Counterfeit crime demands EU attention

Counterfeiting generates billions worth of Dollars and Euros on a worldwide basis. The amount of goods are tremendous, and the first step to stop the bulk of it is in ports

Esben Holst Harboe

In December 2015, Europol went public with news regarding a series of successful confiscations in two operations “Blue Amber” and “Silver Axe”. Customs officials, national police and the Europol detained 190 tons of counterfeit pesticides in a number of different ports in the Netherlands, Belgium, France, Germany, Italy, Slovenia and Spain.

Drugs, guns and human trafficking are at the centre of attention for both the public and the politicians. But maybe it is worth taking one step back from the well-known crimes, and take a look at one of the arguably biggest moneymakers for many Criminal groups in Europe: Counterfeiters.

“There has been a shift in the behaviour of counterfeit crime,” says Chris Vansteenkiste – head of the Counterfeiting Unit in Europol:
“15 years ago, it was mainly luxury goods, like watches, handbags or clothes, which the consumers knew were fakes. That segment still exists, but now, the criminal organisations are producing day to day consumer goods, which the consumer won’t even know are fakes. This is a more worrying trend,” he says.

“The Customs are very important in dealing with counterfeitting, as they are the first to find the goods. It’s impossible to check all containers, time is limited, and so are the available resources. Therefore we have a multidisciplinary approach, between police, customs and organisations representing the companies,” he says.

Source: AFP-Services, EC - Audiovisual Service /Photo: Marcin Lobaczewski
Source: AFP-Services, EC – Audiovisual Service /Photo: Marcin Lobaczewski

“The reality is, that the larger criminal organisations, like the Camorra in Italy for example, both trade in drugs and in counterfeit goods. They brand out, to gain a bigger share of the market, and to safeguard their business, should one of their areas get shut down. So the money made from counterfeit products, are in many cases made by the same groups selling and distributing drugs,” he says.

A dangerous market for consumers and environment
Items such as clothes, shoes, pesticides, food and medicine are all being copied and counterfeited on a large scale around the world, and are smuggled into either European or American markets, where they are sold on black markets, online or attempts are made to get them into the official stores and businesses, without both customers and shop owners being aware of this.

According to the 2015 Situation Report on Counterfeiting in the EU made by Europol, the harbours of Antwerp, Piraeus and Naples are highly prominent destinations of containers filled with counterfeited goods.
And to make matters worse, even with the huge confiscation in “Silver Axe”, this is dwarfed by the amount confiscated by EU and non – EU authorities in 2011, where more than 2500 tons of counterfeit pesticides were confiscated in a year.

According to Mr. Vansteenkiste, Europol have to rely on external experts from the other dedicated agencies, as they have the expertise to judge the fakes. One of the organisations is the European Crop Protection Association (ECPA), who helped provide information in “Silver Axe”.

“Counterfeiting makes up a serious amount of the entirety of the illegal counterfeit trade, so naturally, we want to stop this kind of crime. We do so by identifying the counterfeited products of our 20 member companies,” says Graeme Taylor, Director of Public Affairs in the ECPA, and continues:

Landbrug pesticider
EC – Audiovisual Service

“Various industry estimates suggest the cost in terms of lost revenues is approximately €1 billion annually within Europe and €4.4 billion globally. This value, if it was a company, would make it the third largest pesticide producing company. But that’s just an estimate. For all we know, this might just be the tip of the iceberg,” he says, but states that the biggest impact is on those who use it; the farmers.

“If they use these products, they either ruin their crops, which also damages the environment, and harm themselves, by being in contact with the fakes. One of the ways we can deal with this, is by raising awareness for those who rely on crop protection. And since it’s estimated that 10 percent of all pesticides in Europe are counterfeit fakes, (of course varying from country to country,) it is up to us as an industry to at least inform the people working in it about the risks,” Mr. Taylor says.

And the farmers are at risk. Mainly because the criminals aren’t thinking about what is in the pesticide containers, says Chris Vansteenkiste.

“The criminals aren’t making counterfeit pesticides because they love the smell of them They do it to earn money. And with pesticides, they often just sell older products with dangerous ingredients, pretending that it is the official one. We saw many cases of that in Romania, where there was a public warning about buying counterfeit pesticides, because many farms were completely ruined. This was actually the best case scenario. If the plants had survived, they would have gotten to the consumers,” he says.

In the eye of the Commission
The most expensive and valuable goods are transported by ship to mainland Europe.
According to an ICC BASCAP report from 2015, 7 percent of all caught counterfeit goods in the US were in shipments, but the value of those seven percent were a lot more valuable than all other goods transported by other means combined. While this might vary a lot from the markets in Europe, it still stands as a good example of the value of the shipped goods.

Another estimate by he Organisation for Economic Co-operation (OECD) and Development and the Office for Harmonization in the Internal Market (OHIM) on the economic impact of counterfeit and pirated goods, a 2010 estimate by the ICC indicated that 10 billion Euros and more than 185 000 jobs were lost in the EU due to piracy alone.

Dealing with this falls within the day to day work of the customs officials in the EU, which is also why the Directorate-General for Taxation and Customs Union (DG TAXUD) are focusing more on the issue, states spokesperson Vanessa Mock.

“Counterfeit products reduce the fair return for creators’ work, discourage investment in research and endanger job creation, when you consider that IPR intensive industries account for more than a quarter of all jobs and more than a third of GDP in the EU,” she says, but also stresses that the goods can also be dangerous to the health and safety of consumers.

“This is the scale of all that can be threatened by counterfeit products and this is why the EU has acknowledged the need to protect consumers and intellectual assets at the same time. So strengthening cooperation among Member States and with the Commission is a key element to make enforcement work better,” says Vanessa Mock.

New strategies will be necessary

Counterfeiting is still highly unlikely to disappear through the efforts of the EU and other organisations. It is a crime on the rise, grossing in a steadily larger amount of money. The OECD for example, estimated that the value of counterfeit products was 650 billion USD in 2008. By 2015, that number was estimated to have risen to 1,7 trillion USD.

“We don’t see indications that it is going down. The number of confiscated goods varies a lot, because of what they find in Customs, and what resources they have available to find the goods,” he says. Havn containere

“But confiscating goods in customs is just one of the first steps. We have to try and climb the ladder, and get an overview. We can continue confiscating the containers from now and until the world ends, but if we don’t stop those behind it, they will always find the weakest link in the supply chain. So if they see that the customs are efficient in Rotterdam, they will just move to Slovenian ports,” he says.

“So as long as trading with counterfeiting remains a relatively safe and cheap way to make a huge amount of money, this kind of economic crime will remain, and will start to expand into new areas. It is already happening, as counterfeit production has slowly begun within Europe in countries such as Italy and Spain. The majority of the goods are still produced abroad, says Chris Vansteenkiste.

“It is far more difficult to track the goods when and if they are made inside the EU. We try to adapt our strategy to these changes. So if they move production into Europe, we will just have to broaden out our strategy as well. Build national networks, and find ways to track down these local production facilities. But as long as this is only a small amount, we will keep focusing at the ports, where the huge quantities of counterfeit articles are still arriving,” he says finally.

 

 

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