VZCZCXRO3069
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHVB #0812/01 3361427
ZNR UUUUU ZZH
P 011427Z DEC 08
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 8805
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0076
RUEHGZ/AMCONSUL GUANGZHOU PRIORITY 0002
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ZAGREB 000812 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EEB/TPP/IPE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV SOCI HR
SUBJECT: NIKE REPRESENTATIVE DESCRIBES COUNTERFEIT GOODS 
SMUGGLING IN CROATIA 
 
¶1.  Summary.  Nike's brand protection manager for Croatia met 
with Econ and FCS officers at the American Chamber of 
Commerce in Zagreb in late November to discuss patterns of 
counterfeit goods smuggling and quality of enforcement as it 
faces growing demand for smuggled counterfeit apparel 
throughout the region.  He said that Croatia's geographic 
position is extremely advantageous to goods smugglers, but 
the response and capacity of law enforcement is uneven at 
best.  As a result of this meeting, AmCham and embassy 
representatives decided to form an IPR working group among 
AmCham's member companies to share information on counterfeit 
goods production/smuggling, and to look for opportunities to 
raise awareness of the issue with Croatian government and law 
enforcement circles.  End summary. 
 
¶2.  With the assistance of the Nike representative, customs 
officials at the port of Rijeka recently seized 20 shipping 
containers filled with thousands of pairs of counterfeit Nike 
shoes destined for markets throughout Europe.  The shoes are 
now awaiting destruction at a warehouse, but the seizure 
highlights a growing trade through Croatia in counterfeit 
apparel, according to Nike.  While Nike has not identified 
Croatia as a major producer of fake goods, its geographic 
position makes it a desirable entry point for goods headed to 
customers both close by, such as the large counterfeit goods 
markets in Brcko, Bosnia-Herzegovina and in New Belgrade, 
Serbia, as well as to markets as far away as the UK.  Most of 
the counterfeit goods originate in China. 
 
¶3.  Nike has established relationships with police and 
customs officials throughout Croatia, who alert Nike when 
they intercept a suspicious shipment.  The Nike rep then 
goes, sometimes in the middle of the night, to inspect the 
merchandise and tell Croatian officials whether the goods are 
fake.  He admitted that this identification is not always 
easy and sometimes requires him to send a sample for closer 
examination by Nike headquarters.  Once identified as fakes, 
the shoes are held in a warehouse while he arranges for their 
destruction.  But the smugglers adapt quickly to avoid his 
interference.  There have been recent cases of shipments of 
"blank" shoes, with a courier bringing in suitcases full of 
the famous Nike "swoosh" later on. 
 
¶4.  Often the Nike representative secures the cooperation of 
the trucking or shipping company involved to help identify 
future shipments as a means of reassuring authorities of the 
shipper's innocence in the crime.  He also works closely with 
Nike's competitors Adidas, Puma, and others, recognizing the 
mutual goal of stopping the counterfeit goods trade. 
 
¶5.  Unfortunately, Nike often comes up against regulatory and 
resource deficiencies on the Croatian side that hinder IPR 
enforcement.  Our contact admitted that his seizures are only 
quasi-legal since the designs being counterfeited are only 
rarely covered by Croatian patent law.  This is because of 
the lengthy procedure to register individual designs with 
Croatian authorities (often taking over a year).  He 
explained it is impossible for an international apparel 
manufacturer, issuing hundreds of new products over four 
seasons, to comply with the letter of Croatian law on 
registration of designs. 
 
¶6.  Law enforcement resources and political will are also 
severely lacking.  The recent successes at the port of Rijeka 
have been due solely to the energy and dedication of three 
Croatian customs inspectors who have been willing to make the 
effort to identify the shipments and work with the apparel 
company representatives to stem the tide of counterfeit 
goods.  At other points of entry, especially along the long 
land borders with Serbia and Bosnia Herzegovina, cooperation 
is mixed at best.  Even in Zagreb, the will among law 
enforcement to fight trafficking in counterfeit goods is 
sometimes weak.  Our Nike contact told us he reported to the 
police weeks ago the name and address of an individual 
offering counterfeit goods for sale over the internet, but 
the police have yet to act. 
 
¶7.  COMMENT:  In discussions on international trade, Croatia 
is often quick to mention that the port of Rijeka is three 
days closer to Asia and the Middle East than the port of 
Rotterdam.  This advantage has clearly been noticed by 
counterfeit goods manufacturers as well.  Croatia also 
struggles with a legal and law enforcement capacity that is 
often lacking or out-matched.  This is especially true along 
the Bosnian border, where understaffed Croatian units face 
smugglers with years of experience in trafficking of goods; 
 
ZAGREB 00000812  002 OF 002 
 
 
experience in many cases honed during the Yugoslav wars, when 
smuggling was a matter of life or death.  These factors 
combine to suggest the transport of counterfeit goods through 
Croatia will be tough to combat.  END COMMENT 
BRADTKE