Free trade zones fostering counterfeit activity: EUIPO and OECD
An additional free trade zone within an economy increases the value of counterfeit goods exported from the economy by 5.9%, according to a new report.
The report, "Trade in Counterfeit Goods and Free Trade Zones", was published yesterday by the European Union Intellectual Property Office’s (EUIPO) Observatory and the Organisation for Economic Co-operation and Development (OECD).
While free trade zones offer benefits to business and host countries, “lightly regulated” zones are attractive to parties engaged in counterfeit trade. Consequently, the report highlighted that an increase of free trade zones in a country correlates to a rise in value of counterfeit and pirated products exported by the country.
In 2013, a total of $461 billion worth of counterfeit and pirated goods were exported globally. Asia was recognised as the biggest contributor, providing $310 billion towards the figure. This was followed by Europe ($83 billion) and the Middle East ($29 billion).
In terms of shares of exports, 5.3% of Asia’s exports were considered to be counterfeit or pirated, and 2.4% of the Middle East’s exports were counterfeit or pirated in 2013.
Of the 1,843 free trade zones that currently exist, 802 are based in Asia. There are 335 free trade zones in North America and the Caribbean, and 246 in Central America. With only 15, Oceania has the least amount of free trade zones.
The problem of counterfeit goods being exported from free trade zones is emphasised when governments do not police the zones adequately, according to the report. It said: “This can occur when zones are deemed to be foreign entities that are outside of the scope of domestic policing activities.”
More effective actions and coordination at national and international levels are “urgently needed to ensure that zones are not undermined by illicit activities”, added the report.
“This is clear evidence that free trade zones are being used by criminals to traffic fake goods,” said OECD public governance director, Marcos Bonturi.
He noted: “We want this to be a call for action, and we will be working in the months ahead to help free trade zones step up their efforts to stop illicit trade, while at the same time maintaining their role as facilitators of legal trade.”
António Campinos, executive director of the EUIPO, added: "We hope these findings will support governments and policy-makers in assessing and tackling the economic damage that counterfeiting and piracy create across the world."
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