industry focus
Report highlights European cost of fake goods
A new report has for the first time attempted to put a figure on the cost of counterfeit goods to industry and the collective Governments of Europe.
The European Observatory on Infringements of Intellectual Property Rights has released its latest study into the economic cost of IP rights infringement, revealing that the clothing, footwear and accessories sector loses approximately €26.3 billion of revenue annually due to the presence of counterfeit products in the EU market.
But it is the related finding that Government revenues not coming into the EU member state treasuries - to the tune of €8.1 billion annually - that will resonate with law and policy makers.
The €26.3 billion of revenue losses (which includes losses in manufacture, wholesale and retail trade sectors) correspond to 9.7% of the sector’s total sales. Additionally, the study calculates that these lost sales translate into direct employment losses of approximately 363,000 jobs, a figure that does not take into account the effect of imports, as in such cases the associated employment impacts occur outside of the EU.
Adding the knock-on effects on other industries and Government revenue, when both direct and indirect effects are considered, counterfeiting in this sector is estimated to cause approximately €43.3 billion of lost sales to the EU economy, which in turn leads to employment losses of 518,281 jobs and a loss of €8.1 billion in Government revenue.
The findings certainly make for a powerful message for law and policymakers. The estimated and conservative loss of Government revenue, from just the clothing (including sports clothing), footwear and accessories sector, is a figure that will focus minds on the need to combat illicit trade. While significantly higher than the revenue lost due to the presence of counterfeit cosmetics (previously estimated as €4.7 billion annually), the percentage of total sales that counterfeits account for was in the same ballpark – 9.7% in the clothing (including sports clothing), footwear and accessories sector compared with 7.8% in the cosmetics and personal care sector.
Should planned future studies into the sporting goods, games and toys, jewellery, handbags and luggage sectors find a similar level of sales lost to counterfeits, the billions lost in terms of Government revenues will rise significantly, the report suggests.
