Trade in counterfeits could increase rapidly with several free trade zones currently planned by the British government, warns a local trade association. Recent studies show how illegal trade can increase with free trade zones.

The British brand protection association Anti-Counterfeiting Group (ACG) is currently raising alarm regarding a strongly increased risk of counterfeiting due to some new Free Trade Zones (FTZ) planned by the British government. The United Kingdom (UK) government is considering several so-called Free Ports, after its exit from the European Union (Brexit), according to an announcement by UK Finance Minister Rishi Sunak. The ACG fears that these could massively intensify counterfeiting trade.

A total of eight trade hubs could be declared free trade zones: East Midlands Airport, East Freeport (Felixstowe and Harwich), Humber (Hull, Grimsby, Immingham, and Goole), Liverpool; Plymouth and South Devon, Solent (Southampton), Thames (London Gateway and Tilbury) and Teesside. Such free trade zones or free ports allow for duty-free storage and distribution of goods and services. Government officials hope this might have a positive impact on the labor market and trade, according to media reports.

The ACG, however, warns of potential negative effects if these free trade zones are mismanaged: “Unless enforcement and policing is strong at Free Trade Zones they run a severe risk of becoming transit points and complex distribution centres for the trade in counterfeit goods“, warns Phil Lewis, Director General of ACG, upon the release of ACG’s annual report. Free trade zones could encourage counterfeiting trade by concealing shipments of fakes there and disguising fakes through mixed shipments and false documents. “Free ports amplify illicit trade because they sit outside the home country’s jurisdiction. Often, they are lightly regulated which appeals to transnational crime groups and illegal activities”, Lewis continues.

Just one single free trade zone within an economy can already increase counterfeit trade by more than six percent, according to a recent study by the OECD and EUIPO. This problem was recently highlighted again when the ICC’s BASCAP initiative published a study that once again illustrates how free trade zones promote trade in counterfeits. The ACG is now urging brand owners to raise awareness of the risk of counterfeiting trade in free trade zones. From the UK government, the association is calling for reliable assurances that action will be taken to prevent the import of illegal and dangerous goods into the country.

Sources: ACG, WTR, BBC