The global economic value of counterfeiting and piracy could reach the trillions of dollars, according to a report, The Economic Impacts of Counterfeiting and Piracy.
That includes not only physical goods such as clothes, handbags, watches and pharmaceuticals, but digital things such as movies, music and computer software.
The report makes estimates on the wider social and economic impacts on displaced economic activity, investment, public fiscal losses and criminal enforcement, and concludes that these costs could reach US$1.9 trillion by 2022. Taken together, the negative impacts of counterfeiting and piracy are projected to drain US$4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022. Besides the loss to the owner of the intellectual property (IP) from the theft of goods and services, and governments deprived of tax revenues, the report points to the links between counterfeiting activities and other crimes.
The report from Frontier Economics , an economics research firm, was commissioned by the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy (BASCAP) and the International Trademark Association (INTA). It was launched in Hong Kong during INTA’s 2017 Anticounterfeiting Conference.
Amar Breckenridge, senior associate at Frontier Economics, said: “This new study shows that the magnitude of counterfeiting and piracy is huge, and growing. Our objective is to as accurately as possible characterise the magnitude and growth of this illegal underground economy and its impacts on governments and consumers. The results show once again that in an interconnected economy, consumers and governments suffer alongside legitimate businesses from the trade in counterfeit and pirated goods.”
The report builds on a 2016 report published by the Organization for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO). That estimated the value of the international trade in counterfeit and pirated products at US$461 billion in 2013, or as much as 2.5 per cent of all international trade. This represents an increase of more than 80pc over the findings in OECD’s 2008 report.
BASCAP Director Jeffrey Hardy said: “The Frontier report picks up where the OECD/EUIPO left off. Here we have expanded the scope of the work to examine categories of impacts identified and discussed – but not quantified – by the OECD/EUIPO report. Our objective is to capture the full spectrum of economic harm associated with counterfeiting and piracy. Measures to fight counterfeiting have not been sufficient. If governments hope to stabilize the economy and stimulate economic growth and employment, they must do a better job to protect the central role that IP plays in driving innovation, development and jobs.”
Frontier examined other impacts not quantified in the OECD/EUIPO report, including the value of domestically produced and consumed counterfeit products, the value of digital piracy, and the negative impacts on society, governments and consumers. Frontier also estimated significant employment effects with an estimated 2 to 2.6 million jobs lost globally in 2013, and projected losses of 4.2 to 5.4 million by 2022. Frontier also estimated the foregone growth and development opportunities that arise from counterfeiting and piracy. For the OECD region alone, there is between US$30 and US$54 billion in foregone growth opportunities in 2015.
INTA CEO Etienne Sanz de Acedo said: “By filling in the gaps left by the OECD, Frontier has been able to paint a more comprehensive picture of the negative economic and social impacts of counterfeiting and piracy. The rapid growth in counterfeit trade means it’s vital for governments to step up the enforcement of intellectual property (IP) rights, and for the public and private sectors to increase their engagement on this issue, as well as their support of government efforts. Measuring the scale of counterfeiting and piracy not only helps us to understand the size and scope of the problem and the related social costs but more importantly, it helps inform policymakers. With greater awareness of and appreciation for the enormous size of the problem and the significant impacts of counterfeiting and piracy on consumers, society, government and business, policymakers are better equipped to assign greater priority to fighting these crimes and allocating resources appropriately towards combating counterfeiting and piracy.”
For the full 61-page report, visit the ICC website.
