EU Seeks to Stem Flow of Fakes From China

     BONN, Germany (CN) – As trade between the European Union and China booms, the flow of counterfeits into Europe is also on the rise.

     While the EU boasts of the success that customs agents have had in protecting intellectual property rights, figures show that EU policies have not been able to stem the flow of fakes from China.
     China has become a major EU trade partner, second only to the United States. Daily commerce between the EU and China amounts to a staggering $1.4 billion, according to EU figures.
     China and the EU have been in a high-level dialogue over trade since 2008, but China is increasingly a source country for counterfeited or pirated products, including tobacco, clothing and medications.
     China produced 85 percent of items intercepted by EU customs officials in 2010 that are thought to violate intellectual property rights, according to a recently published EU report. For the previous year, that figure was 64 percent.

     Social, Commercial Aspects of Customs
     EU customs policy focuses on social and trade issues.
     Social goals for customs enforcement include stopping potentially dangerous products from entering the EU, such as household products or appliances with health and safety problems. Such products constituted 14.5 percent of all seized items last year.
     While the total number of cases of EU customs seizures nearly doubled from 2009 to 2010, the amount of detained articles actually decreased by about 13 percent, the report clarifies.
     This reflects increased postal “interceptions,” as these typically involve only a few products, such as Internet orders sent by post.
     The EU enforces a special policy to deal with the movement of national treasures or other cultural goods, along with restrictions on carrying cash intended to fight money laundering.
     Customs enforcement in the EU also seeks to control drugs, both those that are illicit and those that are patent-protected, as well as flows of ingredients that can be used to make illegal drugs.
     In addition to producing 85 percent of all suspected counterfeit medications, China is also the main source of illegal drug precursors, according to the EU report.

     Action Plan for Fakes
     The EU in 2009 first signed an agreement with China to enforce intellectual property rights.
     The plan includes a working group to study the flow of goods, cooperation at sea and airports, and use of “smart seal” technology to increase security on the supply chain.
     At the time the action plan was signed, then-commissioner for taxation and customs László Kovács stated hopefully that “China is aligning its customs legislation to the EU rules.”
     Since then, China has become the biggest source of imports into the EU, and is the EU’s fastest-growing importer of European goods.
     The EU also seeks to step up cooperation with China on importation of illicit cigarettes, through which member states are estimated to lose $14 billion every year in unpaid taxes.
     Tobacco products comprised 42 percent of all seized customs articles in the EU for 2010.

     EU Pressures China on Trade
     Along with the boom in both legal and “grey market” trade between Europe and China, the EU has sought to compel China to take further steps to open its markets.
     The EU recently won a dispute against China, brought with the United States and Mexico, through the World Trade Organization. China failed to prove that it needed export restrictions on raw materials to protect its resources, the WTO ruled.
     In the wake of the decision, EU Trade Commissioner Karel De Gucht called for China to move faster on economic openness.
     But as trade booms, it remains to be seen whether the EU can stem the flow of fakes from China.

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