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Fake products cost 800,000 jobs annually in the EU

While it is still considered an external phenomenon, the production of counterfeit goods is also increasing in EU Member States. Criminal networks, already experienced in fraud, document forgery, tax evasion or human trafficking, see counterfeiting as a profitable business, with lower risks and the advantage of lower transport costs and circumventing customs controls.

Though data in spheres of illegal activity is heavily based on estimates and approximations, the figures are in any case alarming: estimates of the value of trade in counterfeit products worldwide vary between EUR 600 billion (UN) and close to EUR 1 trillion (other international statistics). For the European Union, the OECD estimates that up to 5 percent or EUR 85 billion of imported goods are counterfeit or pirated, causing the loss of roughly 800,000 jobs and around 14.3 billion in annual tax revues, including VAT and excise duties.

Given that around 39 percent of the EU’s GDP and 26 percent of its employment come from intellectual property right (IPR) intensive industries, the European Economic and Social Committee (EESC) believes the EU and its Member States should no longer ignore this phenomenon, and calls on them to support affected SMEs and industries by updating, harmonising and strengthening the current regulatory framework.

“If we do not act now, we risk multilateral problems such as failure in research, innovation and investment, damage to image and quality, risks to health, safety and the environment, loss of fiscal and para-fiscal revenues, and failure to tackle organised crime”, said Antonello Pezzini, highlighting some of the consequences of inaction. Mr Pezzini is the rapporteur of the EESC opinion on The counterfeit and pirated products industry, which was adopted at the EESC’s July plenary, tabling concrete proposals to fight product counterfeiting and piracy.

Uneven regulation across the EU plays into the hands of criminals

“Both the fragmented and variable nature of national implementation of EU rules and standards and the differences in the effectiveness of customs controls play into the hands of counterfeiters and facilitate the entry of fake products into the EU. This not only endangers the competitiveness of businesses, but in many cases is also a threat to consumers’ health and public safety and security”, stressed Mr Pezzini, who urged the EU and Member States to focus on accelerating the establishment of a single European customs system with shared procedures, instruments and unified, readily available databases.

While the EU’s private sector comprising the industries most concerned by counterfeit products has a main duty in the fight against counterfeiting, it must not be left alone: the European Commission and the Member States must also do their share and urgently update the regulatory framework for IPRs and adapt and harmonise criminal law sanctions in the Member States.

Furthermore, these industries and brand owners need to seek partnerships with internet site providers, content producers, electronic payment operators, advertisers/advertising networks and internet domain registers: together, they will be able to generate rapid adjustments to sudden market changes. “It is in the interest of Europe’s whole economy and industry to maintain their good reputation and consequently fight all fraud. In order to have a clout on criminal networks, strong alliances between the different businesses supported by a robust legal framework are key,” said Mr Pezzini.

The 3,000 free zones located in 135 different countries – with the Tanger Med free zone in Morocco only 15 km away from the EU – need special attention, as these are the areas which are often used as places for exchanging, documenting and re-labelling the contents of containers.

The next steps: draw up an Action Plan and get consumers on board

In its opinion, the EESC calls for a new EU framework for 2018-2021 including a fully financed and coordinated Action Plan to strengthen anti-counterfeiting legislation and initiatives at EU level. Proposed measures, in addition to the ones mentioned above, include:
· Promoting innovative tracking and monitoring applications;
· Stepping up intelligence activity and bilateral law enforcement agreements along the entire supply chain;
· Including anti-counterfeiting clauses in new FTAs;
· Taking coordinated action on e-commerce and adopting common specific rules to monitor the sale of medicines and other sensitive products online;
· Together with EMA, Europol, EFSA and ENISA, drawing up specific rules to monitor sales of drugs, foodstuffs and other sensitive products on the internet; etc.

“We also need to raise awareness”, said co-rapporteur Hannes Leo. “It is important that people be not only informed about the potential risks the purchase of a counterfeit product could pose to their health and security, but also aware of the horrible circumstances – including forced labour and harmful environmental conditions – in which these goods are often produced and what damage counterfeiting does to our economy and jobs.”

Countries whose businesses were most affected by counterfeiting activities between 2011 and 2013 are the US (20 percent), followed by Italy (15 percent), France and Switzerland (12 percent), Japan and Germany (8 percent).

More on the opinion and the proposed measures against counterfeiting and piracy is available on our webpage.


The European Economic and Social Committee / Expatica