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  1. 1. Welcome
  2. 2. Traceability labeling of products in the Eurasian Economic Union (EAEU), EU and beyond
  3. 3. Effects of globalization, international trade, e-commerce, free trade zones Disadvantage of these tools: ● Difficult to detect and less risky to traffic, smuggle and market counterfeit and pirated goods - influx of ‘fakes’ resulting in: ● Complex Supply Chain ● Loss of revenue for governments and brands ● Potentially detrimental effect on a brand’s reputation, image and customer satisfaction ● Infringement of intellectual property rights ● Health and safety risks for end-users ● Impede innovation
  4. 4. Good old days of easily identifiable knock-offs or ‘fakes’ are now long gone
  5. 5. Today, counterfeit products are almost identical to the real thing
  6. 6. Today, counterfeit products are almost identical to the real thing
  7. 7. Trade in counterfeit products in numbers ● 2016 study from the EUIPO and the OECD estimated the value of counterfeit products to be 2.5% of world trade – up to EUR 338 billion ● In the European Union, the counterfeit products amount up to 5% of all EU imports, worth up to EUR 85 billion ● Sectors that represent more than half the total estimated trade in fake goods worldwide at a value of more than EUR 208 billion in 2013: fake foodstuffs, pharmaceutical products, perfumery and cosmetics, leather articles and handbags, clothing and fabrics, footwear, jewellery, electronics and electrical equipment, optical, photographic and medical equipment, fake toys, games and sports equipment. ● Total trade in fake clothes, footwear and accessories throughout the EU-28 amounts to almost 10% of the total sales in these sectors, loss that translates into 363,000 lost jobs ● Knock-off effect loses to legitimate businesses in the EU = €43.3 billion of sales revenue, over €8 billion of government revenue across the EU-28 is not collected
  8. 8. Traceability Labeling of Products Panel Discussion – Description Subject: Analysis of product traceability legislation in the Eurasian Economic Union, EU, US, Turkey and beyond Description: This presentation will examine the recent developments of traceability legislation in EAEU, Turkey and analyse how it impacts consumers’ rights and the obligations of manufacturers and importers to the regions. Our contributions further aim to provide a comparison with the EU and US approach to product traceability and look beyond the legislative measures to provide information on existing technological brand protection solutions. Lastly, it aims to look at trade in counterfeit products from the standpoint of a consumer and answer the question of whether a traceability labelling may represent a break-point.
  9. 9. Traceability Labeling of Products Panel Discussion - Goals, Speakers and Contents Speakers Nesrin Gundogan Uzer - the head of the European Union Technical Harmonization Department at the DG For Product Safety and Inspection of the Ministry of Trade in Turkey Kymberli Stewart – SGS Global Brand Protection Services Manager Martyn Allen – Technical Director at Electrical Safety First (ESF) Livia Kecerova – Senior Regulatory Consultant with Compliance & Risks (C&R) Anticipated Outcome Gaining understanding of the impact of product traceability labelling on manufacturers/importers, and consumers' rights, and also on the fight against illicit trading activities and learning about traceability initiatives in EAEU, Turkey, EU, US and beyond
  10. 10. Labelling of specific products with marks of identification in the Eurasian Economic Union (EAEU) and Russia
  11. 11. Agreements on labeling of specified products with identification marks and traceability labels Background Online commerce – 97% of goods come from non-food sector while clothes make up 23.9% and footwear for 12% 58.7% of all goods bought online come from abroad, with large margin allocated to China, - the main source of counterfeit products which present the safety risk as they lack quality and safety approvals Eurasian Economic Union’s Solution ● Launch of a successful Pilot Project on using chips/chipping for garments and apparel made of fur has been launched to partially resolve this issue (2015/2016) ● Adoption of Agreement on Common Labelling System of Goods with Control (Identification) Signs (2018)
  12. 12. Agreements on labeling of specified products with identification marks and traceability labels Decision No. 70 of 2015 on the Implementation of the Pilot Project for Labelling of Clothing and Garment of Natural Fur establishing labelling for products made of natural mink, nutria, fox, rabbit, hare, raccoon, sheepskin, and other types of fur Agreement on Identification Labelling for Clothing, Accessories and Other Products Made of Natural Fur, 2015 • Series of voluntary pilot projects on medicines, footwear and tobacco • Resolutions No. 791 and 792 of 2018 introducing mandatory products labelling for 10 product groups and forming a unified digital labelling system ‘Honest Sign’ Agreement on common labelling system of goods with control (identification) signs, 2018 Implemented by Success: growth in number of legalized businesses, declared fur products, revenue Implemented in Russia through:
