Hong Kong, 6 February 2017

A new report released today indicates that the global economic value of counterfeiting and piracy could reach US$2.3 trillion by 2022. Titled, The Economic Impacts of Counterfeiting and Piracy, the report provides estimates on the wider social and economic impacts on displaced economic activity, investment, public fiscal losses and criminal enforcement, and concludes that these costs could reach an estimated US$1.9 trillion by 2022. Taken together, the negative impacts of counterfeiting and piracy are projected to drain US$4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022.

The report from Frontier Economics, an internationally recognised economics research firm, was commissioned by ICC’s Business Action to Stop Counterfeiting and Piracy (BASCAP) and the International Trademark Association (INTA). It was launched today in Hong Kong during INTA’s 2017 Anticounterfeiting Conference.

“This new study shows that the magnitude of counterfeiting and piracy is huge, and growing,” said Amar Breckenridge, senior associate at Frontier Economics. “Our objective is to as accurately as possible characterise the magnitude and growth of this illegal underground economy and its impacts on governments and consumers. The results show once again that in an interconnected economy, consumers and governments suffer alongside legitimate businesses from the trade in counterfeit and pirated goods.”

Frontier’s analysis builds on a 2016 report published by the Organization for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO), which estimated the value of the international trade in counterfeit and pirated products at US$461 billion in 2013, or as much as 2.5% of all international trade. This represents an increase of more than 80% over the findings in OECD’s ground breaking 2008 report.

“The Frontier report picks up where the OECD/EUIPO left off,” said BASCAP Director Jeffrey Hardy. “Here we have expanded the scope of the work to examine categories of impacts identified and discussed – but not quantified – by the OECD/EUIPO report. Our objective is to capture the full spectrum of economic harm associated with counterfeiting and piracy.”

Frontier examined the additional impacts not quantified in the OECD/EUIPO report, including the value of domestically produced and consumed counterfeit products, the value of digital piracy, and the negative impacts on society, governments and consumers. Frontier also estimated significant employment effects with an estimated 2 to 2.6 million jobs lost globally in 2013, and projected losses of 4.2 to 5.4 million by 2022. Frontier also estimated the foregone growth and development opportunities that arise from counterfeiting and piracy. For the OECD region alone, there is between US$30 and US$54 billion in foregone growth opportunities in 2015.

“By filling in the gaps left by the OECD, Frontier has been able to paint a more comprehensive picture of the negative economic and social impacts of counterfeiting and piracy,” said INTA CEO Etienne Sanz de Acedo. “The rapid growth in counterfeit trade means it’s vital for governments to step up the enforcement of intellectual property (IP) rights, and for the public and private sectors to increase their engagement on this issue, as well as their support of government efforts.”

“Measures to fight counterfeiting have not been sufficient,” Mr Hardy added. “If governments hope to stabilize the economy and stimulate economic growth and employment, they must do a better job to protect the central role that IP plays in driving innovation, development and jobs.”

“The unchecked growth of counterfeiting and piracy already has created an enormous drain on the global economy,” said Mr Sanz de Acedo. “This illegal business activity deprives governments of revenues for vital public services, forces higher burdens on taxpayers, dislocates hundreds of thousands of legitimate jobs and exposes consumers to dangerous and ineffective products.”

The report notes that counterfeiters and pirates operate outside the law, which makes estimating the extent of counterfeiting and piracy and the harm these activities cause extremely challenging. Illegal businesses do not report information on their activities to any government agency so measuring their size must be done using indirect methods.

“No one report or approach will yield a complete picture or provide all the answers but we’ve attempted to examine the measurement of this illegal activity in a more comprehensive way than has been done to date and to develop methodologies that others can now use for more completely and accurately estimating the economic and social impacts of counterfeiting and piracy,” Mr Breckenridge said.

Mr Hardy added: “BASCAP is committed to learning from as many sources of expertise as possible because we believe that reliable information on the scope and impacts of counterfeiting and piracy is critical for helping policymakers better understand that the trade in fake goods is damaging their economies, threatening the health and safety of their citizens and stifling innovation and creativity.”

Mr Sanz de Acedo added: “Measuring the scale of counterfeiting and piracy not only helps us to understand the size and scope of the problem and the related social costs but more importantly, it helps inform policymakers. With greater awareness of and appreciation for the enormous size of the problem and the significant impacts of counterfeiting and piracy on consumers, society, government and business, policymakers are better equipped to assign greater priority to fighting these crimes and allocating resources appropriately towards combating counterfeiting and piracy.”

Read the report The Economic Impacts of Counterfeiting and Piracy.