EUIPO report explores links between corruption and counterfeits
Countries with “corrupt” economies are more likely to experience high levels of counterfeit trade, according to a new report from the European Union Intellectual Property Office (EUIPO).
The report, “ Why do countries export fakes? The role of governance frameworks, enforcement and socio-economic factors”, was published by the Organisation for Economic Cooperation and Development in collaboration with the EUIPO on Friday, July 6.
While the report highlighted that counterfeit products originate from “virtually all economies”, it said there are five main drivers that could determine an economy’s involvement in the trade of counterfeit goods.
The first factor is the role of governance. According to the report, high levels of corruption and poor IP protection “greatly influence the degree of exports of fake goods from an economy”.
The organisations said that economies where irregular payments and bribes are common practice are more likely to experience “significantly larger” numbers of counterfeit exports.
The report highlighted that free trade zones (FTZs) provide a “safe environment” for counterfeiters to trade. Research indicated that there are twice as many counterfeit products coming from the economies that have the 20 biggest FTZs than economies that don’t have any.
Low labour costs and poor labour market regulations were also recognised as contributing towards the trade of counterfeit goods. The report suggested that economies with the poorest working conditions have the largest share of counterfeit exports.
Counterfeit trade is likely to be increased in economies that have low shipping charges, “fast, simple and predictable customs formalities”, and good transport infrastructure. The report said fake goods can be counteracted by the ability to trace and track consignments.
The final main driving force in the trade of counterfeit goods is the role of trade facilitation policies.
The report said that enhancing transparency is likely to reduce the chances that an economy would export counterfeit products. This includes transparent and regular review of fees and charges on imports and exports.
China and Hong Kong were identified as the largest exporters of counterfeit goods in terms of value.
In 2013, 10.1% of global exports from Hong Kong were counterfeit, with 8.7% of all exports from China being counterfeit in the same year, according to the research.
The report concluded that it is important to recognise that none of the mentioned factors alone explain the number of counterfeit products coming from an economy, but rather a combination of the factors should be considered.
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