China brings IPR piracy to EU's
door By Duncan Freeman
BRUSSELS - It has long been the tradition
that the luggage of tourists returning from Asia
should contain some extras, perhaps a few pirated
CDs and DVDs, a fake watch and some counterfeit
fashion accessories. The fakes are a nice bonus to
add to pleasant holiday memories and a suntan, and
perhaps make the trip seem better value for money.
Increasingly, however, Europeans have no need to
travel to Asia to pick up their counterfeits, as
China and other Asian countries are rapidly
increasing their exports of fakes direct to
Europe.
Of course, given the nature of the
business, it is almost impossible to know exactly
how fast this trade is growing. An indicator is
that according to the European Commission, 103
million items of
counterfeit goods were seized in the European
Union in 2004, a 12% increase over the previous
year, but a 1,000% rise since 1998. Asia, or more
precisely Greater China, tends to dominate as the
source of seized goods. In 2004 mainland China was
the source of the fake goods in 54% of seizure
cases, Taiwan in 7.5% and Hong Kong in 3%. Only
India, which accounted for 3.5% of cases, kept
these three from making a clean sweep of the top
three positions.
As in legal international
trade, counterfeiters appear to specialize, but as
usual these days China seems to have a competitive
advantage across many sectors. China was the
source of 97% of toys and games seized in the EU
in 2004, 87% of electrical equipment, 59% of
clothing and accessories, including 68% of
accessories such as bags and sunglasses, and 54%
of watches and jewelry. Taiwan, on the other hand,
which accounted for 41% of compact discs, games,
software and digital video discs seized, was the
leading source of these categories of goods. India
was the source of 67% of counterfeit food,
alcoholic beverages and other drinks. Only for
perfumes and cosmetics was the EU itself the
leading source.
The relatively small
overall increase in seizures in 2004 disguises
considerable variations growth in seizures of
different types goods. Seizures of computer
equipment rose 899%, electrical equipment 707%,
food and drink 197%, and clothing and accessories
102%. But seizures of watches and jewelry actually
fell by 27% and CDs, games, software and DVDs by
43%.
The seriousness with which the EU
takes the problem is indicated by the fact that
last year it mounted its first coordinated action
against imported counterfeits across all 25 member
states, which focused specifically on goods from
China. During the two-week operation more than 2
million items were seized, totaling more than
500,000 kilograms. The breadth of the problem is
indicated by the type of goods seized, which go
beyond such brand names as Nike or Chanel -
usually considered to be the obvious targets for
pirates - to include 289,500 toothbrushes and
470,000 razor blades seized in Belgium, 30,000
batteries in Greece and 60,000 light bulbs in
Italy. It is not just the makers of brand-name
fashion goods and the entertainment industry that
are suffering. Increasingly the imported
counterfeits are affecting all types of goods.
In October the EU announced an Action Plan
to tackle the problem of counterfeiting. For the
most part, the plan aims to promote better
coordination and information exchanges among
member states so as to promote more effective
action against fakes.
Europe is
specifically looking for better cooperation with
China on this issue. In 2004 the EU signed a
customs cooperation agreement with mainland China,
which among other objectives was intended to help
the fight against counterfeits. The agreement was
intended to improve coordination between China and
Europe in tackling the problem. Although EU
officials speak well of the willingness of Chinese
officials to tackle the problem, the figures on
seizures in Europe suggest that effective action
is still some way off. Cooperation between the two
may have been stepped up, and officials in Beijing
declare their determination to tackle the problem,
but enforcement at the lower levels is too weak to
be effective.
According to some estimates,
counterfeits account for 5-7% of total world trade
and there are indications that counterfeiting in
China is a worsening problem worldwide. Apart from
Europe, counterfeit goods from China are also
increasingly being seized in the United States.
According to that country's Department of Homeland
Security, seizures of counterfeit goods by customs
rose sharply in value in 2004, and China was the
main source. The US authorities have prosecuted
several gangs involved in importing and selling
Chinese fakes, especially in the New York area. In
one recent case the counterfeits were LiveSTRONG
bracelets of the Lance Armstrong Foundation that
were produced in China.
Industry
organizations in Europe may urge their governments
and the EU to clamp down on fakes, but experience
indicates that any action taken may be no more
than a temporary diversion. The problem keeps
coming back. According to the Motion Picture
Association, the United Kingdom is the No 1 market
in the world for fake DVDs distributed by Chinese
gangs. Although most of the DVDs are produced in
Malaysia, the groups behind the business are
believed to be Chinese. Enforcement action by the
UK authorities last year was successful in
reducing the number of imported counterfeits, but
this has not necessarily reduced the number of
pirated DVDs in the market. The groups behind the
imported fakes are now believed to have simply
moved production to the UK.
The real
problem for enforcement is that there is no
shortage of buyers for fakes. Europeans, whether
on holiday or at home, appear willing to ignore
appeals to their conscience or the threat of
punishment and continue buying the bootleg goods.
Even widely reported claims that sales of
counterfeits were helping to finance terrorism
seemed to have little effect, and were dismissed
as unsubstantiated by many experts in any case. If
the appeals to the consciences of buyers appear to
have no effect, it is equally unclear whether
better enforcement in Europe and closer
cooperation with source countries such as China
will be any more effective.
Duncan
Freeman is a writer and consultant based in
Brussels. He can be contacted at duncanfreeman@skynet.be.
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