Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee on a Customs response to latest trends in Counterfeiting and piracy
Date: 2005-10-11
Institutions: European Commission
Subjects: customs cooperation, customs inspection, exchange of information, fight against crime, industrial counterfeiting

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.10.2005 
COM(2005) 479 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE 

on a Customs response to latest trends in Counterfeiting and piracy 

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TABLE OF CONTENTS 

1. 

2. 

2.1 

2.2 

2.3 

3. 

INTRODUCTION...................................................................................................... 3 

ASSESSMENT - A GROWING PROBLEM .......................................................... 4 

Customs seizures suggest an increasing and diversified problem ............................... 4 

Reasons for the large increase in trade in fakes ........................................................... 5 

New threats .................................................................................................................. 6 

RECOMMENDATIONS – AN ACTION PLAN FOR AN EFFICIENT 
CUSTOMS RESPONSE TO COUNTERFEITING AND PIRACY ..................... 7 

3.1 

Increasing Community level protection ....................................................................... 7 

3.1.1 

Legislation.................................................................................................................... 7 

3.1.2 

Improving operational performance............................................................................. 9 

3.2 

3.3 

4. 

Improving the Customs-business partnership ............................................................ 11 

Reinforcing international co-operation ...................................................................... 12 

CONCLUSION......................................................................................................... 16 

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1. 

INTRODUCTION 

The health and safety of EU citizens, their jobs, Community competitiveness, trade and 
investment  in  research  and  innovation  are  all  under  increasing  threat  from  the 
industrialised production of fakes. 

This Communication sets out an assessment of the present situation, based on an analysis of 
the  most  recent  EU  Customs  experience  in  attempting  to  stem  the  flow  of  fakes  in 
international  trade.  It  also  presents  a  number  of  concrete  initiatives  which  together  form  an 
Action  Plan  to  improve  the  implementation  of  anti-counterfeiting  policy  and  legislation,  in 
particular through customs actions. 

The Communication details the growth in this traffic as evidenced by the 1000% increase in 
counterfeit seizures made by EU customs between 1998 and 2004. These seizures amount 
to over 100 million articles annually1 but still represent only the tip of the fake iceberg. In 
addition to the impact on jobs, health, safety and competitiveness, much of this traffic is sold 
on the black market which means major losses in tax revenues. The fake industry also leads to 
unlawful  employment  and  is  reported  to  have  links  to  illegal  immigration  and  to  trans-
national organised crime. 

One of the most alarming dimensions of this phenomenon is the increased risk faced by EU 
citizens as a result of the growth in dangerous fake goods such as medicines, car parts 
and  foodstuffs.  Twenty  years  ago,  studies  indicated  that  7  out  of  10  firms  affected  by 
counterfeiting were in the luxury sector. In 2004 more than 4.4 million fake foodstuffs and 
alcoholic  drinks  were  seized  at  Community  borders  (an  increase  of  196%  over  the 
previous year) whilst less than 2% of articles seized by Customs were luxury goods. 

In order to substantially reduce global trade in pirated and counterfeit goods, and combat the 
trans-national networks involved in this trade, counter-measures are required at the national, 
community and international levels. 

A number of Community legal instruments  have been adopted and other relevant  initiatives 
and developments already exist in order to combat counterfeiting and piracy. 

In  the  Customs  area,  the  most  relevant  instruments  are  Council  Regulation  (EC)  No 
1383/2003 of 22 July 20032 concerning customs action against goods suspected of infringing 
intellectual property rights and the measures to be taken against goods found to have infringed 
such rights and its implementing regulation, Commission Regulation (EC) No 1891/2004 of 
21 October 20043.  

In the Internal market domain there are Directive 2004/48/EC of the European Parliament and 
Council  of  29  April  20044  on  the  enforcement  of  intellectual  property  rights  (the  so-called 
the  recently  adopted  Commission  proposals  aimed  at 
Enforcement  Directive)  and 

1 
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3 
4 

Annual EU customs seizures are estimated at between €1and 2 billion per annum. 
OJ L 196 of 2.8.2003. 
OJ L 328 of 30.10.2004. 
OJ L 195 of 2.6.2004. 

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strengthening criminal measures to combat counterfeiting5. The Commission also adopted in 
November  2004  an  Intellectual  Property  Rights  (IPR)  Enforcement  Strategy  towards  third 
countries.6  

However,  as  explained  in  Section  3  below,  more  can  be  done  to  improve  the  fight  against 
counterfeiting and piracy in the customs field. 

2. 

ASSESSMENT - A GROWING PROBLEM 

2.1 

Customs seizures suggest an increasing and diversified problem 

In  Davos,  Switzerland,  in  2003,  global  business  leaders  and  Government  representatives 
called for "a massive global effort to combat counterfeiting, now estimated to equal more than 
450  billion  dollars  annually".  Improving  border  controls  was  considered  to  be  of  key 
importance. 

