“The total volume of potential dangerous fakes traded was almost $75 billion in 2019, which was 16% of the global trade in counterfeit goods.”
A new study on trade in counterfeit goods that pose health, safety and environmental threats has found that China and Hong Kong account for some three-quarters of exports of dangerous counterfeits. It also found that online sales represent 60% of seizures of dangerous products destined for the EU.
The 90-page study was published on March 17 and jointly conducted by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO). It is based on customs seizure data and other enforcement data from 2017 to 2019, as well as interviews with enforcement experts.
The study assumed that counterfeit products are less likely to meet product standards than legitimate goods and therefore pose greater safety risks. It took two approaches to identifying dangerous counterfeits.
The first approach included all goods that need to meet product-specific safety standards and/or are under the scope of the U.S. Food and Drug Administration (FDA) and/or are subject to the draft SHOP SAFE Act. This broad approach includes apparel products, automotive spare parts, optical and medical apparatus and pharmaceuticals.
The second approach was narrower and looked only at foodstuffs, pharmaceuticals, cosmetics, and goods that are frequently subject to safety alerts and recalls. Under this approach, the most commonly traded categories were perfumery and cosmetics, clothing, toys, automotive spare parts and pharmaceuticals.
Based on the narrower approach, the report found there were 70,000 customs seizures of potential dangerous goods from 2017 to 2019. The total volume of potential dangerous fakes traded was almost $75 billion in 2019, which was 16% of the global trade in counterfeit goods.
Under the broader approach, China accounted for 52% of global customs seizures of dangerous counterfeits, Hong Kong 27% and Turkey 8%. (Under the narrower approach, China accounted for 55%, Hong Kong 19% and Turkey 9%.)
The following data are all derived from the broader approach:
- Online sales represented 60% of global seizures of dangerous products destined for the EU. Of these, cosmetics accounted for 46% of seizures, clothing 18%, toys and games 17% and automotive spare parts 8%.
- The leading destination for dangerous counterfeit goods was the United States (37%) followed by Germany (21%).
- Postal parcels accounted for 60% of dangerous good seized, although sea was the top mode of transport in terms of seized value.
- Among dangerous counterfeits shipped by vessel, the most frequently seized product category was toys and games (28%), followed by clothing (14%) and footwear (12%) although vehicle parts were by far the most seized category by value (partly due to one seizure of 50,000 spare parts from China to Ukraine).
- China was by far the biggest origin of dangerous goods shipped by vessel, representing more than 70% of global seizures. A large number of dangerous goods shipped by sea were destined for Gulf countries, with Saudi Arabia topping the list.
- Among small parcels, footwear accounted for 35% of seizures, clothing 16% and leather goods also 16%.
Impact of COVID-19
The report is the latest joint study by the OECD and EUIPO. Previous reports have found that trade in counterfeit and pirated goods constituted up to 2.5% of world trade in 2019 and up to 6.8% of imports into the EU.
The quantitative analysis in the report pre-dates the COVID-19 pandemic. However, the report notes that the pandemic has likely aggravated existing trends, due to online shopping and broken supply chains.
The study includes several case studies of dangerous counterfeits, including hoverboards, lithium batteries and methanol.
EUIPO Executive Director Christian Archambeau said in a statement: “We are confident that this evidence will help understand the risk that counterfeiting poses to our society, facilitate the development of innovative policies to respond to these challenges, and promote fair trade in the post-COVID recovery.”
You can read and download the full ‘Dangerous Fakes’ report in English, the executive summary (in all EU languages) and press release (in six languages) on the EUIPO website.