2007 customs seizures of counterfeit goods - guide

19 May 2008
by eub2 -- last modified 19 May 2008

Statistics just published by the European Commission relating to counterfeit and piracy show a significant increase in customs activity last year. In 2007, customs registered over 43,000 cases of fake goods seized at the EU's external border, compared to 37,000 in 2006. This results notably from improved cooperation between customs and industry, enabling customs to better target suspected shipments and to recognize counterfeit goods. Despite this, the number of articles seized decreased from last year's peak of 128 million articles to around 79 million. This is due to a growing number of seizures involving smaller quantities of counterfeit and pirated articles. However, cigarettes and clothing continue to be faked in large quantities and there has been a worrying increase in sectors that are potentially dangerous to consumers (medicines, electrical equipment, personal care products).

How do counterfeit seizures in 2007 compare with previous years?

The European Commission reports that there has been a significant increase of 17% in the number of customs interventions involving counterfeit goods, compared to last year. Since 2001 the number of cases has been steadily growing. In almost all sectors customs have intervened in more cases than the previous year, with a noticeable boom in the medicines sector, which resulted in an increase last year of over 50%.

The overall amount of articles seized by customs has decreased compared to last year (79 million compared to 128 million). However, there has been an increase in sectors that are potentially dangerous to consumers. The amount of articles like razor blades and moistening creams for personal care, medicines, toys, electrical and computer equipment all show an increase and traditional sectors like clothing and luxury goods have also seen an increase again. The overall decrease in articles is solely due to lesser quantities of seized counterfeit cigarettes and CDs/DVDs.

Why has there been a decrease in seizures in 2007?

The overall decrease in articles is solely due to lesser quantities of seized counterfeit cigarettes and CDs/DVDs.

On the other hand, the increase in seizures of small quantities of counterfeit goods may reflect a shift in smuggling techniques towards larger numbers of smaller-sized shipments. This makes Customs work very challenging.

The figures nevertheless underline the need to maintain customs work on Intellectual Property Right (IPR) enforcement a priority.

Which are the most counterfeited articles?

More than 34% of the articles seized in 2007 were cigarettes followed by clothing with 22%.

With regard to the other sectors, there are significant increases compared to 2006. In particular, cosmetics and personal care products (+264%), toys (+98%), foodstuff (+62%), computer equipment (+62%) and medicines (+51%) show a remarkable percentage increase. These sectors correspond to 23 % of the articles seized in 2007.

What is the most counterfeited medicine?

Without a doubt, medicines for erectile dysfunction (Viagra) continue to be the most popular counterfeited medicines. However, other serious medicines such as anti-cholesterol, anti-osteoporosis or medicines to control hypertension are also found as counterfeit medicines.

In 2007, where did the counterfeit goods come from?

In terms of overall quantities seized, China remains the main source for counterfeit goods, with almost 60 % of all articles seized coming from there.

For some product sectors, other countries were found to be the principle source of counterfeit articles. In the category “Foodstuff and beverages”, Turkey was the main source followed by China; for the category “Cosmetics and personal care products”, Georgia followed by Turkey and China were the main sources and for the category “Medicines”, Switzerland followed by India and the United Arab Emirates were the main sources.

Countries such as the United Arab Emirates and Tunisia are probably used as a transit stop, often with the purpose of hiding the real origin of the goods.

Which means of transport are most used to import fake goods into the EU?

The breakdown by means of transport shows that air and postal traffic accounted for almost 70 % of the total of all cases treated by Customs. Air/express courier and mail transport are transport modes known for smaller quantities.

In 2007, there was also a big increase in the number of Customs cases in road transportation.

Due to the nature of the different types of transport, seizures involving sea traffic invariably lead to bigger quantities.

Does the Commission have an estimation of the amount of money the counterfeiting market represents?

No, the Commission does not have reliable figures on this.

Is the seizure of counterfeit products only a matter for customs authorities?