Already  in  1998,  according  to  OECD  studies,  counterfeits  accounted  for  5  to  7%  of  world 
trade. In the same year, the customs administrations seized around 10 million counterfeit and 
pirated goods at the EU's external borders. In 2004, EU customs have seized more than 103 
million fake goods, a 1000% increase. 

Whilst  the  true  extent  of  the  counterfeiting  phenomenon  is  by  its  very  nature  impossible  to 
calculate  with  accuracy,  detailed  EU  Customs'  statistics  on  seizures  of  fakes  do  offer  a 
possibility  to  monitor  changing  developments  in  this  sector.  The  reports  which  Member 
States'  customs  administrations  transmit  to  the  Commission  under  Commission  Regulation 
(EC) No 1891/2004 of 21 October 2004 on their interception of fakes at Community borders 
provide  a  fairly  accurate  indication  of  changing  patterns  in  counterfeiting  and  piracy  in 
international trade. 

It  should  be  noted  that  the  following  assessment  of  the  nature  and  scale  of  the  problem 
constitutes  the  annual  report  by  the  Commission  envisaged  in  Article  23  of  Council 
Regulation (EC) No 1383/2003.  

Annex  1  contains  a  comparative  summary  of  the  global  figures  for  recent  years.  This 
summary  indicates  both  the  number  of  articles  stopped  and  the  number  of  cases  treated  by 
customs.7 

A  detailed  analysis  of  the  EU  Customs  seizure  statistics  over  the  last  5  years  shows  the 
following: 

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7 

See  COM  (2005)  276  final,  "Proposal  for  a  European  Parliament  and  Council  Directive  on  criminal 
measures aimed at ensuring the enforcement of intellectual property rights" and "Proposal for a Council 
Framework  Decision  to  strengthen  the  criminal  law  framework  to  combat  intellectual  property 
offences". 
OJ C129 of 26.5.2005,p.3. 
Full details appear on Taxation and Customs Union Directorate-General website. 

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Quantitative changes: 

•  Seizures have increased by 1000 % in that period 

•  Customs now seize more than 100 million articles per year 

•  Asia, China in particular, is the major producing region  

•  From 2003 to 2004, the number of customs cases involving fakes more than doubled to 

22 000 cases annually  

•  Increasing problems linked to the need for an  environmentally-friendly destruction of 

large quantities of seized goods 

Qualitative changes 

•  Large increase in fake goods which are dangerous to health and safety 

•  Most products seized are now household items rather than luxury goods 

•  Growing numbers of sophisticated hi-tech products  

•  Production is on an industrialised scale  

•  High quality of fakes often makes identification impossible without technical expertise 

In 2004, in addition to the usual types of products retained by customs (such as luxury items, 
cigarettes,  DVDs,  CDs,  textile  goods  etc.),  fake  goods  seized  by  customs  at  EU  borders 
included: mineral water, jam, mobile phones, coffee, apples, face creams, flowers, car parts, 
washing powder, pharmaceuticals, razors, toothpaste and brushes etc.  

The  quality  of  these  fakes  is  now  so  good  –  the  copies  may  have  additional  security 
holograms, better packing, etc., than the originals – that it is becoming increasingly difficult 
for customs authorities and even rightholders themselves to distinguish the real from the fake. 

2.2 

Reasons for the large increase in trade in fakes  

The reasons for this explosion stem essentially from the high profits and comparatively low 
risks involved, particularly when it comes to penalties in some countries, and from a general 
global growth in industrialised capacity to produce high quality items. 

Fake DVDs are a good example: profits are higher than for an equivalent weight in soft drugs 
whilst  the  penalties  if  detected  are  much  lower.  Cigarettes  are  another  good  example:  if  a 
counterfeiter manages to introduce one consignment in 10 of his containers of fake cigarettes, 
he  will  still  make  a  successful  return  on  his  investment.  Counterfeiting  on  this  scale  also 
provides criminals with a useful means of laundering their criminal proceeds. 

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Increasingly  sophisticated  industrial  production  capacity  in  certain  countries  (notably 
China) has provided the fake industry with a massive opportunity. Seizures of fake computer 
parts, inkjet cartridges, mobile phones and car parts demonstrate the growing capacity to copy 
anything. 

Even  where  countries  have  made  efforts  (such  as  new  laws)  to  stem  production,  they  find 
themselves  hampered  by  difficulties  in  controlling  industries  which  can  switch  production 
rapidly and where there may be local enforcement weaknesses.  

These trends have been reinforced by the growing interest of organised crime in taking a 
share  of  these  high  profits.  Consignments  often  contain  not  only  counterfeit  products  but 
also  other  illegal  goods  such  as  illicit  drugs.  Terrorist  groups  have  also  been  linked  to 
counterfeiting initiatives.  

