ILLICIT TRADE AND SECURITY SERVICES A Presentation by

ILLICIT TRADE AND SECURITY SERVICES A Presentation by Dr. John Akoten, Ph. D Ag Executive Director/CEO Anti-Counterfeit Agency 1 st COMESA Business Council Transport Services Dialogue Nairobi, 17 -18 Sept 2015 Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 1

Illicit Trade and Security Services: How the public and private sector can facilitate control of illegal goods and substances along borders: Experiences and Perspectives of the Kenya Anti. Counterfeit Agency Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 2

Outline of Presentation 1. Illicit trade and Counterfeiting 2. Economic size & impact of counterfeiting 3. Offenses under the Anti-Counterfeit Act 4. Public/Private Sector Cooperation 5. Conclusion/Recommendation Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 3

Illicit Trade “A trade that infringes the rules – the laws, regulations, licenses, taxation system, embargoes and all the procedures that countries use to organize trade, protect their citizens, raise the standard of living and enforce codes of ethics. ” - Moses Naim (2005) Examples include practices such as; counterfeiting, piracy, smuggling of legitimate products and tax evasion – Interpol Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 4

Other Examples of Illicit Trade Ø human trafficking, Ø Drug trafficking, Ø Arms trafficking, Ø Trade in human body parts Ø Environmental crime, Ø Illegal trade in natural resources, Ø Trade in certain substances that cause health or safety risks, Ø smuggling of excisable goods, Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 5

Counterfeiting is infringement of Intellectual property rights (IPR) and it is therefore a form of illicit trade IPRs include; Ø Trademarks Ø Copyrights Ø Patents Ø Plant breeder’s rights Ø Geographical indications Ø Industrial Designs Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 6

Economic Size of Counterfeiting The IMF & World Bank: parallel economy represents 15 -20% of global GDP. Since the 1990 s, illicit trade has increased 7 times faster than legal trade. The BASCAP estimates that the global economic value of counterfeit and pirated products is US$650 bn in 2008. Estimated to reach US$1. 77 trillion by 2015. OECD report (2007) – Seizures: Asia (70%), followed by Middle East (4. 1%), Africa (1. 8%), Europe (1. 7%), North America (1. 1%) and South America (0. 8%). Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 7

Economic Size of Counterfeiting Growth of Global Counterfeiting and Piracy 2000 US $ (billion) 1750 1500 1250 1000 750 500 250 0 2005 2006 2007 2008 2009 2010 2011 Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 2012 2013 2014 2015 8

Counterfeiting in EAC OECD (2008) estimates that the EAC loses over US$500 million in tax revenue annually due to counterfeiting. In Kenya, KAM estimates that the government loses Kshs. 19 billion in lost taxes, while the private sector loses Kshs. 50 billion in sales per year. The Kenya Publishers Association estimates that publishers in Kenya lose more than Kshs 2 billion annually through book piracy. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 9

Impact of Counterfeiting… Private Sector: Government: Ø Loss of market share/sales Ø Loss of brand trust and value. Ø High cost of IP surveillance Ø Lower profits/income; job cuts and reduce investment; it undermines innovation All these lead to lower economic growth. Ø Lower tax revenues and higher spending on welfare, health services and crime prevention. Ø Perpetuates bribery, thereby weakening the effect of public institutions. Ø Ruined international relations/diplomatic tension. Ø High unemployment Anti-Counterfeit Agency: Educate, Enforce, & Eliminate Consumers: Ø Poorer quality products that are unregulated and unsafe. Ø Exposure to health and safety risks. Ø Discourages creativity. Ø Environmental impact. 10

Offences under the Act The Act (s. 32) has criminalized all dealings with counterfeit goods which include the following actions: Have in possession or control, in the course of trade, counterfeit goods. Manufacture, produce or make in the course of trade, counterfeit goods; Sell, hire out, barter or exchange counterfeit goods; Offer or expose for sale, hiring out, barter or exchange counterfeit goods; Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 11

Offences… Expose or exhibit for the purposes of trade counterfeit goods; Distribute for purposes of trade or any other purpose counterfeit goods; Import into, transit through, transship within or export from Kenya counterfeit goods; In any other manner, dispose any counterfeit goods in the course of trade. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 12