Customs administrations in the EU lead enforcement activities at the external frontier, by suspending and detaining shipments that are suspected of infringing intellectual property rights. Given their role at the border, customs efforts are centred around the control at import and export of physical goods. Customs have a prime role in stopping the international movement of fake goods; in fact the majority of all seizures made globally are done by Customs as first line of defence when protecting our borders.

Customs are also the only enforcement agency assigned with a specific mission under the World Trade Organisation's Trade Related Intellectual Property Rights (TRIPS) Agreement.

However, it is clear that co-operation with other actors needs to be enhanced if the counterfeit problem is to be kept under control, such as cooperation with other law enforcement authorities and with business.

For instance, computer or internet-based piracy of copyright media, such as music, movies or software is also a significant problem, but because these activities usually have no link to the border, customs is not as involved in fighting this form of IP infringement.

In most Member States, law enforcement authorities other than Customs are assigned to control and seize counterfeit goods within their territories, for example at open markets or where production of such goods is discovered on their territory.

How effective is the cooperation with the industry?

Given the fact that the quality of counterfeit and pirated goods has substantially improved and more and more high technical goods are involved, this often becomes a challenging process for customs to detect counterfeit goods. Input from industry becomes therefore indispensable.

The risk assessment process to select suspicious goods at the border relies heavily on the information given by industry in their applications for action. In addition to existing information on counterfeit and pirated goods, which is certainly important, it is also very important for customs to have information on production, transport and physical characteristics concerning the original goods. The Commission, in collaboration with Member States has therefore decided to set up a set of guidelines for right holders and customs for lodging and processing the application for actions. Publication can be expected during the course of 2008.

The growing involvement of industry is measured through the increasing numbers of application for action made in the Member States. In 2007, right holders lodged 10,260 applications for action to Customs administrations. This corresponds to 80% of the customs interventions.

How effective is the cooperation with the USA?

The Commission is building up a close cooperative relationship with the US.

In particular, on an operational point of view, the European Commission Taxation and Customs Union Directorate General (TAXUD) and U.S. Customs and Border Protection (CBP) carried out in November-December 2007 the first joint the first IPR joint enforcement operation (Operation INFRASTRUCTURE). Operation INFRASTRUCTURE resulted in the seizure of over 360,000 counterfeit integrated circuits bearing over 40 different trademarks (see press release). The European Commission and the U.S. Customs and Border Protection will continue to build upon this operation to combat the global trade in fake goods.

What type of cooperation does the Commission envisage with China?

Enhancing customs cooperation with China is a Commission priority in order to progress in the fight against counterfeiting. China continues to be the main source of counterfeited and pirated goods to the EU and it is suspected that a large portion of Chinese exports that are sent to Asia is re-exported to Europe.

The EU has an interest in promoting good practices and exchanging information as it can result in less counterfeit goods leaving China. Consequently, at the EU-China Summit on 28 November 2007, it was agreed that customs cooperation on IPR enforcement is to be strengthened. The EC-China Customs Cooperation Agreement (CCMAA) offers a clear legal base for such cooperation. In the recent High Level Dialogue and Mechanism (April 2008) Commissioner Kovacs and China Customs agreed to expedite discussions on the development of an Action Plan on IPR Customs Enforcement between the EC and China and to define concrete commitments by 2008.

The bilateral customs cooperation with China is also represented through a supply chain security pilot project on secure and safe trade lanes. The main objective is to strengthening security while increasing facilitation between EC and China and to allow for better targeting of traffic in illicit goods. Through the means of the mutual recognition of the Authorized Economic Operators schemes, the security measures and control results the pilot project will also allow better targeting illicit goods coming from China that do not correspond to the EC safety standards.

In which Member States did Customs seize more counterfeited goods?

10 Member states account for 75% of the overall amount of cases. With regard to articles seized, the top 10 Member States account for almost 85% of the overall amount seized. 7 Member States appear in the top 10 of both tables (cases and articles), representing 74 and 70% respectively, of the overall amounts.

Source: European Commission