The Threat of Continuous Duping of Chinese Clothes And Footwear Is Very Real. By Eszter Kantor.
The European Commission`s anti fraud agency has published their annual report for 2017 and it illustrates how important an effective customs system is for the textile and fashion sector.
"In 2017, OLAF concluded a string of large-scale investigations into the undervaluation of textiles and footwear entering the European Union, generally through Germany, but going through customs clearance in the United Kingdom, Slovakia, the Czech Republic, France and Malta. The fraudsters’ modus operandi was fairly simple. Goods from China would arrive in containers on vessels, which would generally enter Europe through the port of Hamburg, although other European ports were used occasionally. The containers, considered to be in transit, would then be placed on lorries and taken for customs clearance elsewhere in the EU, wherever fraudsters considered they could get away with declaring falsely low values for the products they were importing."
Most of these goods were cleared at UK borders causing a loss of 1.9bn Euros in customs duties and a 3.2bn Euros loss of VAT revenues.
What the paper does not mention and we can only assume ourselves is the loss of the fashion industry and the retailers who could not compete with these low priced goods (after all the sellers did not need to calculate with tariffs and VAT), which may or may not have been counterfeits. UK customs operations remained rather relaxed in terms of risk assessment and opening containers, fraudsters and criminals were increasingly targeting these border crossings.
This information highlights the problems with the UK government`s customs options. It shows that currently the UK is struggling to maintain an effective border control with this fairly simple border arrangement that we have today. The UK border ideas include a highly technological alternative which does not exist today and an option for Northern Ireland border control to distinguish and apply different procedures for goods arriving to the UK from those that arrive and go through to the EU. As we can see there are problems today with a high amount of fraudulent clothing and footwear entering through the UK border, these undervalued goods are not stopped and checked, meaning we don`t know if they are genuine Chinese brands that are dumped on the market below market value or counterfeits. More people and a more effective procedure is needed today on the borders to screen containers. The threat of continuous duping of Chinese goods particularly textile and footwear is very real.
This is very relevant while the issues of the Northern Ireland and what form Brexit will take are being shaped.