Business calls not to buy counterfeit products

25/ 06/ 2019

The issue of combating falsified or illegally imported products is becoming increasingly relevant to legal businesses operating in Ukraine. The markets for coffee, alcoholic beverages, agrochemical products, olive oil, household electrical appliances and others suffer from these negative phenomena. Representatives of the European Business Association once again emphasized this issue during a public discussion Im buying the real! which was organized by the EU Delegation in Ukraine together with the European Business Association, the Ministry of Economic Development and the Ukrainian Anti-counterfeiting and Piracy Alliance on the occasion of Dialogue between the EU and Ukraine on Intellectual Property Rights property on June 25th. According to European Business Association member companies, last year the proportion of falsified or illegally imported goods comprised inter alia: coffee - 40% (about 25 million dollars), alcoholic beverages - 60% (about 400 million dollars), agrochemical products - 25% ( about 200 million dollars), household appliances and electronics for certain categories from 50 to 70% (300-400 million dollars). Serhii Verbov. The Coordinator of the Coffee Fair Trade project of the European Business Association. For example, the process of production of counterfeit coffee products begins with the import of raw materials in bulk volumes from foreign factories for the production of instant coffee with an understatement of the customs value by 2-3 times. Last year, according to EBA member companies, about 3.8 thousand tons of coffee were imported. Coffee production alone led to more than $17 million in losses from the state budget. Clearly, understatement of customs values affects the cost of coffee for the consumer. But it is necessary to understand that fake coffee means quality and taste much worse than the original products. Counterfeit products can be sold on the Internet or in spontaneous markets where, today, illicit entrepreneurs are not responsible to the buyer for poor-quality or hazardous food products. The Manager of the committees of the European Business Association, Christina Linichenko, stressed that today the issue of confiscated products is also a pressing question. For example, most sites that sell counterfeit products can be closed - but only by court order. However, what happens to products after confiscation is unclear. And here, obviously, it is necessary to develop a transparent chain of traceability to enter the market and utilization. Thus, when buying a counterfeit, the consumer makes an unknowing investment in an illegal business, which later causes damage to the state budget, but also directly to the consumer in the absence of state financing of socio-economic spheres (medicine, education, social security) - due to non-payment of relevant taxes and fees. Anxiety also causes volumes of falsification of dairy products, where the most common way is to replace milk fat with vegetable fats. This creates unfair competition, undermines confidence in the domestic dairy market and misleads consumers, because the use of vegetable fats is not accompanied by appropriate labeling. In addition, the existence and growth of the market for counterfeit products in Ukraine limits the further development of Ukrainian business and poses serious risks for investment in Ukraine. So, business encourages consumers to be conscious and not to buy counterfeit products, which, although at lower cost, are worse quality and can cause significant health damage (as with the case of unregulated alcohol). At the same time, customs needs to address the understatement of customs values, and law enforcement agencies and state bodies must examine the issue of regulation of trade on the Internet and in open-air markets. In particular, among the proposals of business is the introduction of a register of sites linked to licenses for the right to sell alcoholic beverages. Therefore, if there is no site in the registry, it is illegal and should be blocked. It is also necessary to restrict the transfer of alcoholic beverages by individuals, as works in many countries. For its part, business is ready for active dialogue and cooperation in order to develop an effective mechanism for protecting the rights of consumers and producers that are harmed due to the prevalence of counterfeit products on the market.

According to European Business Association member companies, last year the proportion of falsified or illegally imported goods comprised inter alia: coffee – 40% (about 25 million dollars), alcoholic beverages – 60% (about 400 million dollars), agrochemical products – 25% ( about 200 million dollars), household appliances and electronics for certain categories from 50 to 70% (300-400 million dollars).

Serhii Verbov The Coordinator of the Coffee Fair Trade project of the European Business Association

For example, the process of production of counterfeit coffee products begins with the import of raw materials in bulk volumes from foreign factories for the production of instant coffee with an understatement of the customs value by 2-3 times. Last year, according to EBA member companies, about 3.8 thousand tons of coffee were imported. Coffee production alone led to more than $17 million in losses from the state budget. Clearly, understatement of customs values affects the cost of coffee for the consumer. But it is necessary to understand that fake coffee means quality and taste much worse than the original products.

Counterfeit products can be sold on the Internet or in spontaneous markets where, today, illicit entrepreneurs are not responsible to the buyer for poor-quality or hazardous food products.

The Manager of the committees of the European Business Association, Christina Linichenko, stressed that today the issue of confiscated products is also a pressing question. For example, most sites that sell counterfeit products can be closed – but only by court order. However, what happens to products after confiscation is unclear. And here, obviously, it is necessary to develop a transparent chain of traceability to enter the market and utilization.

Thus, when buying a counterfeit, the consumer makes an unknowing investment in an illegal business, which later causes damage to the state budget, but also directly to the consumer in the absence of state financing of socio-economic spheres (medicine, education, social security) – due to non-payment of relevant taxes and fees.

Anxiety also causes volumes of falsification of dairy products, where the most common way is to replace milk fat with vegetable fats. This creates unfair competition, undermines confidence in the domestic dairy market and misleads consumers, because the use of vegetable fats is not accompanied by appropriate labeling.

In addition, the existence and growth of the market for counterfeit products in Ukraine limits the further development of Ukrainian business and poses serious risks for investment in Ukraine.

So, business encourages consumers to be conscious and not to buy counterfeit products, which, although at lower cost, are worse quality and can cause significant health damage (as with the case of unregulated alcohol).

At the same time, customs needs to address the understatement of customs values, and law enforcement agencies and state bodies must examine the issue of regulation of trade on the Internet and in open-air markets.

In particular, among the proposals of business is the introduction of a register of sites linked to licenses for the right to sell alcoholic beverages. Therefore, if there is no site in the registry, it is illegal and should be blocked. It is also necessary to restrict the transfer of alcoholic beverages by individuals, as works in many countries.

For its part, business is ready for active dialogue and cooperation in order to develop an effective mechanism for protecting the rights of consumers and producers that are harmed due to the prevalence of counterfeit products on the market.