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Coordinating the International Effort Against Illicit Trafficking in Manufactured Goods: Potential Ways Forward
24 May 2018
09:00—10:15
KEY CONCLUSIONS
Illegal product turnover in the world remains high

According to the World Trade Organization, the world turnover of counterfeit products is nearing USD 500 billion a year. According to the OECD, this turnover added another 150 billion. <...> In Russia, according to various estimates, the share of counterfeit goods is estimated between 5 and 30% in different sectors — Ivan Fedotov, Director, Association of Innovative Regions of Russia (AIRR).

According to the HSE estimate <...> the total volume of counterfeit goods in the Russian Federation equals about 2.5 trillion roubles — Alexey Popovichev, Executive Director, The Association of Branded Goods Manufacturers in Russia .

We still have a problem with products that are not registered, products for which duty is not paid. <...> We do not know what the volume of this grey market is — Jacek Pastuszka, President, Baltika Breweries LLC; Vice-President Eastern Europe Region, Carlsberg Group.

In Russia, the fight against counterfeit is conducted at the state level and brings tangible results

Russia has come a long way since 2000, when the level of counterfeit was off the charts. <...> A huge step forward has been made — Alexey Popovichev, Executive Director, The Association of Branded Goods Manufacturers in Russia .

State Commission for Counteracting Illegal Turnover of Industrial Products has been set up. <...> Regional commissions have been established. <...> After the commission started to work <...> our indicators measuring illegal turnover improve every year — Viktor Evtukhov, State Secretary and Deputy Minister of Industry and Trade of the Russian Federation.

The creation of the state commission <...> was extremely important, because a certain coordinating body was needed — Vugar Isaev, Member of the Presidium, The Retail Companies Association (ACORT).

Creating the State Commission on the problems of illegal trafficking in counterfeit products was a right thing to do, it has good momentum — Aslambek Aslakhanov, President, Anti-Counterfeiting International Organization.

Interdepartmental and interstate cooperation is needed to counter illegal trafficking

The Federal Customs Service maintains working contacts with almost 70 customs administrations around the world. <...> By the end of the year, together with the Federal Tax Service, we will create a system of traceability from customs release to cash registers, then we will create a system of reverse contours — Vladimir Bulavin, Head, Federal Customs Service of the Russian Federation.

ISSUES
Illegal turnover of products leads to budget losses

The budget keeps missing significant contributions from taxes, excises and customs payments. According to the Ministry of Finance of Russia, 3 years unpaid excises from the sale of counterfeit fuel <...> amount to 100 billion roubles — Ivan Fedotov, Director, Association of Innovative Regions of Russia (AIRR).

Imperfection of regulation

To date, rights enforcement is somewhat behind the legislation. <...> Coordination of law enforcement agencies and all departments involved in the fight against counterfeiting for the time being probably is still not enough — Alexey Popovichev, Executive Director, The Association of Branded Goods Manufacturers in Russia .

These problems are in three zones. The first is excessive requirements. <...> If we talk about insufficient measures, there are a lot of those too. <...> And the third area: our technical regulations contain many reasonable requirements, but often times they are just ignored <...> there are no methods for measuring a particular indicator — Maxim Protasov, Head of the Russian Quality System (Roskaschestvo).

Foreign sites <...> are still used for personal consumption <...> in this trade, security requirements <...> are not imposed, and all traffic <...> goes according to different rules — Artem Sokolov, Executive Director, The Association of Internet Trade Companies.

Counterfeit products are potentially dangerous

This is not just a matter of loss of profits or revenue, but this is also a matter of security. <...> Most people would not want to get a faulty brake — Marcus Osegowitsch, General Director, Volkswagen Group Rus .

For us, security is an extremely important aspect, above all others. <...> This applies to <...> the same brake pads — Adil Shirinov, President, General Director, Ford Sollers.

SOLUTIONS
Marking and certification of products

Marking is a tool for ensuring traceability of the entire life cycle of a product. <...> Using the example of a pilot project in fur coats, we can <...> say that labelling is a promising tool to combat counterfeit. When we implemented the fur coats project, estimates of the counterfeit share were at 60-70% in the market, after the first year of implementation <...> we increased the legal turnover of the goods by 7 times — Veronika Nikishina, Member of the Board (Minister in charge of Trade) of the Eurasian Economic Commission. .

We have developed a system of packaging and marking with a high degree of protection, and as one of the largest OEMs we could share this experience — Adil Shirinov, President, General Director, Ford Sollers.

We fully support the Government's approach to <...> digitization, labelling, this is a very successful undertaking — Dean Gilfillan, General Director, JTI Russia LLC.

Our task is to move to unified standards, uniform rules for certification of our products. <...> These are the issues of the unified producer responsibility — Mikhail Skorokhod, Chairman of the Management Board, Union of Cement Producers (Soyuzcement).

Experience and information exchange within the business community

The shadow business infrastructure inside the country remains uncontrolled, and we are interested in a greater understanding of these mechanisms. We are interested in sharing experience with other industries — Dias Shukanov, Regional Manager for Russia, International Federation of Spirits Producers LTD.

We need to use the international contour much larger — Sergey Slipchenko, Vice President for Corporate Affairs in Russia and Belarus, Philip Morris International .

Public control of product quality

The second important area is getting the consumers involved. <...> And product marking that we do in Russia provides any buyer with a possibility to go to the website and check on the product code, checking if it is counterfeit — Marcus Osegowitsch, General Director, Volkswagen Group Rus .

We need a public control tool <...> we need to involve citizens, both consumers and employees — Mikhail Dubin, chairman of the board of directors of the Centre for Advanced Technology Development (CGTP).

Preferences to bona fide participants of foreign economic activity

Recently, the number of participants assigned to the green sector, i.e. to the sector with minimal risks, grew twice. They account for 65% of the declarations. <...> The number of inspections for this category of declarants is now less than 1% — Vladimir Bulavin, Head, Federal Customs Service of the Russian Federation.

The material was prepared by the Russian news agency TASS