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THE RIGHT TO "EXCLUSIVE": THE RESULTS OF PARALLEL IMPORT PROHIBITION

16 March 2018
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On March 14, first meeting of the Committee for the Development of Small and Medium-Sized Businesses of the Atameken NCE RK was held in an updated composition. One of the topical issues discussed at this meeting was the issue of establishing exceptions to certain types of goods from the application of the regional principle of exhaustion of rights. What imported goods will not need to receive the consent of the right holder?

Kazakhstan entrepreneurs had to face with the administrative and even criminal responsibility, because of the establishment of a regional principle of exhaustion of the exclusive right to a trademark. This principle of exhaustion of rights under the Treaty on the Eurasian Economic Union prohibits the import and sale of original products without the consent of the right holder. Entrepreneurs applied to the National Chamber of Entrepreneurs to solve these problems.

"At the initiative of the National Chamber, the issue of "parallel import" has been actively discussed in the Eurasian Economic Union for several years. Parallel import means the importation of the original product into the country by any person without the permission of the owner of the trademark. A specially drafted Working Group developed a draft Protocol on Amendments to the Agreement on the EAEC. It provides for exceptions for certain types of goods that are not available in the market of the Union, that are available in insufficient quantities or at inflated prices, in other cases, based on the social and economic interests of the EAEC member states," - Deputy Director of the Customs Administration Department of the NCE RK Atameken Elvira Karimova said.

The National Chamber supports the draft Protocol. After all, the legalization of parallel imports for certain categories of goods is in the interests of consumers, since it will not only fence the business from problems with the import and sale of original products, but will also reduce the prices of some imported goods. In particular, on auto spare parts.

"Now the difference in the price for Toyota car spare parts, being sold by official dealers and parallel importers, can reach from 200 to 400%, taking into account transportation, taxes, etc. Just because they are restricted in import and because of operation of the regional principle of exhaustion of the exclusive right. We understand that in this case, the regional principle of exhaustion of rights is a deterrent to business and it strains the pocket of the population. If we allow parallel imports for at least some goods, then the prices for spare parts can be lowered roughly by 20-30%," - Timur Zharkenov, chairman of the board of the Union of Independent Automobile Business of Kazakhstan said.

It also was noted that now the Ministry of National Economy of the Republic of Kazakhstan forms a List of certain types of goods in respect of which exemptions from the regional principle of exhaustion of rights to the trademark will work.

"We sent the proposals of industry associations to the Ministry of National Economy. The National Chamber has proposed to add crawler excavators, crawler bulldozers, quarry dump trucks, wheel loaders, roadheaders, drilling rigs into the list of exemptions from the regional principle of exhaustion of trademark rights. It is also proposed to include there spare parts for cars. Now the issue is actively discussed in the Government, at the meetings of the Ministry of Justice with the participation of all state bodies and the National Chamber,"- Elvira Karimova said.

Nevertheless, the business still has a chance to include those goods that are in their area of interest. The National Chamber takes proposals until the end of March.

In addition, at the meeting of the Committee the work of five new Associations was presented. All of them were accredited in the Atameken NCE RK and entered the SME Development Committee. These are the Association of Fire and Rescue Services, the Railways Association, the Union of Independent Automobile Business of Kazakhstan, the National Association of Professional Suppliers of Social Media Marketing Services and the Media Marketing Messenger and the National Association of Cooperatives and Other Forms of Economic Communities. Each Association will be actively involved in the work of the National Board since this year.

At the end of the meeting, the work plan of the SME Development Committee for 2018 was approved. All Associations were invited to engage actively in its implementation.

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