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Impact of Global Counterfeiting and Piracy Could Reach $4 Trillion by 2022

Posted February 08, 2017

A report from Frontier Economics published this week estimates that the global economic value of counterfeiting and piracy could reach $2.3 trillion in the next five years.

The report, Economic Impacts of Counterfeiting and Piracy, additionally concludes that the wider social and financial impacts in terms of displaced economic activity, investment, public revenue losses, and criminal enforcement could reach an estimated $1.9 trillion during the same time period.

Taken together, the negative impacts of counterfeiting and piracy are projected to drain $4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022.

Commissioned by the International Chamber of Commerce’s anti-counterfeiting group, Business Action to Stop Counterfeiting and Piracy (BASCAP) and the International Trademark Association (INTA) the report from Frontier Economics, a European-based consulting and research firm, 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 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 characterize 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 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.

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.

“The unchecked growth of counterfeiting and piracy already has created an enormous drain on the global economy,” said INTA CEO Etienne 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.”

“Measures to fight counterfeiting have not been sufficient,” BASCAP Director Jeffrey 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.”

Related: Measuring the Magnitude of Global Counterfeiting: Creation of a Contemporary Global Measure of Physical Counterfeiting (U.S. Chamber of Commerce GIPC)