22nd Mar 2018


Can EU laws tackle smuggling and forging?

  • One in every 10 cigarettes smoked in Europe is from illicit sources (Photo: Piotr Drabik)

The European Union has a fight on its hands, and this time we aren’t talking about Brexit. The battle is against the illicit trade in contraband and counterfeit goods and the culprits are organised crime and even terrorists, its prime beneficiaries.

According to a report published by the OECD and the EU’s Intellectual Property Office in April 2016, imports of counterfeited and pirated goods have doubled in less than a decade and are worth nearly $500 billion a year, or around 2.5% of global imports.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Perhaps surprisingly for most people, the two most frequently smuggled product sectors in Europe are pharmaceuticals and tobacco. Research from KPMG showed that one in every 10 cigarettes smoked is from illicit sources, while the European Commission estimates that globally 10,000 deaths each year can be attributed to falsified medicines.

Not only does the illicit trade sell dangerous products, which puts consumers at risk, and fund serious crime, but it also costs governments billions of euros in lost tax revenue.

The EU is determined to tackle this problem by introducing legislation that seeks to improve track and trace and authentication of the most commonly smuggled products. Businesses from different sectors have also voluntarily tested and introduced measures against this criminal practice that erodes their revenue and reputation.

But the question remains, can EU legislation really be effective in tackling the problem? Especially one that often originates beyond Europe’s borders?

The Falsified Medicines Directive (FMD) was the first piece of European legislation designed to specifically tackle illicit trade through harmonised, pan-European measures that control and monitor the trade pathway and authentication of medicines.

Coming into force in 2019, its key requirements are that all medical products for sale in the EU carry a unique identifier (a 2D data matrix code and human readable information) that can be scanned at fixed points along the supply chain and have visible tamper evident features on the pack.

Manufacturers will be responsible for uploading the unique and serialised product identifier via a European hub to country-based national data repositories. The FMD requires verification of the safety features, including the serialised product identifier, at least once before the product leaves the supply chain, normally by pharmacies at point of dispensation.

But will it work? From the outset those involved in the pharmaceutical supply chain – brand manufacturers, wholesalers, traders and pharmacies – have argued that they should take the initiative on creating and developing existing serialisation technology and databases for them to then input unique serial numbers into an EU Hub database.

This will then supply the numbers to a stakeholder-led database in the local market. Sounds complicated, but this ensures ownership of commercial data – like pharmacy dispensing data – is retained by those who put it there in the first place.

The challenge is that manufacturers need to design their serialisation and compliance infrastructure both for the extreme scalability challenges presented by the FMD and the flexibility required to serve the member states.

For many larger pharmaceutical manufacturers serialisation was already implemented but for small to mid-size entities who do not have the infrastructure or resources readily available to create a bespoke solution or to integrate with an Enterprise Resource Planning system, this will be a significant cost and logistical challenge. There are also concerns that member states will not have their own systems ready for 2019.

A small price to pay

The main burden however will fall on pharmacies, including hospital pharmacies, which will be required to scan barcodes, check tamper-proof devices and decommission medicines at the point of dispensation.

The European Commission estimated average costs at €530 a year for each pharmacy, with a particular burden on smaller family run businesses lacking the economies of scale.

This may seem a small price to pay for patient safety but the difficulties surrounding implementation could be argued to be the result of the European Commission not taking sufficient time to consult with industry, especially smaller players, and not sufficiently understanding the logistical and cost implications of reporting and storing data across multiple systems, which requires open standards and interoperable solutions in order to be effective.

The European Commission is currently working on a second piece of legislation designed to tackle the trade in counterfeit and contraband goods, the Tobacco Products Directive Articles 15 (Track & Trace) and 16 (Security Feature) and is consulting with stakeholders, including the industry and supply chain, on the implementing Acts covering these articles, with submissions due by 4 November.

As with the FMD, the challenge is to ensure that a system dealing with product in the billions is sufficiently flexible and interoperable to allow international tracking and tracing distributors, beyond EU borders, to integrate with other product sectors, and manufacturers to continue to be involved in the authentication process.

Moreover, fair market competition among services providers based on best in class and latest technologies should be encouraged rather than undermined.

The European Union is at its most effective when it pools resources across member states to address a multinational problem like the trade in illicit goods. However, it must always remember that (unlike some of its parts) it is not an island, and that for its legislation to be effective it must also be flexible and adaptable, encouraging effective implementation rather than formal box ticking within and beyond its member states.

Craig Stobie is director - global sector management and development at Domino Printing Sciences

'Denial' - is meat the new climate change?

The European Parliament's agriculture committee meets on Tuesday, with speculation that the EPP will vote against a report on the EU plant protein plan if it mentions switching away from animals to plant-based diets.

Moria refugee camp is no place for people

Two years on from the highly-controversial EU-Turkey deal, many thousands of refugees are still trapped on Greek islands. One of them offers an open invitation to EU leaders to see their inhospitable conditions at the Moria refugee camp on Lesbos.

Four years on – but we will not forget illegally-occupied Crimea

Together with many other partners, including the United States, Canada and Norway, the European Union has implemented a policy of non-recognition and sanctions regimes, targeting people and entities that have promoted Russia's illegal annexation.

Column / Brussels Bytes

EU e-privacy proposal risks breaking 'Internet of Things'

EU policymakers need to clarify that the e-privacy should not apply to most Internet of Things devices. The current proposal require explicit user consent in all cases - which is not practical.

News in Brief

  1. Parliament must publish 'trilogue' documents, court says
  2. Italy's centre-right set to share top posts with 5-star movement
  3. Brussels condemns tear gas in Kosovo parliament
  4. Finland pays billionaire €400,000 in EU farm subsidies
  5. 44 leaders sign up for Africa free trade area deal
  6. British 'blue' passports to be made in EU
  7. EU to have 'immediate' trade talks with Trump
  8. Separatist activist renounces Catalonia leadership candidacy

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. EU summit takes hard look at Russia
  2. Germany casts doubt on Austrian intelligence sharing
  3. EU leaders set for 'stormy debate' on digital tax at summit
  4. EU praises Turkey on migrant deal despite Greek misery
  5. Judicial reforms 'restore balance', Poland tells EU
  6. Whistleblower fears for life as US arrests Malta bank chair
  7. Behind the scenes at Monday's EU talks on Russia
  8. US yet to push on Nord Stream 2 sanctions

Stakeholders' Highlights

  1. European Jewish CongressThe 2018 European Medal of Tolerance Goes to Prince Albert II of Monaco
  2. FiscalNoteGlobal Policy Trends: What to Watch in 2018
  3. Human Rights and Democracy NetworkPromoting Human Rights and Democracy in the Next Eu Multiannual Financial Framework
  4. Mission of China to the EUDigital Cooperation a Priority for China-EU Relations
  5. ECTACompetition must prevail in the quest for telecoms investment
  6. European Friends of ArmeniaTaking Stock of 30 Years of EU Policy on the Nagorno-Karabakh Conflict: How Can the EU Contribute to Peace?
  7. ILGA EuropeCongratulations Finland!
  8. UNICEFCyclone Season Looms Over 720,000 Rohingya Children in Myanmar & Bangladesh
  9. European Gaming & Betting AssociationEU Court: EU Commission Correct to Issue Guidelines for Online Gambling Services
  10. Mission of China to the EUChina Hopes for More Exchanges With Nordic, Baltic Countries
  11. Macedonian Human Rights MovementCondemns Facebook for Actively Promoting Anti-Macedonian Racism
  12. Nordic Council of MinistersGlobal Seed Vault: Gene Banks Gather to Celebrate 1 Million Seed Collections