Smugglers’ Run #2: Hong Kong urged to keep up high standard fighting illicit trade

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Asian countries should step up regional cooperation and engagement with the private sector.

Photo (from right): Chris Clague, Simon Jim, and Lina Baechtiger (Credit: Yiannis Korkovelos for EuroCham Singapore)

Anti-illicit trade champions have called on the Hong Kong Customs to keep up the strong performance on combating illicit trade while warning of the shift of illicit manufacturing from mainland China to Southeast Asia.

The Economist Intelligent Unit (EIU) published late last year a report ranking 17 Asian economies over illicit trade. Instead of ranking the economies by measuring the inflows and outflows of illicit and counterfeit goods, the report looked into the environments where illicit trade flourishes or wanes, by assessing, with a scale from 0 to 100, the economies’ performances on four major categories, namely intellectual property [protection], trade and transparency, customs environment, and supply and demand. Australia topped the overall rankings with 85.2 points, followed by New Zealand (81.8) and Hong Kong (81.4). See previous report.

Chris Clague, Project Leader and Senior Editor of Thought Leadership at the EIU, visited Hong Kong recently to attend an annual anti-counterfeiting conference. Clague told Harbour Times that while Hong Kong should get more credit for making significant advancements in the past decades, more can be done to combat illicit trade.

“While Hong Kong should continue to make progress in terms of IP protection, the ability to track shipments and cargoes is very important from an intelligence perspective,” Clague asserted. “Single window systems are very useful and would greatly help improve Hong Kong’s track and trace services.”

To this end, the Hong Kong government has launched a consultation last April on the development of a trade single window. The establishment of such a system can bring about time and cost savings for the trading community. It can also facilitate cross-border customs co-operation with other economies and connectivity with their single windows.

Hong Kong’s proximity to China, a major manufacturer of counterfeit goods, can be a concern particularly in terms of regional cooperation. Clague, meanwhile, offered an alternative view.

“The reason why China has been the leading supplier of counterfeit and fake goods over the last two decades and more is because illicit manufacturing or trade follows licit manufacturing. As all of these foreign investments and all these manufacturing moneys have piled into China, the unfortunate outcome of that is so has a lot of these illicit manufacturers,” Clague contended. “If historical pattern follows, as more and more manufacturing moves out of China into Southeast Asia, you’d expect illicit trade or illicit manufacturing are to following into the region, and that is why regional cooperation will become more and more important.”

Accompanying Clague to Hong Kong was Lina Baechtiger and Simon Jim from the European Chamber of Commerce Singapore which sponsored the illicit trade index project.

“Singapore can learn from Hong Kong and widely improve as the authority here really works a lot with the private sectors and organises official working groups with brand owners” said Baechtiger, executive director of the chamber. “Overall, Singapore and Hong Kong are good benchmarks for many countries in the region for best practices.”

In response, the Customs and Excise Department stated that it has taken a number of initiatives, including exchange of intelligence and sharing experience in IPR enforcement with overseas law enforcement agencies, and IPR-related seminars with the IP industry and law enforcement agencies.

“That being said, there is no one-size-fits-all regime. We would encourage brand owners to participate as well, not just to protect their brands and revenues but it’s actually to protect their consumers. It is that engagement that’s needed to stay ahead of the illicit traders,” Jim, chair of the chamber’s committee on intellectual property rights, added. “Consumer involvement is also very important. Illicit goods don’t just take away revenue from companies and governments. They do threaten the security of nations and affect consumers at a very basic level, and all of these support transnational crime. Therefore It’s key that affected stakeholders, namely companies, governments and consumers, should all address the problem together.”