2.3 

New threats 

Counterfeiting  and  piracy  are  widely  reported  as  a  threat  to  investment  and  jobs  in  our 
knowledge-based economies as well as harming the cultural heritage of many countries. 

However,  because  of  increasingly  industrialised  production  linked  to  ruthless  operatives  we 
are now also faced with serious public health and security risks.  

Recent  Customs  seizures  of  dangerous  goods  include  counterfeit  pharmaceuticals,  often  on 
route to least developed areas. Seized fake foodstuffs, washing powder, unsafe toys are other 
indicators of the need to step up our counter-measures and ensure an effective implementation 
of the legislation. 

The growth in industrialised production of fakes also increases the risk of serious tax losses 
to  governments  in  both  producing  and  consumer  countries  as  counterfeiters  operate  almost 
entirely  in  the  black  economy.  Annual  VAT  losses  in  the  United  Kingdom  alone  resulting 
from fakes have been estimated at €2.5 billion per year by the business community.  

Some fakes discovered by Customs pose other serious risks to society: examples include false 
or  blank  passports,  identity  cards,  marriage  certificates,  driving  licences  etc.  which  may  be 
used to support illegal immigration or threaten security. 

Transhipment is of growing concern because fraudsters break routes to disguise the origin 
of the goods. Countries generally regarded as low risk by Customs, such as Japan and USA, 
are becoming  higher risk due to transit and transhipment traffic in fakes. A seizure in 2004 
showed  that  fake  car  mechanisms  entered  the  Community  from  the  US  although  the  goods 
were  in  reality  of  Chinese  origin.  Cases  have  also  occurred  where  the  Community  itself  is 
used to disguise the origin of goods (e.g. fake medicines from Asia transhipped through the 
EU on route to Africa). 

Internet  sales  are  an  increasing  problem.  More  than  30%  of  the  postal  seizures  made  by 
customs  in  2004  were  internet  related.  The  small  quantities  involved  make  the  use  of  the 
simple  and  low  cost  destruction  procedures  now  permitted  under  Article  11  of  Council 
Regulation (EC) No. 1383/2003 of increasing significance.  

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3. 

RECOMMENDATIONS  –  AN  ACTION  PLAN  FOR  AN  EFFICIENT 
CUSTOMS RESPONSE TO COUNTERFEITING AND PIRACY  

Customs  prime  role  in  stopping  the  international  movement  of  fake  goods  is  shown  by  the 
fact  that  they  are  responsible  for  approximately  70%  of  all  seizures  of  fake  products  made 
globally.  Customs  are  also  the  only  enforcement  agency  assigned  with  a  specific  mission 
under the World Trade Organisation's Trade Related Intellectual Property Rights Agreement 
(TRIPS Agreement).  

However, despite this situation, it is clear that Customs can do more. A more far-reaching and 
comprehensive  approach  is  required  if  the  problem  is  going  to  be  kept  under  control.  In 
particular, it is necessary to look beyond seizures towards investigations to cut off production, 
distribution  and  sale  of  counterfeit  items.  Co-operation  with  other  actors  needs  to  be 
enhanced.  Whilst  this  Communication  focuses  primarily  on  operational  co-operation,  in 
particular with business and customs authorities in third countries, it is also important not to 
lose sight of the need for close co-operation between law enforcement authorities.  

It is important that any comprehensive approach is based on practical measures which can be 
enforced. Business has shown its willingness to support such concrete customs initiatives.  

Actions  are  considered  necessary  in  3  key  areas:  increasing  Community  level  protection, 
improving the Customs-business partnership and reinforcing international co-operation8. The 
following section looks into those areas and provides a series of recommendations. These, if 
agreed  at  political  level,  would  together  form  an  action  plan  whose  implementation  and 
impact could be monitored and evaluated by the Commission. 

3.1 

Increasing Community level protection 

There is a strong need to reinforce protection against products posing a risk to the health and 
security  of  the  EU  consumer  (fake  pharmaceuticals,  car  parts,  foodstuffs  etc.)  or  likely  to 
involve organised crime (cigarettes, alcohol, DVDs etc.). 

To do this, it is necessary first of all to improve customs controls on inbound traffic beginning 
by an examination of the adequacy of the existing legal and operational measures in place and 
recommending changes where necessary.  

3.1.1 

Legislation 

In  the  Community,  Customs  have  powers  which  go  well  beyond  the  minimum  controls  on 
imports  as  set  out  in  the  TRIPS  Agreement,  and  can  stop  suspected  fakes  during  import, 
export,  transit  or  transhipment.  In  2004  Customs  in  the  Community  made  approximately 
22000  interventions  which  resulted  in  seizures  of  fake  goods  (in  2003  the  corresponding 
figure was 10,000). 

At  the  Community  level,  Customs  have  worked  since  1986  to  counter  IPR  infringements 
under  various  legislative  instruments.  The  situation  changed  significantly  with  the  new 
Community  Customs  legislation  (Council  Regulation  (EC)  No.  1383/2003)  which  entered 

8 

Certain actions may be financed under the Customs 2007 programme. 

