BATTLE AGAINST COUNTERFEIT GOODS UNDERWAY,

UNCLAS DAR ES SALAAM 001068

SIPDIS

SENSITIVE
SIPDIS

DEPT AF/E FOR BYODER; AF/EPS FOR MNORMAN; EEB/IPE; PLEASE
PASS TO USTR FOR WJACKSON

E.O. 12958: N/A
TAGS: KIPR ETRD ECON TZ
SUBJECT: BATTLE AGAINST COUNTERFEIT GOODS UNDERWAY,
REINFORCEMENTS EXPECTED

REF: NAIROBI 02393


1. (SBU) SUMMARY: The Government of Tanzania (GOT) is
establishing a comprehensive system for addressing the
problem of counterfeit goods by improving existing
legislation, preparing implementing regulations and seeking
autonomy from the judiciary. In the meantime, the GOT's Fair
Competition Commission (FCC) is using existing law and
customs regulations to expose and destroy counterfeit goods.
END SUMMARY.


2. (SBU) The FCC has located, seized, and destroyed caches
of counterfeit goods in recent months, primarily upon their
entry at the port of Dar es Salaam, Godfrey Mkocha, Director
General of the Fair Competition Commission (FCC),and John
Mponela, Head of the FCC's Anti-Counterfeit Department, told
Emboff July 10. In May 2007, the FCC received a tip that
counterfeit light bulbs, imported from China by a Chinese
company operating in Dar es Salaam since 1998, were at the
port. The FCC used customs regulations to open the container
in question, confirmed the goods were counterfeits of the
Dutch brand Phillips, and destroyed them in the presence of
the media and at the cost of the importing company,
increasing awareness and serving as a deterrent.


3. (SBU) Mkocha believes there are a relatively small
number (no more than twenty) of counterfeit import operations
in Tanzania, but that they are well-organized and
well-connected. Counterfeit importers identify a fast-moving
branded item, send a sample to a firm in Hong Kong or South
East China and ask the firm to manufacture a container's
worth of the item which the importer then sells at a price
lower than that of the branded item. Mkocha noted this
system of counterfeiting is popular with fast-moving branded
clothing and is used by small businesses as well as larger
operations.


4. (SBU) The "scourge" of counterfeit goods is affecting
many unsuspecting and uneducated consumers in rural and urban
areas, especially counterfeit medicine, food and electrical
goods which often cause fires, Mkocha told Econoff July 12.
Due to the dangers of sub-standard goods, Mkocha aims to
"protect the people first, then the general merchandise."
Mkocha and Mponela said they want to work closely with
foreign businesses affected by the trade in counterfeit
goods.


5. (SBU) John Mhina, Director of International Trade in the
Ministry of Industry, Trade, and Marketing, told Emboff the
FCC "has the teeth to bite," expressing both his belief that
the FCC is empowered to take action against the trade in
counterfeit goods, and his positive view of the FCC's recent
efforts.


6. (SBU) The FCC is enhancing the GOT's efforts to combat
counterfeit goods by proposing amendments to the Merchandise
Marks Act, Mkocha told Econoff. The Merchandise Marks Act
outlaws the manufacture or importation of goods with forged
or deceptive trademarks, false trade description, or false
name or initials. The proposed amendments, which Mkocha
expects Parliament to pass as part of an omnibus
miscellaneous bill at the end of the current session, creates
the position of Chief Inspector at the FCC and empowers the
Minister of Industry, Trade and Marketing to appoint the
Chief Inspector and other inspectors and to issue
implementing regulations. Mkocha expects the amendments to
grant the FCC greater autonomy, particularly from the
judiciary, by granting investigatory and prosecutorial
authority to the Chief Inspector. Current law requires the
FCC to obtain a judicial order to perform a search and
seizure.


7. (SBU) The FCC wants regulations which formalize the
powers of a Task Force regarding intellectual property rights
(IPR) and counterfeit issues, and address certain gaps in the
Merchandise Marks Act. These gaps include the process for
storing and destroying counterfeit goods, how to discourage
frivolous allegations that goods are counterfeit,
establishing an internal appeal mechanism and establishing
modalities for paying fines. At the FCC's request, the
Tanganyika Law Society drafted regulations which have been
reviewed by stakeholders and the Attorney General so when
Parliament passes the amendments, the Minister may sign and
publish the regulations for immediate use. "With

regulations, three-quarters of the problems would be solved,"
Mkocha said.

8. (SBU) To further the fight against counterfeit goods,
Mkocha suggested Dar es Salaam undergo a port audit similar
to one conducted in Mombasa, Kenya in 2006, noting the
potential for counterfeit goods to proliferate in Tanzania if
authorities can't account for goods entering the country via
the port. Mkocha added "counterfeits generate big money, so
it's not difficult to buy influence at the port."


9. (SBU) COMMENT: Given the widespread believe that
Tanzania's judiciary is susceptible to corruption and
Mkocha's characterization of counterfeit traders as
well-connected, his desire to obtain greater autonomy from
the judiciary is highly practical. The FCC's swift action to
amend the Merchandise Marks Act and put regulations in place
before the October 2007 regional IPR conference in Dar es
Salaam (reftel) is commendable and, if successful, indicates
high-level support within the GOT to protect intellectual
property. END COMMENT.
RETZER