DUBAI // The EU has threatened to withdraw special trade privileges from the UAE unless the country reduces the number of goods sent to Europe with fraudulent paperwork. As an emerging market, the UAE is a beneficiary of tariff-free imports under the EU's General System of Preferences (GSP). That offers Emirati businesses an easier path into the European markets, as exported goods can be exempt from tariffs for up to 60 per cent of the items' value.
But EU officials say the UAE and Malaysia have been identified as significant sources of improperly exported goods, raising concerns about organised crime networks, revenue losses and the country's reputation as a reliable trading partner. Sultan al Mansouri, Minister of Economy, said at the conference that the issue had a direct impact on trade, and that customs officials had a big role to play in reducing violations.
"Being in the GSP is an opportunity for UAE business to enter a large market with the advantage of reduced taxation," Mr al Mansouri said. "We must prevent fraudulent products from being traded under the banner of the UAE." David Murphy, the head of the control department at the European Anti-Fraud Office, said the UAE was not taking firm enough action to prevent illegal trade passing through its ports.
Speaking at an export trade conference in Dubai this week, he said: "If the UAE cannot implement adequate procedures for post verification of trade consignments entering the EU by the end of this year the inevitable consequence will be the withdrawal of special preferences. The GSP is a preferential scheme intended to provide an incentive for industry and foreign investment in emerging markets, such as the UAE.
"However, this system is continually under attack by fraudsters and organised criminal groups. All agencies must work together to ensure these attacks are repelled." The value of non-oil exports to the EU for goods manufactured or assembled in the UAE was Dh2.1 billion (US$572 million) in 2007, according to the latest available Ministry of Economy figures. The value of goods re-exported, or routed through the UAE, to the EU was Dh7.3bn.
The EU delegation met Ministry of Economy officials to devise better methods of fighting trade fraud. Although the EU anti-fraud delegation considered the procedures and practices of the Ministry of Economy and customs department adequate, information sharing was cited as among its concerns. The delegation requested that the UAE improve information sharing among the Ministry of Economy, customs, chambers of commerce and free zones in the Emirates.
Every consignment arriving at an EU customs point must have a certificate of origin, which determines the tariff level and import restrictions on that item. However, according to the European Anti-fraud Office, manufacturers and exporters from countries such as China have been dodging tariffs by routing goods through the UAE and claiming it as the country of origin. The anti-fraud office, which deals with large and complex trade cases, was unable to provide figures on how much fraudulent trade it believed was passing through the UAE to Europe. Smaller cases are dealt with customs officials in individual countries.
Bridgetta Erdmann, an officer at the European anti-fraud office, said strong enforcement would act as a deterrent.
"Communication between agencies is critical in monitoring irregular trade flows and tracking specific products that have been identified as a problem," she said.
tbrooks@thenational.ae