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into force on 1 July 2004. This new legislation introduced controls in sectors not previously 
covered  (such  as  plant  variety  rights,  designation  of  origin  and  geographical  indications), 
simplified procedures, reduced business costs and provided the possibility for Member States 
to allow fake goods to be destroyed with minimum bureaucracy. 

EU  Customs  legislation  in  this  area  is  now  reckoned  to  be  among  the  strongest  in  the 
world (China has now adopted new legislation of a similar type) and is reflected in the fact 
that Member States' Customs administrations seize considerably more counterfeit goods than 
is  the  case  elsewhere.  With  controls  on  all  movements  of  goods,  especially  during 
transhipment,  customs  protect  not  only  the  EU  but  also  other  parts  of  the  world  and  in 
particular the least developed countries which are often targeted by fraudsters (cf. seizures of 
fake medicines, condoms and car parts stopped at EU borders on route to Africa).  

The  completion  of  the  protection  of  IPR  for  internationally  traded  goods  will  be 
complemented  by  similar  Community  protection  for  fakes  produced  and  remaining  in  the 
Community when the Enforcement Directive adopted in 2004 is implemented in 2006. This 
Directive, coupled with proposed measures in the criminal law area to strengthen enforcement 
of intellectual property rights and combat offences, would provide a fairly complete armoury 
of weapons to tackle this issue within the Community.  

IPR is a fast moving sector and legislators and business need to work together to ensure 
that  legislation  continues  to  meet  present  and  future  requirements  and  can  be  adapted 
quickly where problems arise.  

In  this  context,  business  is  still  raising  two  particular  concerns.  Firstly,  economic  operators 
want Member States to quickly introduce the simplified destruction procedures now allowed 
under Community law which would reduce costs to business and public administrations alike. 
The  second  concern  relates  to  the  existing  possibility  for  travellers  to  import  low  volume 
personal use items which may be counterfeit. The business side accepts that Customs cannot 
tackle  every  individual  case  but  feels  that  the  legislation  sends  out  the  wrong  signal  and 
appears  to  condone  counterfeiting.  A  further  legislative  concern  relates  to  the  attribution  of 
costs,  where  business  considers  that  more  of  the  onus  should  be  placed  on  the  wrongdoer 
rather than on the right-holder.  

Action points:  

Two key issues need to be addressed: low value consignments and simplified destruction procedures. 

A  business-Customs  working  group  should  be  created  to  examine  how  the  treatment  of  these  issues 
can be improved in practice.  

In  the  light  of  the  group's  deliberations,  the  Commission  would  report  on  the  need  for  legislative 
amendments or other practical proposals to improve the situation. 

Target date for group meetings: End 2005.  

Target date for report: June 2006. 

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3.1.2 

Improving operational performance 

Even  more  important  than  updating  legislation  is  the  need  to  ensure  that  operational 
capacity is of a consistent and sufficiently high level. 

Customs have the dual role of facilitating international exchanges whilst applying controls to 
stop  illicit  traffic.  To  do  this  it  is  necessary  to  improve  controls  further  via  the  use  of  new 
instruments and techniques. 

There have been many operational initiatives in recent years which have led to good results in 
terms of increased Customs seizures of counterfeit goods.  

The  use  of  operational  seminars  to  bring  Customs  and  business  together  to  examine  latest 
developments  and  exchange  enforcement  information  are  a  welcome  move  to  increase  co-
operation.  Similarly  the  exchange  of  operational  officials  and  joint  operations  between 
Member States are significant steps towards strong enforcement co-operation.  

These  actions  need  to  be  further  developed  and  brought  together  in  a  new  operational 
control plan based on a Community approach to risk management and using Member States' 
expertise to spread best practices both in the Community and outside. 

One key problem is how to move from the present situation, where seizures are growing but 
not  enough  is  done  to  investigate  and  cut  off  production  and  distribution  networks,  to  a 
situation where the root of the problem is attacked.  

Action points: 

1. 

Greater use of risk management 

With  the  recent  amendment  of  the  Community  Customs  Code9  putting  a  greater  emphasis  on 
Community risk management, the counterfeit sector is a good candidate to start piloting a Community 
approach.  The  completion  of  a  specific  anti-counterfeiting  Risk  management  guide  is  the  first 
action to be accomplished. 

The guide should be used in practice. This could be done by distributing the guide to risk management 
centres and via the sharing of risk experience between closed user groups of counterfeit experts. This 
would  enable  real  time  risk  information  to  be  exchanged  between  experts  via  the  new  Community 
Risk management system.10  

Target date for Risk management guide: January 2006.  

Target date for creation of Closed user Groups on RIF: January 2006. 

2. 

Establishing  a  Task  Force  of  Member  States  Customs  experts  to  improve  anti-
counterfeiting controls. 

