OECD says fakes make up 2.5 per cent of global trade

One of the most often-cited figures among those tracking the market for counterfeit and pirated goods comes from the OECD – and the organisation has just updated its estimate.

Based mainly on customs seizure data for 2019, the OECD says the illicit trade amounted to as much as $464bn – equivalent to 2.5 per cent of total world trade – which is in the same ball park as earlier studies carried out in 2013 and 2016.

The latest figure is actually a slight decrease on the 2016 figures of $509bn and 3.3 per cent, but given the difficulty in estimating criminal activity – which is by its very nature surreptitious – it is not possible to ascribe a trend to the decline.

As the OECD and partner organisation EUIPO remark in the report, "in absolute terms and in terms of its share in total trade, the volume of trade in fakes has remained significant" – and roughly equivalent to the gross domestic product of an advanced national economy such as Austria or Belgium.

The study also provides an in-depth assessment of the situation in the EU, estimating that imports of counterfeit and pirated products into the bloc amounted to as much as €119bn ($134bn), which represents up to 5.8  per cent of total EU imports.

While the numbers change, many of the prevailing themes remain constant. China is the remains the primary economy of origin, and faked goods continue to follow complex trading routes, following a set of intermediary transit points such as Hong Kong, Singapore and United Arab Emirates (UAE) en route to their final destinations.

Several East Asian economies – including India, Thailand and Malaysia – have been identified as important producers in some sectors, while Turkey seems to be a relatively important producer of fake leather goods and cosmetics shipped to the EU.

Small parcels delivered by post is still the most common delivery route, posing a significant challenge to enforcement agencies. Although in value terms counterfeits transported by container ship still dominate, accounting for more than a half of the global value of counterfeit seizures in 2019.

While the COVID-19 pandemic didn't get established globally until 2020, the report also covers some trends that have emerged during the crisis. That included a swift pivot by criminal organisations to tap into sought-after products like pharmaceuticals, medical supplies, fast-moving consumer goods (FMCG) and sectors such as tobacco or alcohol during lockdown.

"The main trend was the intense misuse of the online environment," says the report. "Under confinement, consumers turn to online markets to fulfil their needs, driving significant growth in the online supply of a wide range of counterfeits."

Future work should focus on the relationship between the volumes of fakes entering a given economy and its socio-economic profile, as well as the "quality of governance and the integrity of the public sector," according to the report.

The new data could also be used to "develop a more effective set of enforcement and governance responses for both transit points and producing economies," it concludes.