Summary

The World Customs Organization (WCO) recently conducted a two-week intensive training programme, the WCO Knowledge Academy, focused on the development of technical skills for Customs officials and related trade practitioners. BASCAP was invited to facilitate a session on the need for strong intellectual property rights (IPR) enforcement by Customs agents in Free Trade Zones (FTZs). The training was based on the findings and recommendations of BASCAP's FTZs-report, Controlling the Zone: Balancing facilitation and control to combat illicit trade in the world's Free Trade Zones, and provided guidance on the critical role that needs to be played by Customs to control the movement of illicit goods into and through these Zones.

The WCO has labeled IPR as a top-priority and addresses it as part of its "IPR and Health & Safety Programme". The training is part of BASCAP's ongoing initiative to call attention to the report's recommendations, including cooperation with the WCO.

Counterfeiting risks in FTZs

Presenting from BASCAP, Donia Hammami, Policy & Project Manager, underscored the role FTZs play in facilitating global trade and economic growth, but also the growing realization that they have become major hubs for counterfeiting and piracy. Criminals exploit the benefits that FTZs provide, such as limited regulatory oversight and reduced Customs inspections of goods in transit. FTZs are used to launder shipments and documents to disguise the suspicious origin of products. Furthermore, counterfeits use FTZs for manufacturing (e.g. assembly, repackaging, relabeling) after which the finished fake products are distributed.

Although the WCO Revised Kyoto Convention clearly states that a "free zone means a part of the territory of a Contracting party where any goods introduced are generally regarded, insofar as import duties and taxes are concerned, as being outside the Customs territory", many countries have limited Customs Enforcement to a a minimum in FTZs.

Conclusions and recommendations for Customs authorities

BASCAP recommendations and conclusions relevant to Customs authorities were reiterated by Ms Hammami at the training session.

• FTZs are part of the national territory of the host state. Activities that are illegal in the host country are therefore illegal in the Free Trade Zone. The WTO TRIPS Agreement is also applicable to FTZs.

• Customs should be given access to FTZs and authority over goods in transit. Non-tariff oversight should be in place since the customs regime in a FTZ only relates to duties and taxes.

• Close cooperation should be ensured between national Customs authorities of FTZs to provide e.g.:
• an interface between Customs Form and business records of Zone Operators to facilitate the tracking of goods,
• enforcement of anti-counterfeiting criminal and civil law.

Related links