What it means for transporters Transporters must avoid being complicit in the facilitation of illicit trade by insisting on SLAs that have responsibilities; Counterfeit goods are legally defined to include any means used for the process of counterfeiting (vehicle included). Exporter and importer are defined to include the person who is actually in control of the goods at that particular time or acts on behalf of the importer or exporter (transporter & freight forwarders included). "Said-to-contain or s. t. c. " is no longer an excuse The consequence is that the vehicle constitutes counterfeit goods and will be seized and the driver arrested. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 13

Penalties under the Act For a first offender: A fine of not less than 3 times the retail value of seized goods; Up to 5 years imprisonment; or both. For a second and subsequent offender: A fine of not less than 5 times the retail value of seized goods; Up to 15 years imprisonment; or both. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 14

Penalties under the Act… A court will consider the severity of the penalty based on (s. 35 (3)): 1) Any risk to human or animal life, health or safety or danger to property. 2) Conduct of the suspect – supply of truthful information, source of counterfeit goods, identity of persons involved; their whereabouts; channels of distribution, etc. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 15

Public - private partnership in the control of illicit trade High prevalence of illicit goods leads to increased inspections at port of entry, hence increased cost of doing business. Fighting illicit trade requires many actors. ACA’s other mandate is to coordinate with national, regional or international organizations involved in combating counterfeiting. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 16

Coordination ACA is working closely with the following institutions: ØKRA ØKEBS ØPPB ØInterpol ØKAM & other umbrella bodies ØDevelopment partners Øetc Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 17

Coordination… Collaboration, cooperation and communication is critical: ØCollaboration (Police, KEBS, Ke. Co. Bo, county government; Interpol) ØCooperation (KRA – issue stop notice; judiciary, ODPP; KAM-policy/AC Act) ØSharing intelligence (Interpol, devpt partners, private sector/investigators) ØJoint raids (Interpol, KEBS, W&M) Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 18

Coordination… ØParticipate in prosecution (private sector, public sector) ØFinancing (US, UK, KAM, private sector) ØJoint awareness activities (JCAC, private sector firms) ØTraining of ACA inspectors (HP, Philips, Nokia & Glaxo Smith Kline, etc) ØInter-agency committees – to address alcohol, etc (NACADA, Min of Interior, KEBS, ACA, Health Min, etc) Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 19

Coordination… ØICT (KPA’s KWATOS – for monitoring cargo movement & scrutinize container manifest; KRA’s Simba system-cargo clearance system; Kenya National Single Window System-for profiling; KEBS-launched tech to fight faking of its quality marks). ØShun illegal activities/Do not be partakers of criminal activity - Avoid ferrying counterfeit goods. Stop facilitating the export/import or clearance of illicit/counterfeit goods. Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 20

How law enforcement agencies are helping reduce delays Adoption of Joint verifications – under the coordination of KPA and KRA Frequent cargo intervener committee meetings under the coordination of KPA Weekly Port Users and Stakeholders’ forums coordinated by KPA Compliance with the 24/7 operations directive Cargo release-under-seal – for inspection at the destination Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 21

Other problems facilitating illicit trade 1. Cargo mis-declaration 2. Cargo diversion 3. Corruption 4. Cargo consolidation Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 22

Conclusion/Recommendation For the war on counterfeiting and other forms of illicit trade to be won, commitment, cooperation, collaborations and communication among all actors is critical. Ø Sharing of intelligence/cooperation Ø Joint investigation and prosecution – multiple counts in charge sheets, quality checks at port of exit Ø Sharing resources – public, private Ø Regularly reviewing laws/policies Ø Shunning illicit trade/communicate bad habits Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 23

The End Kenya Anti-Counterfeit Agency Kenyatta Avenue/Koinange St Junction 4 th Floor, Telposta Towers P. O. Box 47771 GPO 00100 Nairobi Tel: +254 -(20)-2280 -000 Email: info@aca. go. ke; Website: www. aca. go. ke Anti-Counterfeit Agency: Educate, Enforce, & Eliminate 24