Saturday, May 2, 2009

Fakes, Counterfeits, Used Goods, Generics and Hazards

There was a confused and confusing article in Tanzania's Daily News on Thursday. It starts off with an account of how much tax revenue the government loses as a result of counterfeit and substandard goods. For a start, I don't think it is because goods are substandard that tax is withheld, but no matter; the country badly needs tax revenue and everyone should be protected from substandard goods.

But if the Tanzanian government is so worried about tax revenue, they should take a careful look at the foreign owned extractive industries. They make huge profits and they legitimately pay very little tax or duty. But many who don't even bother paying anything at all. In fact, indigenous industrialists cannot compete against the benefits that foreign owned businesses enjoy. I guess that's the 'free market', which penalises small businesses and rewards big, foreign multinationals. Indigenous businesses are asking for fairness, not protection.

In Kenya, the government could take a look at its cut flower and horticulture sector, much of it foreign owned. Many of the company owners neither pay tax in Kenya nor in any other country. In fact, both Kenya an dTanzania need advice on raising revenue. So perhaps they could ask leaders of the burgeoning Christian church industry, which extracts punitive levels of dues from the poorest people in East Africa. Just an idea.

The article purports to be about counterfeiting. However, it fails to distinguish between counterfeit products, used goods, generic products and fake products, even hazardous products. If I put a brand name on a product and try to pass it off as genuine, that's a counterfeit. If I produce an equivalent product with a different brand name, that's a generic. Goods that have already been used are used goods, of course. And if I produce something that doesn't do what it purports to do, that's a fake. Thus, the newspaper’s photo of a 'fake pair of shoes' really depicts shoes that may be counterfeit or they may be generic. I doubt if they are fake. A hazardous product would be something like the malaria pills that have been found to have no active ingredients.

The recently passed Kenya Counterfeit Bill also fails to distinguish between these basic concepts. It is legitimate to charge 100 dollars for a pair of shoes that have a particular logo on them if you are the owner of that piece of intellectual property. The fact that the shoes cost less than 5 dollars to make (in a sweatshop that pays peanuts to underage employees) and could profitably be sold for 10 dollars, is irrelevant. These overpriced shoes could also be substandard, but this affects the consumer, not government tax revenue.

If you have an income of between 30 and 60 dollars a month, you won't be buying the 'genuine' article. You may buy something second hand, a generic equivalent, a counterfeit version, whatever. People produce generics and counterfeits because there is a market for them. The market for cheap products is created by the existence of overpriced goods that can only charge these inflated prices because intellectual property laws protect intellectual property owners. They claim to protect consumers but, in fact, they only protect consumers who can afford the inflated prices.

Wealthy and very greedy multinationals create the market that results in the production of cheaper goods and that guarantees that they will often be bought in preference to 'genuine' goods. Ironically, the 'deregulation' insisted on by international financial institutions and by free market dogmatists also means that national governments have very little control over trade. But unfortunately, the same laws that were designed to protect people from dangerous goods, poor working conditions, exploitation, etc, also fell under the hatchet of 'deregulation'. Countries didn't suddenly become lawless, as this article would have us believe; they were rendered lawless by the growth of globalization and other ideologies.

Consumers need to be protected from fake products that don't do any good or ones that do harm. That's true whether they be branded products, generics, counterfeits or second hand goods. People also need to be protected from trade practices that favour rich multinationals over poor consumers. Labour forces need to be protected from unscrupulous employers who expose them to physical danger, exploitation, long hours, low pay and casualisation. Why single out a few objectionable practices and ignore others?

The deception involved in calling a radio Sqny or Phillips may really deceive, though I doubt it. The consumer gets a product they can afford and the owners of the intellectual property don't. Perhaps they could consider reducing their prices. They don't pay much in wages and they do very well but they seem to want to price themselves out of the market and, at the same time, penalise anyone else who tries to take up the business that they themselves don't seem to want.

But personally, I object to the deception of charging 100 dollars for a pair of shoes that could cost a lot less. The price, protected by international laws, hangs on people valuing a particular fashion. Great, if they can pay for it. If they can't, they just need shoes and there are people willing to supply them. There is more than one deception here and I’m out of sympathy with the owner of the ubiquitous smudge that happens to be their logo.

And on the subject of fakes, products purporting to be something they are not, there's an article in Kenya's Saturday Nation about genetically modified maize (GM) possibly making up 90% of the maize imported into the country every year. Maize is the country's staple food but, apparently, Kenyan's don't know they are eating GM maize. There is a deception here that seems far more significant than a mere name, brand or logo. People are entitled to make the choice as to whether they consume GM products and it sounds as if they are not being given that choice in Kenya at present.

Kenya has also just passed a Biosafety Act, to allow the safe use of GM crops. But it seems a bit late if the market is already swamped with contaminated foods. If regulations are such that it's not even certain how much of the country's imports are GM, there is already a serious problem. How much GM food has been distributed, to whom and what has it been used for? If people have used GM foods to try to grow crops, they will be in trouble when the owners of those technologies find out, they will have to pay for the 'privilege'. And many GM seeds will not germinate. Right now, crops are failing because of low levels of rainfall. In the future, will crops fail because they are 'terminator' crops, ones designed so that the seed cannot be collected and used for the next season?

It's a dangerous trick. GM products are hazardous in the sense that their safety has never been demonstrated but sneaking them in without people's knowledge, even if there is a low concentration of GM organisms, only increases the danger further.

There are many threats to our welfare and safety, often masquerading as 'genuine', 'approved' and 'legal'. Consumers need legislation that protects them, not legislation designed to allow certain producers to maximise and protect their profits at all costs.


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