in specific countries and related increases in the value of counterfeit and pirated products they export.

Using data from FTZ’s across the world and international customs seizures, the report clearly reveals that that the larger the role of FTZ’s in a country, the greater the value of counterfeit and pirated goods they export. The report adds that a single, extra, FTZ in a country increases the value of exported fakes by almost 6%.

Alison Statham, Director General, of the Anti Counterfeiting Group welcomed this ground-breaking report and stated “international businesses have long been aware that criminals have been exploiting from FTZ’s to help amass vast sums of money, which are then used to support other forms of serious crime, including human trafficking, drugs and weapons”.

Alison is calling on national and international governments and agencies to work even more closely together with trade associations and businesses, to develop more innovative and effective remedies and actions, to ensure FTZ’s are free from criminality and can serve global trade, as they were properly intended.

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ACG represents more than 3,000 brands affected by this influx of fakes into the UK and delivers an international network of information, advice and contacts on all aspects of IP protection. Working with Government and law enforcement agencies since 1980, ACG is focused on providing an effective and sustained response to counterfeiting.

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