At a 'Facts Behind the Figures' presentation at the Ghana Stock exchange in April 2009, a reporter castigated Unilever for speaking out against unfair trade at every opportunity it got insinuating that Unilever was always looking for protection from competition.
I choose this anecdote because it was obvious to me that the young reporter, possibly representing the views of many Ghanaians, did not appreciate the harmful effects of counterfeiting and illicit trade on national development - other than the stereotype that large manufacturers and enterprises speak out it against it, perhaps self-servingly with one eye on their bottom-line profitability.
I had to digress somewhat and spend sometime explaining the different levels at which the nation was affected by illicit trade.
The Ghana Employers' Association (GEA) is commemorating its Anniversary Celebrations and has dedicated the month of June to dialogue on the topic "Consumer Protection Against Illicit Counterfeit Goods." It is in this vein that I would like to con¬tribute, on behalf of the GEA, some views that Ghanaian industrialists and enterprises have had cause to espouse previously.
A growing regional and global business
Counterfeiting and piracy are terms used to describe a range of illicit activities linked to intellectual property rights (IPR) infringement. Counterfeiting thrives on the whole process of globalization, since globalization is the spread of capital and know-how to new markets.
This in turn contributes low cost labour to create the ideal export machinery, manufacturing first low cost, value-added products and then moving up the value chain. This is the story of South East Asia. It is also the story of China. Now it is the story of fake products.
Counterfeiting delivers the benefits of skilled labour, efficient distribution and product technology without the associated investment in costly research development and marketing in products that are not genuine brands.
In 2004, the World Customs Organisation estimated the global trade in counterfeit products to be worth $512 billion and growing exponentially.
Today the term ‘counterfeit’ is often used synonymously with imitation, adulteration and passing-off to embody all these various forms of illicit trade which are however, not one and the same thing.
The WHO defines a counterfeit as a product which is deliberately and fraudulently mislabelled with respect to identity and/or source ingredients or the packaging and presented as a known branded product. Substandard goods are genuine products.
Substandard goods are genuine products produced by legitimate manufacturers that do not meet the quality specifications that the producer says they meet.
An imitation or pass-off is a product made to resemble very closely, a known branded product but with very minor changes in name or packaging. Adulterated products comprise fake ingredients or product form in recycled genuine packaging of known and legitimate brands.
Thus all counterfeit products are substandard because they are manufactured and distributed outside of regulatory control and their composition is unpredictable. On the other hand, not all substandard products are counterfeit because not all of them have been deliberately and fraudulently mislabelled.
The definition of counterfeit products currently varies from region to region and from one try to another in Africa, where a lot of our laws are relics from the colonial era when illicit trade and economic crimes were very different from what they are today.
As such some Penal Codes in Africa still classify acts of counterfeiting as misdeamenours, enabling perpetrators get away to with a slap on the wrist and minor fines when apprehended.
Industrial property rights experts are presently campaigning for the harmonisation of anti-counterfeiting laws across Africa. They blame Africa's disjointed legal regime for the failure to tackle the menace which has stifled the continent's industrial growth.
The lack of clear, legal frameworks at national levels and absence of a common regional policy on counterfeiting leaves a vacuum that is being exploited by counterfeiters. Worldwide corruption conflicts of interest result in weak regulation
And lack of enforcement.
Informal distribution systems in many developing countries, false declaration by importers and an insecure environment also create conditions for proliferation of counterfeit products. This is compounded by ignorance and poor public awareness about counterfeit products, deceitful advertisements and in some cases indifference by governments.
Counterfeit operators have created a global industry that now rivals the multinational, corporation in speed, reach and sophistication. Counterfeit manufacturing used to be cottage industry but this is no longer so.
The combination of seed capital to finance their operations operations, expertise in re-engineering and ability to penetratrate legitimate distribution channels has created a global crisis, Anything that is manufactured can be faked -- from consumer electronics through cigarettes and auto parts to shoes, bouillon cubes, antibiotics without active ingredients to $100 bills. Counterfeiting has become as profitable as trading drugs and illegal narcotics, and is a lot less risky.
In some parts of the world organised crime is said to have shifted from smuggling of narcotics and weapons to counterfeiting of medicines as a lucrative enterprise. As counterfeiters do not have to cover research and development, marketing and advertising costs, most of their expense goes into making products look convincing not into making them perform well.
In the last few years we have been witnesses to the speed with which new designs from Ghanaian textile industry have copied by counterfeit manufacturers based in China.
A new report from the International Policy Network (IPN) states that 700,000 people die annually from consuming fake drugs, most of which originate from China and India.
IPN estimates that almost one per cent of drugs sold in Ghana, Nigeria, Angola, Burundi and the Congo are fake and sub-standard leaving people unknowingly consume paint saw dust, cement, talcum powder and other toxic substances.
IPN also estimates that only one per cent of counterfeit drugs are found in the developed countries where there is high literacy rate and resolve by government to protect trademarks and intellectual property
A multi-faceted problem.
Counterfeit products affect nation on five different levels and adversely impact our society in the following ways which unfortunately are not always obvious:
Via-a-vis Consumers : One level many level many consumers do not know about counterfeit products, and even when they do, are unable to distinguish between counterfeits and authentic products. Thus unsuspecting consumers are often cheated into buying counterfeits and only become aware of this long after parting with their money.
