NCPA - National Center for Policy Analysis


December 20, 2007

Drug counterfeiters are using free trade zones to hide -- or sanitize -- a drug's provenance, or to make, market or re-label adulterated products, according to the New York Times.

One of the major drug hubs is the United Arab Emirates (U.A.E.) and one of its largest cities, Dubai:

  • Dubai is particularly attractive to counterfeiters because of its strategic location on the Persian Gulf between Asia, Europe and Africa.
  • Records show that nearly a third of all counterfeit drugs confiscated in Europe last year came from the U.A.E.
  • Dubai is vulnerable because of the huge volume of goods that move through its free trade areas, and because of what is perceived by some in the pharmaceutical industry to be a murky line of authority for rooting out counterfeits there.

However, it's not just the U.A.E. trade zones that are a problem, says the Times.  For example:

  • Panamanian authorities recently raided a warehouse there that was used by an Australian to run his Internet pharmacy business.
  • No charges were filed in connection with that raid, but about $50,000 in drugs were seized.

The problem with free trade zones is that they act as way stations for goods moving around the globe, says the Times.  Since most of the shipments do not officially enter the country, there are fewer bureaucratic entanglements.  In the Emirates' zones, the usual requirement for local ownership of companies is waived, and there are no import and export fees or income tax.

Source: Walt Bogdanich, "Counterfeit Drugs' Path Eased by Free Trade Zones," New York Times, December 17, 2007.

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