Such  a  Task  Force10  would  consist  of  anti-counterfeiting  customs  specialists  from  Member  States 
working together with other Member States experts, notably by monitoring the situation and providing 

9 
10 

Regulation (EC) No 648/2005, OJ L 117 of 4.5.2005, p. 13. 
Funded under the Customs 2007 programme. 

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short term assistance by sharing know-how and practical expertise. Business could be involved in this 
work as appropriate. 

Target date for first actions: October 2005 

3. 

Joint operational controls 

Targeted  joint  customs  operations  or  regional  operations  on  counterfeiting should  be  carried  out  as 
necessary  under  the  co-ordination  and  with  the  support  of  the  Commission.  This  would  consist  of 
specific actions to target controls for a limited period on specific counterfeiting issues (high risks areas 
or goods). 

Some  third  countries  for  which  an  EU  mutual  administrative  assistance  agreement  (or  protocol)  in 
customs  matters  is  entered  into  force  should  be  invited,  if  necessary,  to  participate  in  such  joint 
customs operations 

Target date: during 2006 

4. 

Operational Customs/Business seminars 

These seminars have previously been extremely successful. Seizures have increased after each event 
due  to  more  focussed  controls.  They  have  also  enhanced  co-operation  between  different  national 
authorities  and  different  actors.  To  be  supplemented  by  training,  benchmarking  and  exchanges  as 
appropriate. 

Target date: Ongoing 

5. 

Use of customs laboratories 

Little information is available on most of the dangerous products being discovered, the possibility of 
using  Customs  or  other  government  laboratories  to  check  unsafe  counterfeit  products  should  be 
examined.  A  small  study  group11  of  Member  States'  experts  should  report  on  the  benefits  and 
practicality (including costs) of doing this.  

Target date: during 2006 

6. 

Customs Information System 

use 

The maximized 
(CIS), 
which enables the national  customs  services of  MS to  exchange,  search  upon and  disseminate 
information on smuggling activities and requests for action (sighting, reporting, discreet surveillance 
or specific checks), should be also promoted in the fight against piracy and counterfeiting.  

European  Union’s Customs Information System 

the 

of 

This  will  increase  the  impact  of  controls,  and  in  particular  help  cut  off  distribution  networks,  by 
ensuring  that  when  suspected  consignments  are  stopped  in  one  Member  State  specific  actions 
(sighting, reporting, discreet surveillance or specific checks) can be taken in other Member States to 
counter this traffic. This could be of particular significance for the growing internet related traffic. 

Recourse to Council Regulation (EC) No 515/97 of 13 March 1997, on mutual assistance between the 
administrative  authorities  of  the  Member  States  and  cooperation  between  the  latter  and  the 
Commission to ensure the correct application of the law on customs and agricultural matters, in this 

11 

Funded under the Customs 2007 programme. 

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respect will be important to reinforce mutual assistance between the Member States and between the 
Member States and the Commission  

Target date: during 2006 

3.2 

Improving the Customs-business partnership 

It is important to  recall that counterfeit goods are treated differently  from other goods  dealt 
with under general Customs controls. Customs do not seize goods directly but usually detain 
goods  to  allow  business  to  take  the  necessary  action  with  the  competent  authorities.  This  is 
done  on  the  basis  of  business  firstly  requesting  action  by  customs  on  a  special  application 
form. Business involvement is necessary as only rightholders have the technical expertise to 
distinguish  today's  high  quality  fakes  from  the  original  product.  Business  also  takes 
responsibility if consignments are stopped without due justification. 

This  makes  full  business 
enforcement.  

involvement 

indispensable 

to  ensure  effective  customs 

Control  authorities  need  to  do  more  with  business,  whilst  business  has  to  provide  sufficient 
information  to  protect  its  rights.  The  main  effort  business  needs  to  make  is  to  lodge 
applications for action with Customs,12 without which Customs have little chance or incentive 
to help right holders effectively.  

Improving  early  information  exchange  between  business  and  Customs  is  also  crucial. 
However, it is important to ensure that public money is not spent on developing sophisticated 
or  costly  systems  for  exchanging  information  (which  may  well  not  be  useful  to  front  line 
customs) that business could do more cheaply and effectively, particularly when it comes to 
keeping systems up to date. 

In this context, a practical and cost-effective solution could be envisaged in the form of an EU 
IPR  electronic  information  system  bringing  together  the  existing  tools  for  customs  to 
exchange  risk  information  with  the  possibility  for  customs  to  access  via  hyperlinks  the 
various specific Intellectual property databases (such as the Office for Harmonisation in the 
Internal  Market  –  OHIM).  This  would  save  resources  and  improve  controls  by  enabling 
customs  to  identify  and  contact  rightholders  where  suspect  goods  are  encountered  at  the 
frontier. 

Action points 

1. 

