Jul 12, 1984

THREATS OF UNILATERAL ACTION ON COUNTERFEIT GOODS.

BRUSSELS, JULY 6 (IFDA/YOJANA SHARMA) – The European Community has warned that the U.S. and EEC might take unilateral actions to deal with what they claim to be "alarming growth" in trade in products using imitation brands.-

The EEC has sought negotiations on this in the General Agreement on Tariffs and Trade, where the issue has raised some jurisdictional questions, since patents and trade marks and their violations are governed by the century-old Paris Conventions administered by the World Intellectual Property Organisation (WIPO).-

Also Third World countries say that when more important issues on the GATT work programme, some involving holdovers from the trade negotiations of the 60’s and 70’s, are making little progress, they see no reason why they should be asked to take up an issue much lower down in the GATT work programme.-

Paul Luyten, Deputy Director-General in the EEC’s Division of External Affairs has said that if the Third World countries continue their unwillingness to discuss the issue in GATT, "the U.S. and EC will be forced to react in a non- international framework".-

The Third World "should not abuse our patience", the EEC official threatened.-

Though the EEC has presented proposals in the GATT, Third World countries continue to be "reticent", he complained.-

European industries are increasing their pressure on the Community to push for a GATT code on the subject.-

They say the existing Paris Convention and laws dealing with patents and trade marks are inadequate to deal with the problem.-

The EEC estimates such counterfeit trade to amount to as much as two percent of international trade.

Under the Paris Union Conventions, owners of trade marks and patents could go to courts against infringements, and have the goods seized and also get damages.-

But the European and other Industrial countries do not want to take recourse to such judicial procedures, but favour administered rules whereby countries could act at the customs entry point and seize alleged counterfeited goods.-

Third World countries are wary to giving such powers to importing countries under GATT, both because of the possibilities of abuse and harassment, and also because of the possibilities of such powers being used as protectionist barriers against their exports.-

They cite abuses of other powers, as under the GATT codes on anti-dumping and counter-vailing duty procedures.-

Also, Third World countries insist it is hypocritical of the Industrial countries to single out the counterfeit issue for priority action when western transnational companies, for example, continue to dump substandard, dangerous and products, banned in their own home countries, in the Third World.-

"It smacks of double standards", one South Korea diplomat commented.-

The issue of hazardous products and what could be done in GATT is also one of the issues on the GATT work programme, and on the agenda of the 1984 GATT Contracting Parties meeting in November.-

Luyten is understood to have brought up the subject earlier this week when the South Korean Foreign Minister, Won Kyung Lee visited the EEC.-

But Luyten said that Korea was by no means the worst offender. There was far bigger involvement in Taiwan and Hong Kong, and also in Latin American countries.-

The counterfeit goods do not merely flow from south to north. But with the growing appetite for "brand-name" goods in the Third World, consumers there too are victims.-

The EEC argues that "influx of counterfeit products in developing countries can stifle nascent industries there by stealing their domestic and export markets".-

Luyten told journalists that nobody was immune and that EEC countries themselves "have not been above temptation in manufacturing look-alikes".-

But in Luyten's view, from luxury and fashion goods counterfeiting was now spreading to spare parts and appliances and could lead to accidents or health risks.-

He cited in this connection counterfeit aircraft brakes made from soft rather than hardened steel.-

Other examples cited by the EEC are counterfeit antibiotics, containing only ground vegetable matter and talcum powder, fungicides that resulted in virtual destruction of the coffee crop in East Africa at an estimated 20 million dollar loss to farmers.-

Often counterfeit goods were below quality, and organised crime is becoming involved, according to the EEC.-

The EEC contends that not only are genuine manufacturers "losing face" by these bogus products, but there is also loss of income, markets and jobs.-

The European motor parts manufacturers claim that due to counterfeiting some 6.000 jobs a year are lost, while the U.S. industry claims 14.000 layoffs annually are due to this.-

U.S. politicians have suggested a law to take away special tariff preferences for those countries that fail to "wipe out" the counterfeiters.-

The U.S. and EEC have also stepped up customs checks, causing delays in clearing imports from the Third World.-

Third World countries note that even without this, imports from the Third World are now increasingly subject to other harassments too as a protectionist measure, and what the Industrial countries seem to be seeking is international legitimacy for one more measure.-

Another threat being held out by the EEC is that if no international action is taken, there would be "loss of confidence" between north and south, and this would lead jeopardise transfer of technology.-