Counterfeit pharmaceutical products have led to drug resistance, treatment failures and deaths, and have eroded public confidence in health care systems. On another level there is another group of consumers who are very much aware of the existence of counterfeit products and patronise them willingly, in the belief that counterfeits are "good for poor people."
Vis-a-vis Local Industry and Traders:
The existence of counterfeit products spoil the good name of genuine products and crowd them out of the market, leading to loss of volume, capacity under-utilisation, higher cost of production and depressed earnings for manufacturers and legitimate trademark owners.
Counterfeits also affect the reputation of brands over time, and lead to erosion of confidence in the manufacturer and product delivery systems. This further affects foreign direct investment as the structure of trade is altered.
Vis-a-vis Employment and Job Creation:
Employment is put at risk where there is no effective deterrent against counterfeiting and piracy.
Vis-a-vis Government revenue:
Counterfeit operators are illicit traders who do not comply with government regulations. This leads to loss of customs and excise duties, corporate and personal tax revenues for government as well as higher cost of law enforcement and judicial proceedings.
Vis-a-vis the Image and Reputation of Ghana: Economy worldwide, counterfeiting and piracy undermine innovation which is key to economic growth. More importantly, a nation where counterfeiting is rampant quickly gains a reputation as a safe haven for peop1e who wish to engage in economic crimes, shattering any hard won positive reputation we may have built over time.
The Ghana Business Coalition Against Illicit Trade
Fakes have been around for decades, but their prevalence and sophistication have grown in leaps and bounds over the past 16 years, almost spinning out of control. A cross-section of private sector organisations led by GEA sounded a renewed call to arms against counterfeits and piracy in 2007.
The GEA led a movement culminating in the launch of the Coalition against counterfeits and Illicit Trade (CACIT) on July 18, 2007 with membership drawn from the following bodies:
• Ghana Standards Board, whose role is to prescribe the standards for products to be sold in Ghana, and ensure that products meet those set standards.
• Food and Drugs Board, whose role is to regulate and monitor foods drugs, cosmetics, devices and chemical substances on the Ghanaian markets. The FDB registers all such products and ensures that only registered products are sold on our market. FDB is also responsible for ensuring that all registered products are wholesome and fit for human consumption/use.
• The Registrar General’s Department.
They are responsible for registering international property right including trademarks, designs and patents and also ensuring that no individual or entity registers a trademark/design/patent that is similar to one that has already been registered or one that is commonly known globally to belong to another individual or entity e.g. Coca Cola.
• Customs, Excise and Preventive Service, whose role is to police the country's borders and ports to prevent counterfeit, unwholesome and illicit products from entering the country. CEPS is also responsible for ensuring that all products that enter Ghana legitimately pay the right taxes and duties.
• Ghana Union of Traders Association, representing the interests of traders who unknowingly (and sometimes knowingly) deal in counterfeit goods.
• Ghana Trades Union Congress, representing the interests of employees whose jobs could be affected by increased levels of counterfeits.
• The Association of Ghana Industries.
AGI's role is to represent the interests of private sector companies and intellectual property right holders whose products are the tar¬get of counterfeiters .
• Ghana Employers' Association, sponsors of the initiative and representing employers.
I will emphasise that the Coalition Against Counterfeit & Illicit trade acknowledges that competition is healthy as it offers consumers the choice and forces local industries to be more effective, and does not seek to promote protectionism. CACIT recognised that there had been an alarming increase in the incidence of dumping, smuggled, under-invoiced, counterfeit and sub-standard products on the Ghanaian market which did not meet the prescribed Ghanaian standards. These activities impacted the Ghanaian consumer and called for appropriate remedial action to be initiated
As a coalition, CACIT seeks the enforcement of intellectual property laws, copyright, patent and trademark protection, and licensing laws in order to protect consumers from counterfeit products and all other forms of illicit trade, thereby defending the integrity of member organizations’ brands.
The strategy for achieving these goals is to use all legal means at its disposal to significantly increase intellectual property rights levels. These include working for the enactment of tougher laws and the education of the business community, consumers, and the media and interaction with authorities -local and international - to strengthen the enforcement of those laws governing illicit trade in all its forms.
Actions Underway/Required to Combat Counterfeiters and Illicit Trade
Manufacturers can work more systematically with law enforcement agencies to intensify raids on factories and warehouses of suspected distributors.
IPR reform leading to speedy resolution of intellectual property rights disputes and heightened intellectual property protection. A strong legal framework and effective punishment to serve as a real deterrent is needed.
Counterfeiting of any product that presents a health or safety hazard to consumers could be treated as a criminal offence with a possible mandatory prison term.
National education and awareness programme to overcome the lack of awareness of the problem by counterfeit products and medicines in the mind of the average Ghanaian. A specia1 collaboration to combat counterfeit medicines could be initiated at National and regional levels involving stakeholders from the public sector, civil society, health care professionals, manufacturers, distributers, and the media.
Counterfeiting is greater in areas where regulatory and legal oversight is weaker. Intellectual property protection enforcement have contributes significantly to innovation, investment, and growth around the world and Ghana is at stage of development where continued investment in the growth of our economy are necessary to improve living standards of Ghanaians. That is why as employers we speak out, and seek to bring about action against counterfeits and illicit trade. The GEA is of the firm conviction that combating piracy and counterfeiting with determination will bring benefits to Ghana and the West Africa sub-region.
By Charles A Cofie
President of Ghana Employers’ Association
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