UNICRI Report: Counterfeiting: a global spread, a global threat
Decent jobs, consumers and corporate revenues are the victims of an emerging crime
A global answer to a growing phenomenon
The Report presented today by the United Nations Interregional Crime and Justice Research Institute (UNICRI) at CRT Foundation, which includes data from governments and international organizations, underlines the magnitude of counterfeiting: a growing phenomenon that is threatening consumers and economic systems.
According to UNICRI analysis the impact of counterfeiting has been underestimated. Mr.Sandro Calvani, UNICRI Director, said that 'Counterfeiting is an extremely dangerous criminal activity which has enjoyed a sort of impunity, thanks to the belief that it is a victimless crime. This is far from the truth. Counterfeiting entails serious consequences for the entire society. Entrepreneurs lose profits, the reward for their creative activity and for the investments made to ameliorate their products. Consumers' health and safety is threatened by counterfeit products. Because of counterfeiting jobs are lost every year and States collect fewer revenues'.
- According to the European Commission counterfeiting would total between 5-7% of the total legal market. The Organization for Economic Cooperation and Development (OECD) affirms that up to 200 billion US dollars of international trade in 2005 could have been in counterfeit or pirated products, this figure does not consider domestically produced and consumed counterfeit pirated products and the pirated digital products distributed via the Internet.
- The World Intellectual Property Organization, WIPO, has estimated that the losses sustained by EU member states in tax revenues correspond to 3,731 million Euro in the toy and sports clothing sector, 1,554 million Euro in the pharmaceutical sector, 7,581 million Euro in the clothing and footwear sector and 3,017 million Euro in the perfume and cosmetics sector.
- Counterfeiting causes a net reduction in the Gross Domestic Product which, according to estimates supplied by the Center for Economics and Business Research, can be quantified as 8,042 million Euro across Europe.
- It estimated that, in the European Union alone, more than 100,000 jobs are lost every year due to counterfeiting.
- Data from the World Customs Organization and the European Commission DG TAXUD show an increase of 88% in the years 2000-2006, in the seizures of counterfeit goods in the European Union, with almost 68 million goods seized in the year 2000 and more than 128 million in 2006.
- Italy is confirmed as one of the EU member countries most affected by counterfeiting with more than 18 million goods seized in 2006 it is also an entry point for counterfeit products destined to other EU countries. The greatest part of them originates from China. In 2006 the incidence of Chinese counterfeits items seized by the customs in Italy was 93.4%.
Mr. Calvani said that 'Counterfeiting is the 21st century golden mine for organized criminals which are creating networks exploiting the same routes used for the trafficking of human beings, drugs and weapons. It is an immense source of profits ready to be reinvested in other illegal activities or meaning to easily launder money deriving from other crimes'.
There are several cases that testify how the use of counterfeit products could be extremely harmful, or even deadly, for consumers. Counterfeit baby milk-powder caused the death of at least 13 babies in China in 2004. In 2005, counterfeit raki a typical Turkish alcoholic beverage caused the death of 23 people while dozens were hospitalized. The use of diethylene glycol in counterfeit cough syrup, anthistamine tablets, calamine lotion and rash ointment killed more than 100 people in Panama in 2006. Counterfeit drug containing diethylene glycol caused the death of 11 people in China in the same year.
The World Health Organization reports that between 7-10% of all pharmaceuticals products in the world are possible counterfeits, reaching a total of 30-40% in some African countries while in the former Soviet republics counterfeit medicines could constitute more than 20% of market value.
In order to improve the global response to counterfeiting a series of proposals have been elaborated by UNICRI:
- The need to collect and exchange data
- The need to strengthen the cooperation between the public and private sector.
- Awareness of law enforcement regarding the involvement of criminal organizations in this activity,
- The creation of codes of conduct as well as investigative protocols.
- The adoption of detection techniques and integrated IT customs risk assessment systems for counterfeit goods
- The need to focus on the concealment methods utilized by counterfeiters.
- Awareness raising activities targeting producers and the public at large.
Mr.Calvani has also proposed the creation of an International Permanent Observatory on Counterfeiting which could provide services and facilitate the needed acceleration in the execution of measures against counterfeiting. Good practices that are now applied in some specific areas (i.e. medical products) might represent a good model of coordinated action for other sectors as well.
If criminal organizations are now creating new synergies to maximize the potential of counterfeiting the establishment of a global alliance to counter this phenomenon is the correct answer.