1. Jef Vandekerckhove Philips Intellectual Property and Standards February 01, 2008 The Challenges Facing Free Trade Zones and Transshipment Countries 4 th Global Congress – Combating Counterfeiting & Piracy

2. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 2 Definition: Free Trade Zone A part of the territory of a contracting party (country) where any goods introduced are generally regarded, in so far as import duties and taxes are concerned, as being the customs territory (Revised Kyoto Convention 1999). A specified area within the territorial jurisdiction of a country where such country allows minimum or no customs control on the entry or exit of goods.

3. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 3 Why have Free Trade Zones been established? (from governmental side) Promote legitimate trade; Providing a free trading environment whereby a minimum level of regulation is demanded of companies approved to operate within them; Permissible operations include: –Preserving goods –Preparing goods for shipping –Handling goods in order to improve their packaging or marketing

4. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 4 Advantages of Free Trade Zones for Companies Minimum level of regulations is demanded from companies; Exemptions from Duty and Taxes; Simplified administrative procedures; Duty Free import of raw materials, machinery, parts and equipment.

5. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 5 Definition: Transshipped Goods = Goods re-exported through Free Trade Zones Sea shipments: unloading goods into a port, transporting them to a warehouse for storage and/or transferring them to another vessel for export to another destination/ Land shipments: goods entering one country for direct movement and sale to another country. Common characteristic: the goods are temporarily on the territory and are intended for sale outside that territory; all traffic operations (importation, storage, negotiation and reshipment of goods) take place duty-free and with minimum Customs control.

6. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 6 Why do Free Trade Zones and Transshipment create a problem for IP Rights owners? Common element is a very limited control by Customs; Both systems are used by counterfeiters for trade in fake products; Free trade zones are used to alter or hide: –Origin or property of the goods –Nature, Quantity and Quality of the goods –Purpose of utilization of the goods –Destination of the goods Only the authorities of the destination territory are allowed to control these elements

7. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 7 Transshipment is used by counterfeiters to move counterfeited products over the world to disguise the nature of the product and render it difficult for IP owners and Law Enforcers (Customs) to track this counterfeiting activity. Why do Free Trade Zones and Transshipment create a problem for IP Rights owners?

8. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 8 Latest trends with respect to Free Trade Zones and Transshipments?

9. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 9 Legislative provisions required?

10. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 10 Which Enforcements Policies and Procedures are currently at our disposal and are they working?

11. Philips Intellectual Property and Standards, Jef Vandekerckhove, February 01, 2008 11 Are new initiatives required to adres the misuse of FTZ and Transshipments and who should take these initiatives?