Business should adopt a more pro-active approach 

Encourage business to lodge applications for action with Customs, in particular SMEs. 

A  number  of  businesses  (e.g.  Mercedes,  LVMH,  Panasonic,  Gillette,  Nike,  Lacoste  and  BIC)  have 
developed  quick  reference  guides  for  customs.  This  approach  should  be  encouraged  via  regular 
Customs/Business exchanges used to examine new problem areas.  

Target date: Ongoing. 

12 

This procedure is foreseen in the Community legislation and gives Customs the power and information 
to stop suspect fakes. 

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2. 

Widening the Business-Customs partnership 

Signing memoranda of understanding with major trade representatives, airlines, shipping companies, 
express  carriers  etc.  would  encourage  co-operation  and  improve  controls  via  better  information 
exchange and a broader awareness of the risks posed by the traffic in fakes. 

Target date: During 2006 

3. 

Improving Customs – Right holders contacts 

Identifying the right holder in the case of a consignment of counterfeit goods is not an easy task for 
Customs.  The  difficulties  SMEs  face  in  lodging  applications  for  customs  action  in  the  25  Member 
States contributes to this problem. An EU IPR information system, which combines the possibilities 
offered  by  the  Community  customs  risk  management  systems  for  customs  to  exchange  risk 
information  on  counterfeiting  with  the  possibility  for  Customs  to  access  listings  of  companies,  key 
products  and  contacts  via  the  internet,  would  encourage  Customs  to  take  actions  and  enable  more 
businesses to benefit from Customs protection. 

A Customs – business working group should be established to develop a framework for such a system.  

Target date: Meetings 2nd half 2005. Basic system in place end 2006. 

4. 

Business express information system 

A  system  should  be  created  which  enables  business  to  provide  information  on  cases  of  immediate 
significance.  This  is  a  particular  problem  for  SMEs.  A  possibility  of  a  central  electronic  mailbox 
monitored by an anti-counterfeiting specialist would enable these requests to be checked and, where 
justified, transmitted via the Community Risk Management system to anti-counterfeiting specialists in 
Member States and also to major ports/airports/land frontiers. This would operate in real time. 

Target date: 2006. 

5. 

Specific actions with sensitive business sectors 

Specific initiatives should be undertaken in high risk sectors for public health (pharmaceuticals, toys 
etc.) but also in sectors where tax losses are particularly damaging. 

Target date: Ongoing. 

6. 

Raising awareness and publicity actions 

Raising awareness both of business about Customs actions and of the public on the threat to health, 
jobs and society as a whole is extremely important. This could be done via campaigns at major border 
points (particularly international airports), the use of road-shows, exhibitions in Customs museums, or 
the dissemination of information to consumers, etc. 

Target date: Ongoing 

3.3 

Reinforcing international co-operation 

In addition to stepping up EU controls against imported counterfeits, which will only ever be 
a  means  of  stopping  consignments  or  tackling  individual  criminal  sectors,  it  is  necessary  to 
act at the source of the problem by, at the very least, stopping the export of counterfeit goods 

EN 

12 

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and,  where  possible,  by  shutting  down  the  production.  This  requires  international  co-
operation. 

Whilst the TRIPS minimum standards for IPR protection provides for controls on imports by 
Customs, EU Customs experience shows that more needs to be done.  

Firstly,  one  of  the  best  means  of  stopping  goods  before  they  leave  producing  countries 
(including preventing fake traffickers from using safe regions like the EU, Japan or the US to 
mask  the  real  origin  of  the  goods),  is  to  introduce  widespread  export  and  transhipment 
controls. 

Secondly, it is also necessary to ensure that Customs Co-operation Agreements (or protocols 
in  broader  international  agreements),  which  enable  close  co-operation  with  partner 
administrations  and  provide  suitable  legal  coverage  for  bilateral  actions,  are  fully  exploited 
and expanded to cover regions where production is significant. The signing in April 2005 of 
the  Customs  Co-operation  Agreement  with  China  (responsible  for  the  majority  of  all  fakes 
seized by EU customs) is particularly important in this respect.  

Action points 

1. 

Enhancement of the WTO TRIPS Agreement 

The growth in seizures of fakes during customs transhipments, have demonstrated for some time that 
there  is  a  need  to  consider  enhancing  Article  51  of  the  TRIPS  Agreement13.  This  would  consist  in 
extending the present obligation for countries to apply customs anti-counterfeiting controls on imports 
to cover also controls on export,  transit and transhipment  movements14. Consideration could also be 
given in due course to the extension of the scope of Article 51 to include infringements of certain other 
Intellectual Property rights.  

Target date: dependent upon WTO negotiations. 

2. 

