Counterfeit sales cost global economy $464 billion

Global trade in illicit tobacco products contributes to a $50 billion loss in global tax revenues

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International trade in counterfeit and pirated products amounted to as much as $464 billion in 2019, with e-commerce proliferating the sale of fake goods in the digital age, a conference heard.

The numbers, from a report published by the Organisation for Economic Cooperation and Development (OECD) in the summer, were discussed at the EMEA Security Conference in Dubai on Thursday.

The report estimated that 2.5 per cent of world trade is linked to counterfeited items.

The goods, usually electronics, cosmetics, pharmaceuticals, car parts and cigarettes, are usually of inferior quality and pose a threat not only to public health, but society as a whole.

Speaking at the conference in Dubai, Philippe Van Gils, head of illicit trade prevention at Philip Morris International, called it a social and economic menace.

We have to make sure our supply chain is as safe as possible. Knowing your customers, tracking origins of products and ensuring you know your points of weakness is crucial
Philippe Van Gils, Philip Morris International

“We have to make sure our supply chain is as safe as possible,” he told The National.

“Knowing your customers, tracking origins of products and ensuring you know your points of weakness is crucial.

“It takes a network to fight a network. There has to be a clear and exhaustive strategy to tackle counterfeit goods and fight trade fraud.”

The potential for physical harm to consumers from the use or consumption of counterfeit goods, accidental or intentional, is clear.

Poorly manufactured pharmaceuticals, cigarettes and cosmetics can cause health issues, while faulty car parts can result in serious injury or even death.

Philippe Van Gils, head of illicit trade prevention at Philip Morris International. Ruel Pableo / The National

However, another key reason society suffers from counterfeiting is the loss in potential tax revenue, which can affect economic growth.

A group of people working within a sector of organised crime, such as counterfeiting, is extremely unlikely to declare earnings of their illegal enterprise to the government.

In the tobacco industry alone, Mr Van Gils said about one in 10 products, or 12 per cent, are counterfeit, which contributes to a “$40 billion to $50 billion loss in global tax revenues”.

Use tech to combat illicit trade

Educating consumers and harnessing technology is one way of combating such organised crime.

But authorities and government bodies have to strengthen regulations and standards for import and export too.

“It’s about being proactive, not just reactive,” Mr Van Gils said.

“Take technology development for example. The acceleration that took place because of Covid-19 was a good change from a consumer’s point of view.

“Usually, they are the victim and only find out a product is fake when they receive it, which is too late.

“Consumers can now scan codes on packaging to check if they are genuine or not, they have a platform on their phone whereby they can identify if it is fake or not.”

He said they can use such technology when browsing online, or at the place of purchase, and play an active role in reporting illegal trade to the authorities.

The following indications can help a consumer detect whether a product is genuine or not.

Examine the quality of the product, be wary of unusually low prices, check if logos and trademarks are displayed correctly and, when in doubt, contact or check out the website of the manufacturer of the genuine product.

In today’s world, Mr Van Gils said, “criminal groups are a moving target”, so it was necessary for all organisations to work together to combat the trade, including public and private companies, policing authorities and the public.

In recent years, he said there had been a phenomenon in Europe whereby criminals were setting up temporary counterfeit factories and forcing migrants to work in terrible conditions to produce fake goods.

Within three months, they would pack up and move elsewhere.

UAE raids crackdown on fake goods

Last year, customs officials in the UAE seized 923,724 counterfeit goods at various entry points to the country.

The Intellectual Property Rights Report in 2020, which was issued by the Federal Customs Authority, identified hundreds of thousands of counterfeit items discovered in numerous raids.

According to the report, counterfeit goods seizures by marine or sea transport represented 70.7 per cent of total seizures, followed by air cargo at 19.5 per cent.

Land transport and regular courier mail accounted for 4.9 per cent.

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Updated: October 30, 2021, 8:18 AM