Cracking down on black market

10 January 2001

A flood of illegal imports into the Czech Republic has sparked a public call to toughen trade laws. Authorities are looking for new ways to clamp down on an influx of illegally imported counterfeit-brand products sold on the country's notorious black market. The Czech Trade Association (SO) has called for meetings of the public-private Czech Council of Economic and Social Agreement. The council's members come from government, private employers and trade unions. A tougher trade measure that took effect last year has given the government new power to battle black-marketers. But SO officials say more is needed to protect Czech companies. 'We all have to act together against illegal imports, because it's our common problem and those imports have a truly ruining impact on particular sectors of the economy', said SO president Helena Piskovska. The famous Czech shoe industry has been especially hard-hit. According to a recent SO analysis, illegal imports cost the government and the private sector billions of crowns. The analysis said unpaid customs duties totalled about 20 billion Kc ($500 million) a year. In addition Czech manufactured goods traders lose between 30 billion Kc and 40 billion Kc in potential revenues. Efforts to stop illegal imports recently spurred Parliament to amend the market-protection law. It took effect in September. The measure gave the Czech Commercial Inspectorate Office the power to levy fines and confiscate fraudulent goods. Recent government inspections have led to the confiscation of thousands of shoes and clothing items bearing bogus trademarks, including 5 million Kc worth of goods taken from a single market near the Czech-German border. While the amendment has created problems for many street markets, it's failed to put a significant dent in sales of counterfeit products. 'Although we can follow a certain decline in the amount of street stands [offering forgeries], their sales have moved into retail businesses', Piskovska said. 'Toughening conditions has brought about a mere change in distributing poor-quality goods with new wholesale paths and recipients popping up.' To fight under-priced imports, the SO has suggested the General Customs Office set minimum duty prices for selected items shipped across the Czech border. The battle has become increasingly urgent as the Czech shoe industry founders. Before 1989, about 60 million pairs of shoes were churned out in the homeland of world- renowned shoemaker Tomas Bata. After the demise of the communist regime threw open the borders, Czech shoe production fell dramatically - only about 13.5 million pairs of shoes were sold last year. According to a Czech Shoemakers Association (COA) report, the domestic market comprises only 10 percent of the total sales of Czech-made shoes. Now, more than 50% of domestic shoes sales are Asian imports. 'Almost 5 million [pairs of shoes] are sold in street stands every year and so the local shoe industry loses tens of millions of crowns', lamented COA president Vaclav Novotny. Novotny said the Czech market could receive substantial protection from the new measure, which enables state authorities to set both quantity restrictions on imports and minimum prices.

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