Co-operation with the World Customs Organisation (WCO), Europol and Interpol 

Many of the lessons learned at Community level on risk management and the use of seizure statistics 
could  be  of  interest  globally.  Close,  active  co-operation  with  the  most  involved  international 
enforcement  bodies  such  as  the  WCO,  Europol  and  Interpol  could  be  used  to  both  pick  up 
international trends and help spread the EU's practical approach to a broader audience. Spreading the 
EU's expertise in risk management in this sector would be of particular benefit to interested parties. 

13 

14 

TRIPS article 51 reads: "Suspension of Release by Customs Authorities" Members shall, in conformity 
with the provisions set out below, adopt procedures to enable a right holder, who has valid grounds for 
suspending that the importation of counterfeit trademark or pirated copyright goods may take place, to 
lodge an application in writing with competent authorities, administrative or judicial, for the suspension 
by the customs authorities of the release into free circulation of such goods. Members may enable such 
an application to be made in respect of goods which involve other infringements of intellectual property 
rights,  provided  that  the  requirements  of  this  Section  are  met.  Members  may  also  provide  for 
corresponding  procedures  concerning  the  suspension  by  the  Customs  authorities  of  the  release  of 
infringing goods destined for exportation from their territories. 
The Commission has already introduced this question before the TRIPs Council in June 2005, when it 
presented  a  Communication  on  the  enforcement  of  Intellectual  Property  rights  which  stated  in  the 
Chapter describing the expected results that "among the issues that should be given special attention by 
the  TRIPs  Council  should  be…the  customs  measures  and  their  availability  for  export  and  transit" 
(para.26 of Commission Communication IP/C/W/448). 

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Target date: 2005/2006  

3. 

Bilateral arrangements 

It  is  necessary  to  share  the  practical  tools  (risk  management  guide,  statistics,  trends  analysis  etc.) 
developed in the EU  with the EU's trading partners in order to tackle counterfeiting in key problem 
areas.  Customs  Co-operation  Agreements  and  Partnership  and  Co-operation  Agreements  with  a 
Mutual assistance component provide a legal basis to co-operate and exchange information. 

Examples of such co-operation include training, the exchange of officials, sharing expertise and latest 
trend information. 

Customs  Co-operation  Agreement  should  be  envisaged  or  are  being  negotiated  with  countries  or 
organisations such as India, Japan, members of ASEAN15, Mercosur and Pakistan. 

In addition, the Commission will seek to include in the IPR chapter of future bilateral arrangements a 
commitment for the parties to apply customs controls not only on imports but also on exports, transit 
and transhipment of goods infringing certain Intellectual Property rights.  

Target date: ongoing 

4. 

Specific actions in relation to China 

Chinese  exports  make  the  majority  of  all  EU  seizures  of  fakes  and  this  figure  is  likely  to  increase 
rapidly given China's rate of development. China is also of interest for other customs reasons (known 
source  of  ecstasy  precursors  to  Europe,  of  unsafe  foodstuffs,  fireworks  etc.).  China  has  adopted  a 
strong  anti-counterfeiting  customs  legislation  and  it  will  be  necessary  to  work  together  to  promote 
legitimate  trade  whilst  stopping  the  burgeoning  fake  traffic.  The  recent  Customs  Co-operation 
Agreement between the EC and China provides the legal framework for in-depth co-operation.  

In addition to exchanging officials and expertise, a specific information system through which the EU 
and China can exchange information to help stop illegal traffic and close down production would be a 
major  practical  step  to  reduce  the  international  flow  of  fakes.  If  successful  this  approach  could  be 
extended to other key trading partners. 

Target date: 2006. 

5. 

International partners for major actions 

The recent EU/US Summit declaration shows the clear intent of the US and the EU to work together to 
combat  counterfeiting  and  piracy.  Taking  this  forward  in  practice  implies  fostering  exchange  of 
customs  expertise  and  information  under  the  existing  EC-US  Customs  Co-operation  Agreement.  It 
would also be desirable to see where the EU could join forces with other partners. 

Target date: 2005/2006 

15 

Association of South East Asian Nations. 

EN 

14 

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6. 

Stationing of Customs officials in main source regions 

The level of counterfeiting and the need to stop production at source makes the stationing of Customs 
anti-counterfeiting specialists in key regions, such as the Asian region, an increasingly cost-effective 
investment.  A  direct  customs-to-customs  interface  would  bring  increased  results  based  on  common 
experience  and  understanding.  This  point  should  be  examined  by  the  Commission  and  the  Member 
States. 

Target date: 2006 and beyond. 

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15 

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4. 

CONCLUSION 

The steep rise in EU Customs' seizures shows that counterfeiting is a dangerous and growing 
phenomenon. Combating this requires political support and concrete actions to protect the EU 
and its citizens from unfair trade and dangerous products. 

As international trade increases, notably from the Asian region, where growth in production in 
China  is  particularly  significant,  the  EU  is  faced  with  a  potential  avalanche  of  increasingly 
high quality fake goods. The trade combines extremely high profits with comparatively low 
risks, which makes it particularly attractive to criminal organisations and even terrorists. If the 
EU  does  not  act  strongly,  quickly  and  appropriately  it  will  soon  be  too  late  to  effectively 
tackle this serious threat to jobs, health and a safe society in the EU. 

