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Trade in Counterfeit Goods and Free Trade Zones

Evidence from Recent Trends

image of Trade in Counterfeit Goods and Free Trade Zones

This study examines the potential for the misuse of Free Trade Zones (FTZs) for trade in counterfeit and pirated goods. It presents the evolution of the FTZs and the international legal framework in which they operate, the reasons for establishing such zones and the benefits they offer businesses, and, finally, the role these zones play in fuelling trade in counterfeit and pirated goods. It also analyses the links between the FTZs and trade in counterfeit products, and provides data on these links.

 

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Evolution of Free Trade Zones

The 2017 OECD and EU Intellectual Property Office (EUIPO) report, Mapping the Real Routes of Trade in Fake Goods notes that parties that engage in the trade of counterfeit and pirated products tend to ship infringing products via complex routes, with many intermediate stops along the way (OECD/EUIPO, 2017). The transit points are used to i) facilitate falsification of documents in ways that camouflage the original point of departure, ii) establish distribution centres for counterfeit and pirated goods, and iii) repackage or re-label goods. In addition, while imports of counterfeit goods are, in most cases, targeted by local enforcement authorities, goods in transit are often not within their scope, which means they are less likely to be intercepted. The analysis in this report refers to goods that are placed in free trade zones, and does not refer to “goods in transit”, as referred to Article 5 of GATT.

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