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TOWNSHIP TRADE
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ILLICIT TRADE Consumer Goods Council launches hotline to report on illicit manufacturing and trading FACT SHEET ABOUT ILLICIT TRADING IN SOUTH AFRICA AND GLOBALLY
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he Consumer Goods Council of South Africa (CGCSA), in partnership with its members in the manufacturing and retail industry, has launched a toll-free hotline number the public can use to anonymously report information about illicit and counterfeit manufacturing and trading of products in South Africa. Abraham Nelson, the Council’s head for the crime risk initiative (CRI) says the toll-free number (0800 014 856) is one of the initiatives by CGCSA to protect its members from illicit and counterfeit manufacturing and trading of various product such as alcohol, cigarettes, food, pharmaceuticals and clothing. It also serves to protect consumers from harmful products. “One of the biggest threats to economic order and growth as well as to the fiscus in South Africa is the trend of counterfeiting and illicit trade. That is why CGCSA has, through the support of its members, launched a toll-free number so that members of the public can anonymously report any suspected illicit manufacturing and trading activities,” says Nelson. He says the illicit economy thrives on counterfeit and fake goods, and is estimated to account for as much as 10% of the SA economy. It is estimated that the South African Revenue Services (SARS) could be losing moer than R8-billion every year from the sale of illicit cigarettes alone. Nelson says in South Africa, the most counterfeited goods are alcohol, cigarettes, footwear, clothing, leather goods, electrical equipment, watches, medical equipment, perfumes, toys, jewellery and pharmaceuticals. Globally, trade in counterfeit and pirated goods has risen steadily in the last few years and was last year estimated at 3.3% of global trade, according to a report by the Organisation for Economic Co-operation and Development (OECD) and the EU’s intellectual property office.
Nelson says the information provided on the hotline will first be verified by CRI in conjunction with law enforcement agencies and other relevant authorities before appropriate action can be taken. “We will work closely with law enforcement agencies such as the South African Police Service (SAPS) and SARS, as well as the relevant parties in the consumer goods industry, to ensure that we enforce the country’s laws related to counterfeiting, consumer safety and infringement on the rights of brand owners,” Nelson says. He says callers will be guaranteed anonymity and they will never be requested to provide any information that may compromise their identity. The toll-free number will be operational Monday to Friday, from 8am to 5pm. Callers will still be able to provide information outside these hours by leaving information via voice message. “CGCSA looks forward to further meaningful and practical solutions to deal with both illicit and counterfeit trade, and as an industry body, we are ready, through our crime risk initiative, to work with our members and government to ensure that we protect our members and consumers for the betterment of all in our country,” Nelson says. • The hotline number is 0800 014 856. • The toll-free number will enable members of the public to report illicit manufacturing and trading in counterfeited products. • Information provided will be treated in confidence and once verified, will be shared with law enforcement agencies such as SAPS and SARS. • The hotline will be manned during business hours from 8am to 5pm, Monday to Friday. There is an after-hours facility to leave messages.
• Counterfeit manufacturing and trading mostly affect such products as alcohol, cigarettes, food, pharmaceuticals, and clothing. The most counterfeited goods are footwear, clothing, leather goods, electrical equipment, watches, medical equipment, perfumes, toys, jewellery and pharmaceuticals. • The three major areas of impact from counterfeit products are: one, consumer safety from trading in and sale of counterfeit products such as medicines, medical devices, food, toys, consumer electronics, alcohol and tobacco; two, the economic effect, resulting from reduced market for legitimate brand owners, which in turn means reduced government income through taxes; and three, national security, due to the danger posed by counterfeiting in electronic components for military and defence equipment, which is a potential national security risk • The countries most affected by counterfeiting in 2016 were the United States, whose brands or patents were concerned by 24% of the fake products seized, followed by France at 17%, Italy (15%), Switzerland (11%) and Germany (9%). • There are four main categories of illicit trade: 1. Undeclared local production, where products are manufactured and sold for consumption in the same country and are not declared to the local excise authorities and therefore excise is not paid. These products may be manufactured in approved factories, or they may be manufactured in illegal covert operations. 2. Smuggling through illegal trading of goods across borders 3. Counterfeiting, where goods that imitate the characteristics of genuine goods are produced. Linked to counterfeiting is piracy, where goods are reproduced without the authority of the owner, and 4. Transit fraud, which involves the evasion of customs and duties. Diversion may occur when goods that should have been exported from the country are illegally entered into the commerce of the country.
