Freeports and Single Trade zones increase counterfeiting by 6%
Anti-counterfeiting champions the ACG are warning about the dangers of criminal activity and illicit trade at the proposed new Freeport’s in the UK. The Chancellor has announced plans to establish eight new regional Freeports in the UK, and two more may be on the way.
While the announcement is welcome news for the economy as we enter a new era of international trade after leaving the European Union. The Anti- Counterfeiting Group (ACG) warns that the misuse of freeports in a wide range of other countries has led to serious increases in illicit trade, including counterfeit goods, drug trafficking, corruption and money laundering. In fact, Free Trade Zones are amplifiers of illicit trade as they lie outside the home country’s jurisdiction. They are often “lightly regulated” and as such are attractive to illegal groups and activities.
Many business leaders argue that new freeports could lead to thousands of new jobs. The investment also has the potential to cut the cost of customs controls, alongside lower customs duties and taxes. But Phil Lewis from the ACG warns that “Unless enforcement and policing is strong at Free Trade Zones they run a severe risk of becoming transit points and complex distribution centres for the trade in counterfeit goods. These zones can facilitate the export of fakes by concealing and disguising consignments of counterfeit products through mixed shipments and false transport documentation.”
In the past, customs officials have closed Free Trade Zone factories found to be producing counterfeits. The Organisation for Economic Co-operation and Development (OECD) has also reported that the addition of a single trade zone within an economy significantly increases counterfeiting by 6%. The risks raised by OECD and other respected bodies, including the World Customs Organisation (WCO), led to the European Parliament calling for the abolition of freeports in the EU.
ACG believes that simply cutting red tape to boost jobs and reduce business taxes and customs controls does not lead to more protected borders.
The global trade in counterfeit goods is now worth more than $509 billion. It is destroying businesses, economies and is threatening consumers’ lives through the trade of dangerous fake goods. The recent pandemic has thrown a clear light on the scope and scale of criminality involved. The ease with which counterfeit face masks, sanitisers, remedies, medical equipment and even fake vaccines have reached the UK.
UK businesses and consumers need solid reassurance that the UK government has clear plans in place to prevent more illicit and dangerous goods from arriving in the country. The ACG calls for assurances that there will be effective detection systems at these new freeports, including specialised officers, modern technology, to assist surveillance, inspections and preventative customs controls. Otherwise, the only people taking control of our borders will be international criminals.