  13. 13. Deadlines for mandatory application of ‘Honest Sign’ for 10 product categories How? Data Matrix Code Unique marking code consisting of: • Product ID code: • Verification code (crypto-tail) Russian Unified National System of Digital Marking and Product Traceability System ‘Honest Sign’
  14. 14. Russian Unified National System of Digital Marking and Product Traceability System ‘Honest Sign’- Process 1. The Centre for the development of promising technologies (CRPT) assigns each product a Data Matrix Code to be placed on a product by a manufacturer or importer 2. Digital code is a product’s passport that travels along the entire path and can be traced every step of the way 3. The store scan the products and puts it on the shelf – the labelling system detects and records the transfer of goods through the logistics chain 4. When being sold, a product is scanned again at the check-out counter and recorded as ‘out of circulation’. The system will not allow the sale of counterfeits 5. The mobile phone app ‘Honest Sign’ will soon become available, helping consumers easily check the legality and full information plate of a product, simply by scanning the Code. App will show either a ‘Correct Code’, or ‘Error’ message
  15. 15. Manufacturers & Importers Guide to ‘Honest Sign’ 1. Data Matrix Code – a unique tracking and verification code generated by CRPT is send to bona fide manufacturers and importers 2. Manufacturer or importer places the issued digital code on a product’s package. The system records the product as it advances in the supply chain 4. To participate on a pilot project, a manufacturer/importer needs to submit an online application form CRPT – system’s single operator, can issue a code for new products in a short time thanks to the scalability of the ‘Honest Sign’. The company will work out all the niches during ongoing pilot projects Optimization of business processes, transparency in supply chain = cost reduction in a long run 5. Applicant obtains an enhanced qualified electronic signature and can register on the pilot project website Participants get advice on ‘Honest Sign’ implementation, further works in the system, necessary hardware and software 3. The responsibility for the cost of implementing the system will not fall on consumers. They will be born by manufacturers but once the system is set up within the company, cost will go down
  16. 16. ‘Honest Sign’- First of its kind Ground breaking system – unified information platform for controlling the authenticity of goods and increasing transparency Applicable to all types of product groups; facilitate tracking a supply chain and distribution route of a product on a smartphone via app Data Matrix Code on the product packaging tackles the issue of counterfeit products and smuggling, protects legal interests of enterprises, governments, as well as consumer rights. Identification part of the code determines the position of a product in a distribution channel. Verification crypto-tail is generated by domestic cryptography technologies to avoid code interception and hacking Element of public/social control – violations and ‘fakes’ can be instantly reported via mobile app and transferred to relevant regulatory authorities All product information will be accumulated in a single information platform accessible by manufacturers and consumers through the mobile app
  17. 17. Thank You Presented by: Livia Kecerova Regulatory Consultant
  19. 19.  Turkey and the EU established a Customs Union (CU) in 1995 (Decision 1/95 of the EU-Turkey Association Council, 96/142/EC).  The CU covers trade in manufactured products between Turkey and the EU.  The CU covers both harmonised and non-harmonised area.  Entails alignment by Turkey with all EU product legislation. The Agreement aims to ensure the free movement of industrial products between the EU and Turkey, by eliminating import controls at the EU- Turkey border on such products.  Articles 5-7: elimination of measures having an effect equivalent to quantitative restrictions (mirroring Articles 34-36 TFEU)  Article 8: incorporation of Community instruments into legal order  Article 9: trade between the Parties takes place in accordance with the conditions laid down by those instruments 1 DG Product Safety and Inspection 2 1/95 ASSOCIATION COUNCIL DECISION
  20. 20.  Turkey transposes EU’s harmonization legislation on products and quality infrastructure.  Up to now, Turkey has transposed into its legal order the rules of the EU on the CE marking, notified bodies, market surveillance and mutual recognition in the non- harmonized area as well as many EU sectoral legislation, including the acquis requiring the CE marking on products.  80% of EU’s product legislation are already transposed. This work continues since it is a dynamic structure and revisions are taking place time to time in EU and thus Turkey.  Already published legislation includes 21 Turkish Regulations transposing the corresponding new approach directives of the EU such as toys, personal protective equipment, pressure equipment, lifts, etc. These have been confirmed by the Joint Statements signed by Turkey and the EU.  48 NBs under 14 legislation 1 DG Product Safety and Inspection 3 HARMONIZATION
