In today’s interconnected global economy, intellectual property (IP) has become a critical asset and a key generator of value. Alongside the facilitation of international trade, IP-intensive production and supply chains have expanded across borders, linking diverse markets and regions. This global integration enables companies to innovate and distribute IP-rich products widely, fostering growth and competition. However, the international scope of production also exposes these supply chains to significant risks, particularly from counterfeit trade, which has grown in complexity and scale as global markets have expanded.
Unfortunately, counterfeiting risks not only persist but remain a significant concern, undermining the integrity of complex supply chains. These globalised networks, which span many countries, are becoming increasingly susceptible to IP infringement risks. Currently, illicit trade in counterfeit goods poses a threat to economic growth and innovation, while also threatening public health, safety, and the rule of law. Furthermore, counterfeit trade fuels corruption and organised crime, establishing a vicious cycle where innovation is stifled, consumer trust is eroded, and resources are diverted from legitimate businesses to illicit operations.
The challenges facing IP protection have been exacerbated by recent global crises, such as the COVID-19 pandemic and the Russian invasion of Ukraine. These crises have introduced additional complexities into supply chain operations, often leading to shifts in enforcement priorities and creating new barriers to effective risk management. The evolving nature of these crises complicates efforts to profile risks accurately, as enforcement resources are stretched and must adapt to rapidly changing realities, including geopolitical tensions, economic volatility, and the need for swift response to public health and security threats.
Consequently, illicit trade in counterfeits persists as an important threat to economies. It remains a destabilising force within the international trading system, which is built upon shared principles of fairness and compliance. The magnitude of the issue is underscored by the findings of this report, which estimate global trade in counterfeits at a staggering USD 467 billion—a sum comparable to the GDP of some OECD economies. This enormous value illustrates that counterfeit trade is not a minor problem but represents a major challenge to the integrity of global trade and the sustainability of IP-reliant economies.
Criminal networks engaged in illicit trade seek profit, making every IP-protected product a potential target. While there is high incidence of categories such as clothing, footwear, and electronics, it is evident across a diverse range of product categories, including pharmaceuticals, automotive components, spare parts, batteries, fertilisers, and food. The diversity of counterfeit goods demonstrates the scope of the problem, as well as the adaptability of illicit networks to target nearly any product with perceived value in global markets.
Counterfeit products frequently pose serious, even critical, risks to consumers, as counterfeiters often disregard health and safety standards. This issue is particularly serious in sectors like cosmetics, pharmaceuticals, and automotive parts. For instance, a recent increase in counterfeit airbags exemplifies the life-threatening risks associated with this issue. The substandard counterfeit airbags, often unknowingly installed by garages, led consumers to believe they were purchasing legitimate products, thus exposing consumers to severe safety hazards.
China remains the primary source of counterfeit goods, accounting for approximately 62% of the counterfeit items seized in global trade, either originating directly from China or routed through Hong Kong (China). China’s prominence has remained constant through the years that the OECD and EUIPO have been studying the problem. China’s vast manufacturing capacities, which have made it a dominant producer of legitimate goods, also facilitate the production and distribution of counterfeits, underscoring the scale and impact of counterfeit manufacturing hubs within global trade networks.
Counterfeiters exploit evolving distribution channels, often using small parcels and mail to transport fake goods. In fact, about 65% of counterfeit seizures occur in these channels, which are favoured for their speed and reach. However, in terms of value, counterfeit goods transported via containers are more substantial, with each container potentially holding hundreds or thousands of counterfeit items. As a result, approximately 18% of the value of counterfeit seizures is derived from shipments found in container ships, making container trade an essential focus for enforcement.
The enforcement of anti-counterfeiting measures has become increasingly challenging. The recent geopolitical climate and the lasting impact of the COVID-19 pandemic have made it difficult to identify and monitor consistent trade routes, which complicates risk profiling. Additionally, the surge in small parcel shipments has stretched screening capabilities, as high volumes and shorter processing times diminish the capacity of enforcement officers to conduct effective profiling and inspections.
Small parcels, in particular, pose a unique challenge, as they often are not handled at enforcement facilities equipped for thorough inspections. Instead, these parcels move through regular cargo routes, bypassing the scrutiny necessary for identifying counterfeits. This logistical gap places additional pressure on enforcement agencies, which are struggling to adapt to the evolving dynamics of counterfeit trade while contending with limited resources and shifting priorities.
A critical obstacle to enforcement efforts is the generally low priority assigned to anti-counterfeiting initiatives by enforcement authorities. In many non-OECD countries, this issue is exacerbated by a lack of formal resources or political will to address counterfeiting. In some cases, enforcement is undermined when counterfeiters bribe or otherwise corrupt enforcement officials.
In OECD countries, resource constraints following the pandemic, combined with the geopolitical challenges of the present, have relegated anti-counterfeiting efforts to a lower priority, often behind pressing concerns such as narcotics, tax evasion, and national security. However, despite these challenges, a path forward exists, grounded in enhanced co-ordination among enforcement bodies and collaboration with the private sector.
Strengthening co-ordination among enforcement authorities, within and across borders, is essential, as effective anti-counterfeiting efforts require seamless information sharing among various agencies, including customs, financial intelligence units, local police and market surveillance officers. Presently, these agencies often operate independently, limiting the effectiveness of their actions against counterfeit trade. Greater collaboration and integration of real-time data could substantially improve detection and enforcement outcomes.
Collaboration with rights holders, the parties most knowledgeable about genuine products, is also vital. Rights holders can offer insights into the distinguishing features of authentic goods and the common channels through which genuine products are distributed, enabling more effective profiling and identification of counterfeit items. Real-time data and technological solutions can further enhance these efforts, allowing for rapid responses to emerging threats. In this regard, the establishment of the EU Intellectual Property Enforcement Portal (IPEP), should be highlighted. The EU IP Enforcement Portal is an online platform developed by the European Union Intellectual Property Office (EUIPO) to support the enforcement of intellectual property rights across the European Union. It connects rights holders, such as companies and individuals, with enforcement authorities, including customs officials and police, to combat counterfeiting and piracy. The portal enables rights holders to share detailed information about their IP rights, facilitates communication with enforcement authorities for handling infringement cases, allows the management and submission of Customs Applications for Action (AFAs), and provides alerts and reports on suspected counterfeit activities, as well as tracking cases and actions taken.
Moreover, trade intermediaries, including postal services, express shipping operators, free trade zones, and container shipping companies, have a significant role in curbing counterfeit trade. Through best practice exchanges, the establishment of cooperative frameworks, and the implementation of incentive structures, these intermediaries can help prevent the abuse of their networks by counterfeiters. The EU IPEP has successfully expanded the range of actors accessing the platform, as trade intermediaries are now included. They can access the portal and share key information to support the detection of goods infringing intellectual property rights.