Case Studies

Counterfeiting report

by Mark Rowe

Trade in counterfeit goods, that mainly stem from China and Hong Kong, has increased, according to an OECD report on counterfeiting and losses to global economy.

The Organisation for Economic Co-operation and Development (OECD) study titled “Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact” highlights that trade in counterfeit and pirated goods has grown from US$250 billion annually in 2008 to more than US$461 billion in 2013. According to these findings, counterfeit products now represent more than 2.5pc of all world trade, and 5pc of all imports into the European Union.

Counterfeit goods can endanger lives – auto parts that fail, pharmaceuticals that make people sick, toys that harm children, baby formula that provides no nourishment and medical instruments that deliver false readings.

The OECD report reiterates a number of trends that have been evident for more than a decade: virtually all brands are being counterfeited, and counterfeit and pirated products originate from virtually all economies on all continents. Counterfeiters are improving their logistics networks, manipulating transit routes, exploiting governance gaps and taking advantage of the huge growth in online shopping. The report does not cover online piracy. Fake products crop up in everything from handbags and perfumes to machine parts and chemicals. Footwear is the most-copied item though trademarks are infringed even on strawberries and bananas.

Comment

Jeffrey Hardy is director of the International Chamber of Commerce’s (ICC) Business Action to Stop Counterfeiting and Piracy (BASCAP). He said it’s vital for governments to step up the enforcement of intellectual property (IP) rights. “Measures to fight counterfeiting have clearly not been sufficient. If governments hope to stabilize the economy and stimulate economic growth and employment, they must do a better job to support the central role that IP plays in driving innovation, development and jobs.

“The criminal networks involved in counterfeiting and piracy are responsive to changes in the marketplace. They exploit supply chains and free trade zones and are now taking advantage of the rapid move to online shopping. We hope this report will raise awareness of the urgent need for industry players to work together to ensure that the services of legitimate e-commerce marketplaces, search engines and other online intermediaries are not exploited and to restore consumer trust in online shopping.”

The increases in counterfeiting add to BASCAP concerns that the infiltration of counterfeit and pirated goods creates an drain on the global economy – crowding out billions in legitimate economic activity and facilitating an illicit underground economy that deprives governments of revenues for public services, forces higher burdens on taxpayers, dislocates hundreds of thousands of legitimate jobs and exposes consumers to dangerous and ineffective products.

Hardy said: “We hope this report will send a wake-up signal to government leaders around the world that the trade in fakes is hurting investment, innovation and job creation and puts consumer health and safety at risk. Policymakers need to view increased enforcement of IP laws and regulations as an investment – not a cost – in the development of their economies.”

Details

Postal parcels are the top method of shipping bogus goods, accounting for 62pc of seizures over 2011-13. US, Italian and French brands are the hardest hit.

To read the 138-page report online visit the OECD website.

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