  21. 21.  The objective of this Law is to lay down the principles and the procedures for the placing on the market of the products, conformity assessment, market surveillance and inspection and the notifications relating to these arrangements.  Covers; - the conditions of placing on the market of the products, - the obligations of the producers and the distributors, - conformity assessment bodies and notified bodies, - market surveillance and inspection, - prohibition of the placing on the market of the products, withdrawal and destruction of the marketed products, - the notifications relating to these arrangements. 1 DG Product Safety and Inspection 4 LAW NO 4703
  22. 22.  A new draft “Law on Product Safety and Technical Regulations” has been prepared in the context of the revision of “Law No. 4703 on Preparation and Implementation of Technical Legislation for Products”  Planned to be submitted to the Turkish Parliament  The New Legislative Framework (NLF) Package, the General Product Safety Directive of the EU taken into consideration  The purpose is to ensure that the products are safe and in compliance with the related technical regulations (whether produced in or imported to Turkey) 1 DG Product Safety and Inspection 5 DRAFT LAW
  23. 23. MAIN IMPROVEMENTS:  Economic operators defined in accordance with the EU legislation  Responsibilities of the economic operators clarified  Recall  E-commerce/E-Market Surveillance  Product Liability  Notification of Risks and Measures  Administrative Fines in accordance with the gravity of the non compliance  Traceability 1 DG Product Safety and Inspection 6 DRAFT LAW
  24. 24. TRACEABILITY  Name, title, brand and address of the manufacturer/importer should be placed on the product/package (Decision No 768/2008/EU)  Economic operator:  responsible for keeping the record (name, title, brand and address) of the previous and the next economic operator for 10 years  Provides the information to the competent authority when asked  Distributor: if does not provide the information of the manufacturer/importer, will be acknowleged as the manufacturer  Covers E-commerce (intermediary service providers, TVs and radios) 1 DG Product Safety and Inspection 7 DRAFT LAW
  25. 25. TARGET to find the manufacturer of the unsafe/ non-comliant product to reach the primary responsible party 1 DG Product Safety and Inspection 8 DRAFT LAW
  26. 26. THANK YOU Nesrin GÜNDOĞAN ÜZER Head of Department DG for Product Safety and Inspection E-mail: Tel: +90 312 212 89 01 1 DG Product Safety and Inspection 9
  27. 27. SGS BRAND PROTECTION BEYOND LEGAL How to Craft a Secure Supply Chain & Distribution Strategy
  28. 28. 28 WHY IS BRAND PROTECTION NEEDED? Worldwide counterfeiting grows at 15.6% every year Inability to effectively enforce intellectual property laws abroad means there is a need for stricter self-regulation OECD puts the annual cost of counterfeiting at half a trillion USD, others see it as high as 1.8 trillion USD Fake products destroy 10% of the top line revenue, but they also erode the credibility of the retailers selling the products Increasing loss of visibility over more and more complex supply chains 2
  29. 29. 29 WANG HUI 3
  30. 30. 30 US Const. Art I, Section 8, Clause 8 The Congress shall have power to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; 4
  32. 32. 32 WHERE DO THE VULNERABILITIES LIE? *Counterfeiting, diversion, substitutions, recalls, destructions of goods 6
  33. 33. 33 MAP OUT YOUR SUPPLY CHAIN 1 7
  34. 34. 34  Are your factories and warehouses secure?  Can you source your suppliers’ suppliers?  Are your distributors vetted?  Do you sell at trusted retailers?  Are you able to effectively locate and recall product?  Is recalled product destroyed?  Are your consumers engaged?  Are your consumers confident in the products you provide?  Is your reputation secure? 2 IDENTIFY PLACES WHERE YOU LACK VISIBILITY 8
  35. 35. 35  Clear diagnostic of the problem that exists  Create an exhaustive audit of the situation  A brand protection task force • Include many departments (Marketing, Finance, Legal, Operations)  Look at the problem not only as brand security but also fiscally to gain allies internally  Implement solutions that combat piracy  Track & trace  Unscheduled inspections  Regular auditing  Covert tagging  Focus on incentives that not only engage consumers but also distributors/retailers to increase sell-through 3 IMPLEMENT A STRATEGY 9
  36. 36. 36 OVERVIEW  Brand Protection should be part of every brand strategy, regardless of industry  Brand Protection is a mixture of due diligence and technical aides to visualize your supply chain  Do not assume that the work of brand protection is limited to legal teams and legal infringements  Brand protection goes beyond black market counterfeiting and is needed to secure brand reputation  The ultimate goal of brand protection is securing growth & protecting consumers 10
  37. 37. 37 QUESTIONS Can you name the three steps needed to construct a successful brand protection strategy? 11
  38. 38. 38 QUESTIONS THANK YOU 12
  39. 39. 39 BRAND PROTECTION CONTACT SGS Global Brand Protection +33 6 08 46 71 45 Kymberli Stewart 13
  40. 40. WWW.SGS.COM © SGS Group Management SA – 2018 – All rights reserved - SGS is a registered trademark of SGS Group Management SA