The trade in fake goods is one of the biggest headaches facing legitimate manufacturers. In this exclusive interview, Mohammed bin Khalifa Fahad Al Muhairi, Director-General of the Federal Customs Authority (FCA), discusses the global menace and the measures that are being taken to combat it. The GCC countries are considering introducing value-added tax (VAT).
What stage has the negotiations reached?
The FCA co-ordinates with specialist bodies that discuss VAT at the local and GCC levels, but the main role is performed by the Ministry of Finance as well as Dubai Customs. I think they have gone a long way towards drawing up proposals concerning VAT, the mechanisms for its application and the bodies assigned to implement it.
The proposals are still under discussion so it is difficult to reveal details as this will cause confusion, not only at the level of the UAE but also among GCC countries and trade partners.
Customs departments adopt different measures in different parts of the UAE, which wastes money and effort. Why is there not a unified approach?
The problem does not stem from the fact that customs measures are different – it lies with human, technical and technological abilities. There is one customs department that has around 1,500 employees, while another has a only a few.
We have some departments that need comprehensive development. I think this is the biggest challenge we face currently. We do not have a strategic approach to our work. In co-operation with the World Customs Organisation we are trying to build a comprehensive national network with common standards.
What stage has the FCA reached in drawing up its strategic plan?
The FCA was established five years ago and its responsibilities have increased greatly. We think our new duties make it necessary to draw up a new strategy and organisational structure and a new operational work plan. We are concentrating our efforts currently on the development of mechanisms and concepts. The plan is to be announced soon. You participated in free trade agreement (FTA) negotiations with the US.
Why was this and the other agreement with the European Union (EU) delayed?
I presided over meetings during the FTA negotiations with the US. I think the UAE side had more flexibility compared to the US. For example, the Americans put restrictions on the export of UAE dates to protect their national production and prevent a flood on the US market, though the quantity allowed by the US is not enough for the needs of a big supermarket chain in the US.
We definitely gave the Americans in the FTA negotiations many concessions and opened investment doors for them. But, unfortunately, they did not give us a lot. There are, of course, double standards.
The US and European position protects the interests of their countries, not our countries. This is in spite of the fact that we – in the UAE or the Gulf – do not have giant industries that would cause them worries. We want commercial exchange that would create investment opportunities and open up US and European markets for us.
The EU signed many agreements with countries that do not pose a threat to their establishments and investments, such as Morocco. But the situation is different with the GCC countries. The EU and US realise the Gulf countries have a huge amount of capital that could flow into into their countries and threaten them. I think the delay in signing the agreements is because of this concern.
Undoubtedly Europe and the US lost a lot due to the delay. The UAE, along with the other GCC countries, want fruitful commercial and economic relations that benefit all parties, as is the case with the FTA between the GCC countries and Singapore. Some countries, especially Saudi Arabia, claim fake goods enter its markets via the UAE.
What is the truth of these accusations?
Such accusations are not true because fake goods are an international phenomenon. I think the amount of fake goods that enter the GCC countries via the UAE’s customs checkpoints is negligible compared to the total imports, whose value since the introduction of the GCC Customs Union has totalled around Dh25 billion.
The UAE, since it is the main trade gateway for all the Gulf Co-operation Council countries, has tightened up its controls on goods and commodities. We have asked Saudi officials many times to provide us with reports on fake commodities. Our role is to fight the counterfeiters though it is impossible to end such an international phenomenon.
Modern methods and techniques allow fraud to take place. The Fourth Global Congress on Combating Counterfeiting and Piracy, hosted by Dubai last month, discussed the phenomenon and demanded action to fight the counterfeiters.
But the Brand Owners’ Protection Group (BOPG) has accused the FCA of being negligent in performing its duties and sought the creation of a new federal body to provide effective monitoring?
These accusations came before a recent meeting between representatives from the group and the FCA. I met the BOPG’s chairman to discuss co-operation and clarified the FCA’s role, which is to supervise and monitor customs departments. I think public and private sectors are responsible for fighting counterfeiting of commodities.
A study of local laws confirms that the initiative to fight fake products must come from brand owners. They should provide customs departments and specialist authorities with information on fake commodities so action can be taken against them.
The laws consider the person who provides information legally responsible for incorrect information to ensure justice. The fight against fake goods needs all establishments in the UAE to come together and adopt a common approach. Moreover, there should be co-operation at the Gulf, Arab and international levels.
In conjunction with Dubai and Sharjah customs, the FCA has set up departments in the two emirates to protect intellectual property. Some 80 per cent of the trade in the UAE passes through the two emirates’ customs checkpoints. The UAE is the first country in the region to establish such departments. I think they will have a big role to play in the protection of international companies’ products along with limiting money laundering.
Pharmaceutical agents in the UAE say fake drugs enter the UAE via duty-free zones. Is this correct? What is your monitoring role at these zones?
The trade in fake medicines is one of the most dangerous crimes and is widely spread across the world. The World Health Organisation confirmed that the value of this trade exceeds $30 billion (Dh110bn) annually. There are international firms and factories that produce fake drugs.
They sell a fake medicine for a very low price compared to the price determined by the company that produces the original medicine. If the FCA is informed about any breaches it will not hesitate in taking necessary measures to bolster monitoring of the duty-free zones.The BOPG has demanded tougher punishments to reduce the entry of fake goods.
What is FCA’s view on such calls?
The BOPG says there is negligence in the application of punishments. It says customs departments fine violators without imprisoning them. We, on our part, communicate with local customs officers and specialist bodies to evaluate the effectiveness of current punishments and the extent of any negligence in their application.
Director-General of the Federal Customs Authority
Mohammed bin Khalifa Fahad Al Muhairi, 38, has a business degree from Boston University. He worked in the Abu Dhabi National Oil Company and became director of the Investment Department at the Ministry of Finance in 2002. The following year he was appointed Director General of the Federal Customs Authority.
He is a board member of the Arab Authority for Agricultural Investment and Development, the Arab Bank for Investment and Foreign Trade and the Arab Insurance Group and a member of the Anti-Money Laundering National Committee and the Higher Committee of Security Outlets.
He is the founder of Khalifa bin Fahad Companies for Contracting and Trading, head of the Founders’ Committee of Tasweeq Real Estate, a board member at Bina Real Estate and head of the WCO Executive Office of Regional Capacity Building.
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