Cost of counterfeiting to reach $1.7 T by 2015 - ICC report

MANILA, Philippines - The global economic and social impacts of counterfeiting and piracy will reach $1.7 trillion by 2015 and put 2.5 million legitimate jobs at risk each year, according to a new report released recently by the International Chamber of Commerce (ICC).

The International Chamber of Commerce is the largest, most representative business organization in the world. Its hundreds of thousands of member companies in over 120 countries have interests spanning every sector of private enterprise.

The ICC report was launched Feb. 4 at the 6th Global Congress on Combating Counterfeiting and Piracy, during a panel session on economic impacts.

The report updates a 2008 report by the Organization for Economic Cooperation and Development (OECD) that showed more than $250 billion in counterfeit and pirated goods move through international trade alone.

The ICC study not only brings the estimates up to date, but also examines additional impacts not quantified in the OECD report.

These include the value of domestically produced and consumed counterfeit products, the value of digital piracy, and the negative impacts on society, governments and consumers.

“By filling in the gaps left by the OECD, we have been able to paint a more comprehensive picture of the negative economic and social impacts of counterfeiting and piracy,” Jeffrey Hardy, coordinator of the ICC Business Action to Stop Counterfeiting and Piracy (BASCAP) initiative, said.

He added that “this additional data is important because it provides policymakers with better information on how counterfeiting and piracy undermine innovation, economic growth and employment. It better equips them to make the fight against IP theft a higher public policy priority and take the actions needed to stop counterfeiting and piracy.”

The ICC report reveals that based on 2008 data, the total global economic and social impacts of counterfeit and pirated products are as much as $775 billion every year.

This includes impacts of lost tax revenue and higher government spending on law enforcement and health care.

The figure is estimated to more than double to $1.7 trillion by 2015, due in part to rapid increases in physical counterfeiting and piracy as measured by reported customs seizures and greater worldwide access to high speed Internet and mobile technologies.

The report shows that international trade in fakes currently accounts for more than half of counterfeiting and piracy, and could grow to as much as $960 billion by 2015.

“The report shows that in an interconnected economy, consumers and governments suffer alongside legitimate businesses from the trade in counterfeits,” said Damien O’Flaherty, senior associate at Frontier Economics, the internationally recognized consulting firm that produced the report.

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

He continued that “this illegal business activity deprives governments of revenues for vital public services, forces higher burdens on tax payers, dislocates hundreds of thousands of legitimate jobs and exposes consumers to dangerous and ineffective products.”

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.