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Border pirates

Czech Republic does little to curb the illegal goods market

By Paul Voosen
Staff Writer, The Prague Post
July 11th, 2007 issue

COURTESY PHOTO
The U.S. government has recently placed the Czech Republic atop its list of European Union pirate markets.
Bootleg music and movie sales are a bigger problem in the Czech Republic than anywhere else in the European Union, an anti-piracy industry advocacy group says.
Up to 60 open-air markets sell illegal and counterfeit goods to foreign tourists along the country’s borders with Germany and Austria. German bus companies arrange tours to the markets, which seem to draw more German and Austrian consumers than Czechs, based on the languages used on the goods for sale.
Pirated DVDs of American blockbuster movies are sold with German subtitles, for example.
Now, officials from international brands such as Umbro, Puma, Red Bull, Nike and British American Tobacco are calling for the Czech Republic to crack down on the illegal sales. They warn the country could face economic sanctions from other countries in the near future if officials don’t do something soon.
“[These markets are] full of stalls and kiosks and increasingly also brick-and-mortar shops, selling virtually only counterfeit and pirated goods,” said Stefan Krawczyk, European deputy director of the International Federation of the Phonographic Industry (IFPI), the advocacy group leading the anti-piracy charge. “Music, games, films, sports shoes, cigarettes, everything you could dream of.”
Last month, Krawczyk presented government officials with a list of changes he wants them to make to combat the markets. The list went to officials from the Industry and Trade Ministry and to the Justice Ministry, which has an intergovernmental committee in charge of counteracting copyright piracy in the country.
“This is very serious problem at the heart of Europe, which we have highlighted to the Czech government for the last three to four years, but with no results,” Krawczyk said.
Officials are already working on new laws to tackle the issue, said Ladislava Votavová, head of the multilateral and common trade policy department at the Indusry and Trade Ministry.
“Some of the IFPI’s proposals seem reasonable and might be realized in the near future,” Votavová said.
One suggested new law would make those who run the markets culpable for money they make from illegal activities.
“If you look at people involved in this, you’ll find one or two driving around in Ferraris and having big villas,” said Krawczyk. “Those are not guys who have one or two market stalls. … It’s a form of extortion almost. They get part of the profit. They are living from a criminal act indirectly.”
Raiding parties
Border markets trace their origins to communist days, when large groups of Vietnamese immigrants started selling clothes and food along the border. Germans and Austrians started crossing the border in wholesale fashion in the 1990s to take advantage of low prices.
But pirated CDs and DVDs didn’t take off as big market sellers until earlier this decade, when counterfeit goods started coming from China in anonymous shipping containers.
CD and DVD burners and more pirated music on the Internet pushed the business along. As the Czech Republic approached EU accession in 2004, the piracy business was in full swing.
“It was EU enlargement that opened the floodgates,” Krawczyk said. “The movement of German consumers was much easier. They’ve now really grown out of proportion.”
“The dramatics of the issue only become real if you’ve seen them,” he said. “I’ve visited numerous markets in Russia, the Ukraine, even in China. A kind of phenomenon of that size we’ve never seen before, especially in the EU.”
Raids by police have largely been ineffectual. Last winter saw an upswing in raids after the EU warned the markets were becoming an issue. As many as 400 officers raided the markets at one point, confiscating millions of counterfeit shoes and video games.
With limited search warrants and vendors who scattered at first sight of the raid, the police made few arrests, however. Several hours later, the stalls were open again.
Prosecuting owners of such markets is a successful str ategy used by Poland, Krawczyk said. Poland used to have a piracy problem worse than the Czech Republic’s, he said.
In Finland, the government passed a law allowing searches of all passengers returning from Estonia to combat a similar problem between the two countries.
Copyright piracy is front and center for Europe right now, since EU Commissioner for External Trade Peter Mandelson wants to bring a case to the World Trade Organization against China for that country’s pirate markets, Krawczyk said.
“The EU’s trading partners look very closely at what we do and will not hesitate to throw this back in our face,” he said.
Anti-piracy advocacy officials have an ally in the U.S. government, which has now placed the Czech Republic on its list of countries with huge pirate markets — a list that includes such well-known trading heavyweights as China, Russia, Mexico the Ukraine.
Krawczyk believes the United States could take economic sanctions against the Czech Republic if the country doesn’t do more to correct the problem in the next six months or so. The United States instituted such sanctions against Ukraine in 2002.
Czech officials know the clock is ticking.
“We are not of the opinion that this situation represents an immediate threat to Czech trade with other Western countries,” Votavová said. “However, we are fully aware that such a situation cannot be tolerated for a long time period.”

Paul Voosen can be reached at pvoosen@praguepost.com


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