DFS has added its considerable heft to the Duty Free World Council (DFWC) and Tax Free World Association (TFWA) anti-illicit trade declaration, becoming the seventh leading travel retailer signatory to the campaign.
The addition of DFS to the declaration marks a major extension of the duty and tax free industry’s public commitment to combat illicit trade, counterfeiting and intellectual property theft.
As reported, DFWC and TFWA launched the anti-illicit trade declaration in July, supported by an initial six of the leading global travel retailers accounting for combined industry revenues worth around $20 billion*.
Aer Rianta International (ARI), Dubai Duty Free, Dufry, Gebr. Heinemann, Lagardère Travel Retail and Qatar Duty Free were the first collection of retailers to back the next phase of the ‘Duty Free: Trusted, Transparent, Secure’ campaign, jointly launched in 2022 by TFWA and DFWC.
By signing the declaration, the signatories commit to a zero-tolerance approach to illicit trade within their own organisations.
DFWC President, Sarah Branquinho (pictured below) said: “The Duty Free World Council and Tax Free World Association were proud to launch the anti-illicit trade declaration in July of this year with a strong contingent of supportive retailer signatories at the outset.
“The signature of DFS is a major addition to the declaration and can only serve to further strengthen it and set an example for other retailers and suppliers around the world. We now have seven of the largest travel retailers in the world signed up. In the months ahead we hope to bring further positive news as other retailers and brand owners commit to supporting the anti-illicit trade declaration.
“Our industry boasts one of the most transparent, trusted and secure supply chains in the world. Customers around the world shop in duty and tax free stores because they have complete trust in the provenance and authenticity of the quality products we sell.
“This campaign reaffirms that trust and sends a clear message to our millions of customers around the world that they can shop with confidence in duty and tax free stores.”
Although it is difficult to determine an exact figure, the OECD (Organisation for Economic Co-operation and Development) has estimated that total 2019 global trade in counterfeit and pirated products stood at US$464 billion, or 2.5% of world trade.
What is the declaration?
The DFWC and TFWA anti-illicit trade declaration is an individual public commitment by duty and tax free retailers and suppliers against illicit trade, counterfeiting and intellectual property theft in all its forms.
It is a means by which companies operating in the travel retail industry can publicly declare their zero-tolerance stance towards illicit trade and to encourage other companies to do the same. Both bodies note: “Illicit trade in all its forms has no place in the duty free industry – this commitment publicly signals this.”
A briefing paper released last year in support of the Duty Free: Trusted, Transparent and Secure campaign set out the scale of the problem across global categories such as luxury, cosmetics and perfumes, alcohol and tobacco, while offering several important recommendations, including better regulation of informal and casual retail channels and tighter controls regarding free trade zones (FTZs) and special economic zones to tackle illicit trade ‘hotspots.’
Why is it needed?
Both bodies say illicit trade costs the industry millions in lost sales opportunities every year and that many of the product categories sold in the industry are, coincidentally, some of the most counterfeited in the world.
Despite a very high level of trust from customers, the industry suffers from a perception that duty free is an enabler of illicit trade when illicitly produced goods are fraudulently mislabelled as duty free to make them appear more authentic.
The two organisations’ joint statement said: “Not only does this deceive customers, but it causes the industry reputational damage when it is wrongly assumed fraudulently mislabelled illicit goods are in any way associated with the industry.”
Free trade zones
The DFWC and TFWA also highlight how the duty and tax free industry is often mistakenly or casually associated with free trade zones.
Both bodies are keen to stress the two concepts are very distinct. FTZs offer access to trade within a specific customs regulation environment generally not subject to customs duties, while duty and tax free retail sales can only occur inside a highly regulated and closely monitored travel network.
According to the DFWC and TFWA, research by the OECD has indicated there are more than 3,500 FTZs spread across 130 countries, up from 79 in 1975. Governments hosting FTZs should also consider better regulation, as recommended by the OECD, note the two duty and tax free bodies.
A common approach to FTZs among enforcement agencies would also be beneficial, they say, and ensure the zones enhance legitimate trade and prevent illicit trade hotspots from emerging.
A joint statement from DFWC and TFWA stated: “This is a very clear message to all companies hoping to do business in DFTR that we have a zero-tolerance to all forms of illicit trade and we expect the highest of standards both from our retailers and our suppliers. There is no place in our industry for companies that engage in illicit trade.
“The declaration is intended to demonstrate to governments, regulators, enforcement bodies and the wider travel retail sector that the duty free industry is fully aligned as a sector and fully committed to the elimination of all forms of illicit trade, counterfeiting and intellectual property infringements.
“The declaration is about demonstrating the credibility of the industry as one of the most secure and trusted retail channels in the world, with a secure and transparent supply chain.”
The DFWC and TFWA insist their declaration is not intended to replace specific agreements in place between retailers and suppliers. Rather, it is intended to augment existing commitments such as the UN Global Compact to serve as a “public commitment to the fight against illicit trade.”.
*Based on 2022 reported and estimated figures