WCO IPR STRATEGIC GROUP SEMINAR – PENANG, MALAYSIA 15 – 17 DECEMBER 2003
“An Introduction to the WCO/Business Partnership”
David Blakemore, Head of Communications, World Customs Organization (WCO), Brussels
It is my very great pleasure to have been invited to speak to you today and to make some opening remarks. On behalf of the WCO Secretary General, Michel Danet may I pass on his personal best wishes and warm thanks to the Director General for agreeing to host this important seminar. Mr. Danet, Mr. Lempianen (the Director, Compliance and Facilitation) and my other colleagues at the WCO Secretariat in Brussels are well aware of the excellent steps that have been taken by Royal Malaysian Customs in the recent introduction of information technology and x-ray detection equipment and we hope that this seminar will further assist your capacity building efforts. The Secretary General has also asked me to extend his heartfelt thanks to the members of the WCO IPR Strategic Group and the participating rights holders for their initiative in providing the funding and expert speakers. In particular, we are privileged to have with us Mr. Jim Kennedy, the Chairman of the WCO IPR Strategic Group and of course, Mr. Ronald Brohm who has worked so hard in putting the programme together.
The Customs/Business relationship The environment in which Customs administrations must operate has changed enormously in the past few years. I am shortly to leave the WCO Secretariat and one of the most significant changes that I have observed since 1997 has been the dynamic new relationship between the WCO and business at the international level. This is also mirrored at the national level in many of our Member customs administrations. In building this new relationship the WCO has encouraged the participation of a wide range of international business interests through the use of a number of
different initiatives – open days for trade, increased consultation and representation of international business at WCO meetings, increasing transparency through the use of web-sites and very importantly, in the context of this seminar, through the establishment of the WCO IPR Strategic Group to assist member Customs administrations contribute to the enforcement of intellectual property rights If you read the current Strategic Plan of the WCO you will find that the world’s 162 Director Generals of Customs who make up the WCO Council, have placed the issue of business partnership at the very heart of Organizations work programme. Why has this happened?
New challenges for Customs The answer is very simple. The challenges of the new global environment are such that solutions can only be developed by engaging with all players who have an interest in effective and efficient customs procedures. The changed international security situation has also seen an extraordinary shift in the political expectations of customs administrations. Customs administrations stand astride the international trade supply chain and there is now a realisation that they are critical national strategic institutions in assuring safe and secure borders. This vital role has been well recognized at the international level by the United Nations and of course, regionally by APEC leaders. During the extensive multi-lateral and bi-lateral supply chain security consultations that have taken place during the past two years the concept of partnership between Customs and business has underpinned the search for solutions. It has resulted in healthy and constructive dialogue - but more importantly it has positively contributed toward the development of quality international customs standards. There are also other dynamic influences which are shaping the new role of Customs. Global trade is conducted within a rules based framework which seeks to reduce tariffs on goods being traded internationally. As the world moves away from highly protective tariffs, the traditional role of customs as a revenue collector is being subsumed by a new mandate. The need for Customs to protect society, enforce trade rules and contribute to a fair and equitable international marketplace is being added to our responsibilities. The effect of this is that Customs administrations, situated as they are at land, sea and air crossings, with their unique knowledge and understanding of international trade and the dialogue and partnership they enjoy with the private sector are increasingly seen as the natural Government agency to protect external national frontiers and borders.
2
A broad range of contravention’s confront the customs officials of today. Such offences include the trafficking of, illicit drugs, endangered species, nuclear and hazardous goods and also goods that are being imported, transited, or exported, whilst contravening Intellectual Property Rights (IPR) legislation.
IPR Crime – Victimless no longer The public perception of IPR offences has generally been that of a victimless crime involving fake T-shirts, watches and perfume. Today, such a view of counterfeited goods is a naïve one. It has been estimated that the illicit trade in such goods has now reached US$450 billion, which is equivalent to approx 9% of total international trade. At that level it is capable of distorting national economies in addition to any damage it may cause to the affected company or its employees. The range of goods being counterfeited has increased enormously and the traditional production of fake luxury items has now been augmented with a vast array of everyday consumer items such as toothpaste, contraceptives, shampoo etc. The health and safety risk to the public is very serious. Some past cases include pharmaceutical products and prescription drugs, which have been manufactured with sub-standard constituents, unsafe car parts, reverse engineered aircraft spares, and computer processors where the operating speed has been artificially increased making the product more likely to break down under pressure. This last example is a graphic reminder of just how dangerous counterfeiting can be, particularly if the fake computer part is installed, as a key component in an airtraffic control system. It is an issue of high political interest. At the recent APEC meeting in Thailand, all leaders agreed to instruct Ministers to accelerate progress towards improvement of intellectual property rights facilitation, protection and enforcement. Such an approach is likely to put Customs administrations, who have responsibility for ensuring that goods crossing borders comply with national laws and international agreements, at the heart of this regional effort. It will also require the establishment of partnerships with business and other administrative or law enforcement agencies with an interest in the problem.
