Counterfeit Shipments Grew 'Very Significantly' in Recent Years, EU Report Says

Counterfeit goods made up as much as 6.8 percent of total imports into the European Union in 2016, up from 5 percent just three years earlier, mirroring a worldwide increase in trade in counterfeits, the European Union Intellectual Property Office said in a new report. China remained the world’s top shipper of counterfeits, though Hong Kong plays an increasing role as a transit point, and “India, Malaysia, Mexico, Singapore, Thailand, Turkey and the United Arab Emirates remain among the top provenance economies,” the report said.

The share of small shipments in the counterfeit trade continues to grow, EUIPO said. “They represent a way of avoiding detection and minimising the risk of sanctions for criminals. This raises the cost of customs checks and detention with additional significant challenges for enforcement authorities. There is a need for further review of existing policies in this area,” according to the report.

Between 2014 and 2016, an average of 57 percent of seizures worldwide concerned postal shipments and another 12 percent express couriers, with the remainder shipped via air (15 percent), sea (10 percent) and land (5 percent). “Together, small parcels carried either by postal or express services account for 69% of customs seizures of IP-infringing products for the 2014-16 period, against 63% for the 2011-13 period,” the report said.

The study found fake products in a “large and growing number of industries,” including consumer goods such as footwear, cosmetics and toys; spare parts and chemicals; IT goods like phones and batteries; and luxury items. "Trade in fake goods is a very dynamic activity, as counterfeiters look very aggressively for new profit opportunities. Newly targeted groups include guitars and construction materials, for example," the report said. Many fake goods, especially pharmaceuticals, food and drink and medical equipment, pose serious health and safety risks, it said.

The report also highlighted free-trade zones as particularly active in the counterfeit trade. “The existence, number and size of FTZs in a country correlate with increases in the value of counterfeit and pirated products exported by that country’s economy. An additional FTZ within an economy is associated with a 5.9% increase in the value of these problematic exports on average,” the report said.

One tendency the report identified was that counterfeiters ship their products “via complex trade routes, using several transit points.” This is done for “cleansing” documents related to the shipment and camouflaging its origin, and to break them up into smaller shipments. It also allows for the processing of products, “usually in free trade areas, often by adding counterfeit trademarks and/or repackaging or re-labelling goods,” EUIPO said. “A given product may be produced in one economy, and its labelling with counterfeit logos or packaging into trademark-infringing packages may take place in another closer to destination markets and with weaker IP enforcement,” it said.