The rapid implementation of the package of recommendations presented in section 3 of 
this  Communication  would  greatly  strengthen  the  anti-counterfeiting  controls  carried 
out  by  Customs  in  the  Community  and  improve  combined  international  efforts  to 
combat this global threat.  

Given  the  urgent  and  growing  problem  faced,  this  Communication  is  focused  on  the  main 
areas  requiring  immediate  attention.  However,  further  actions  should  also  be  carried  out 
where  appropriate  (including  information  dissemination  on  Customs  measures  to  all 
applicants  for  Community  trademarks,  possible  use  of  customs  expertise  to  assist  in  intra-
Community  spot  checks,  enhanced  co-operation  with  the  Office  for  Harmonisation  in  the 
Internal Market – OHIM).  

The  proposed  Action  Plan  is  realistic:  with  the  necessary  political  support,  most  of  its 
actions are achievable in the near future.  

* * * 

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ANNEX 

Counterfeit products seized by Customs 

– 

– 

– 

– 

– 

Breakdown  by  number  of  cases  registered  and  articles  seized  by  type  of  product  – 
EU 2004 

Evolution of the number of articles seized between 1998 – 2004 

Evolution  of  the  number  of  application  for  action  received  by  Customs  Authorities 
(2000-2004) 

Percentage of Articles seized in 2003 by source country 

Percentage of Customs cases by source country in 2003 

EN 

17 

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EU - 2004 

Breakdown by number of cases registered and articles seized by type of product 

Product type 

Number of cases 
registered by Customs

% 

Number of articles 
seized

% 

Comparison 2003-2004 of 
the number of articles 

Foodstuffs, alcoholic and other drinks 

Perfumes and cosmetics 

Clothing and accessories 

a) Sportswear 

b) Other clothing (ready-to-wear,…) 

c) Clothing accessories 

Electrical equipment 

Computer equipment (computers, screens…) 

CD (audio, games, software, DVD etc.) 

Watches and jewellery 

Toys and games 

Other goods  

Cigarettes 

52 

214 

13.958 

3.906 

4.704 

5.348 

848 

125 

2.781 

2.230 

516 

1.347 

313 

0,5 

4,5 millions 

1 

62 

17 

21 

24 

4 

1 

1 million 

8 millions 

1 million 

2 millions 

5 millions 

4 millions 

1 million 

12,5 

18 millions 

10 

0,5 million 

2 

6 

1 

18 millions 

10 millions 

38 millions 

4 

1 

8 

1 

2 

5 

4 

1 

18 

1 

17 

6 

40 

+ 196% 

- 22% 

+ 102% 

+ 140% 

+ 26% 

+ 146% 

+ 712% 

+ 900% 

- 57% 

- 20% 

+ 46% 

+ 58% 

+ 14% 

TOTAL EU 

22.384 

100 

103 millions 

100 

+ 12% 

EN 

18 
EN 

 
 
 
 
 
 
Evolution of the number of articles seized 
between 1998 - 2004

s
e
l
c
i
t
r
a
d
e
z
i
e
S

f
o
r
e
b
m
u
N

i

)
o
M
n
I
(

140

120

100

80

60

40

20

0

25

10

94

85

92

103

68

1998

1999

2000

2001

Year

2002

2003

2004

EN 

19 
EN 

 
 
 
 
 
 
 
 
 
Evolution of the number of applications for action 
received by Customs authorities - 2000/2004

s
n
o

i
t
a
c

i
l

p
p
a

f
o

r
e
b
m
u
N

d
e
v

i

e
c
e
r

3500

3000

2500

2000

1500

1000

500

0

EN 

2888

1671

1886

1287

981

2000

2001

2002

Year

2003

2004

NOTE:  By introducing an Application for Action the rightholder requests Customs to control any 

              goods suspected of infringing their Intellectual Property Rights 

20 
EN 

 
 
 
 
 
Percentage of Articles seized in 2003 
by source country

6%

3%

3%

2%

2%

11%

14%

60%

s
e
l
c
i
t
r
a
d
e
z
i
e
s

f
o
%

70%

60%

50%

40%

30%

20%

10%

0%

China

Hong Kong Malaysia

Taiwan

Benin

UAE

NC *

Others

Source country

* Source not communicated to 
the Commission. 

EN 

21 
EN 

 
 
 
 
 
 
 
Percentage of Customs cases by source country 
in 2003

35%

30%

28%

31%

s
e
s
a
c

f
o
%

25%

20%

15%

10%

5%

0%

EN 

18%

6,5%

6%

5%

3%

3%

Thailand

China

Hong
Kong

Turkey

Malaysia

Pakistan

USA

Others

Source country

22 
EN