3
A crime which damages economies As much of the illicit trade takes place in the black economy there is a serious fiscal impact on government revenue. This affects the ability of governments to implement their respective policy agenda with a consequent impact on the quantity and quality of central government services. A report in “Business Line” in March 2003 said that an AC Nielsen study had estimated that the revenue loss to the Indian Government from counterfeit goods was Rs 900 crore (US$198 million). That provides some indication of the direct economic impact that can occur. In the longer term, counterfeiting causes serious economic damage, especially in terms of attracting inward investment. Large manufacturers, distributors and other traders are looking for a fair trading situation, where their products and brands are adequately protected from unfair competition. The trend for international businesses is to reduce the number of manufacturing and distribution sites and this means that they are extremely selective in choosing their final investment locations. The degree to which Governments act to create a fair trading environment for these markets is therefore crucial. Customs administrations therefore play an important and legitimate role in providing a valid control against intellectual property rights violations. By supporting the viability of legitimate trade their respective economies will prosper and their public will be protected against sub standard and often hazardous goods.
A cash pipeline for international terrorism There is now clear evidence that the illegal trade is being run by organized crime groups and that international terrorist groups are benefiting from funds derived from the distribution and sale of counterfeit goods. That is an enormously worrying trend. The Customs contribution to IPR enforcement therefore needs to be seen in context of its wider role in securing international trade from security threats.
The WCO IPR Programme The WCO Intellectual Property Rights programme has been developed as a joint venture with international business to help assist and support Customs Administrations with respect to their compliance activities relating to IPR.
4
The programme, which is built upon a number of Memoranda of Understanding (MOUs) between the WCO and key trade bodies, has benefited by a true partnership spirit between Customs and business. Customs administrations are therefore able to improve their effectiveness through access to real-time commercial data and sensitive trade information that are needed for the identification of counterfeit goods. For its part, the legitimate trade benefits enormously by having a partner Customs administration with a better understanding of business needs and the enhanced capacity to identify illegal consignments and facilitate normal trade better opportunities to facilitate legitimate trade. It is very encouraging to see the work being done at the international level being translated into similar actions at the national level. Royal Malaysian Customs are to be warmly congratulated for setting such a fine co-operative example in hosting this important seminar.
In what other ways can the WCO help? You are cordially invited to visit the Web Site of the WCO IPR Strategic Group (www.wcoipr.org). It describes the partnership between the WCO and its business partners who are engaged in the fight against intellectual property rights violations. It contains global information on counterfeiting. It also provides access to a number of sites operated by our business partners such as REACT, BIEM and IFPI. These sites contain specific information that will assist Customs officials identify counterfeit goods. The WCO’s Customs Enforcement Network (CEN) is also available to officials from Customs administrations. It enables them to be informed about the most recent seizures, methods of concealment or trends around the world. It also provides a facility for Customs administrations to provide advice of seizures of counterfeit goods (or other prohibited items such as drugs, money laundering etc) so that the WCO’s network of Regional Intelligence Liaison Offices (RILO’s) can undertake regional trend analysis and provide advice on perceived threats. There will be more discussion about all these very helpful facilities during the course of the next few days.
5
Customs responsibilities under the Agreement on Trade Related Aspects of Intellectual Property (TRIPS)
As part of the negotiations and convention which established the World Trade Organization, The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) was concluded on 15th April 1994. Section 4 of TRIPS describes the future role and responsibility for Customs Services in IPR enforcement. Many developing countries are now facing the responsibility of fully implementing the TRIPS Agreement. In response to this need, the WCO has developed this joint Customs / Business IPR training programme in which vital commercial information and the business dimension is combined with Customs information and enforcement techniques. This is consistent with the basic WCO philosophy to help Member Administrations to improve their efficiency and effectiveness in all aspects of their work in line with their own national capacity building strategy. This seminar is one of many that have been held successfully around the world and the previous seminar was held in Brazil during August this year. I look forward to working with you all during the next three days.
6