Illicit Trade in Fakes under the COVID-19

1. Introduction

Abstract

The COVID-19 pandemic, an unparalleled global event, has significantly affected nearly every sphere of human activity. Among the diverse sectors disrupted was the complex domain of counterfeiting and illicit trade, intertwined with the broader challenges of intellectual property rights (IPR) enforcement. For criminals that run illicit trade networks, the COVID-19 pandemic opened new opportunities for profits. Broken supply chains, strong demand for medicines, protective equipment and tests or limited capacities of law enforcement officials are factors that shaped the landscape of illicit trade.

The COVID-19 pandemic, an unparalleled global event, has significantly affected nearly every sphere of human activity. Among the diverse sectors disrupted was the complex domain of counterfeiting and illicit trade, intertwined with the broader challenges of intellectual property rights (IPR) enforcement. For criminals that run illicit trade networks, the COVID-19 pandemic opened new opportunities for profits. Broken supply chains, strong demand for medicines, protective equipment and tests or limited capacities of law enforcement officials are factors that shaped the landscape of illicit trade.

This report offers a qualitative attempt of understanding of how the COVID-19 pandemic reshaped the world of illicit trade in counterfeit goods. Results discussed in this report primarily rely on a set of structured interviews carried out in July-September 2023 with enforcement and industry delegates from OECD countries, and on findings of a set of deep-dive webinars organised by the OECD Task Force on Countering Illicit Trade1 during the pandemic, between March 2020 and January 2021; see OECD (2020[1]), (2020[2]), (2021[3]), (2021[4]). In addition, the report also presents a set of quantitative illustrations drawn from the OECD-EUIPO database of seizures of counterfeit goods (Box 1.1).

The report is structured as follows. Chapter 2 discusses the main economic impacts of the COVID-19 pandemic, with a particular focus on the European Union. Chapter 3 describes its effects on trade in fakes through the lens of various experts, the challenges encountered, the evolving criminal tactics and potential solutions to mitigate escalating concerns. Chapter 4 concludes and flags some areas for future research.

Box 1.1. The OECD-EUIPO database of seizures of counterfeit goods

Data on customs seizures of counterfeit goods are used as a raw input for analysis. These data originate from national customs administrations and are aggregated and harmonised at the national or regional level and then submitted to international agencies that maintain datasets on seizures. These datasets were received from: (i) The World Customs Organization (WCO), (ii) the EC Directorate-General for Taxation and Customs Union (DG TAXUD), and (iii) the United States (US) Department of Homeland Security (DHS) containing the seizure data from US Customs and Border Protection (CBP, the US customs agency), and from US Immigration and Customs Enforcement (ICE). The global customs seizures data are available from 2011 to 2021.

An overview of customs seizure data used in this report can be found in dedicated overview publications, presented by EUIPO and DG Taxud (EUIPO, 2022[5]),US CBP ICE (CBP, 2022[6]), and the World Customs Organization (WCO, 2022[7]) (WCO, 2023[8]).

References

[6] CBP (2022), Fiscal Year 2021 Intellectual Property Rights Seizure Statistics, US Customs and Border Protection (CBP), https://www.cbp.gov/document/annual-report/fy-2021-ipr-seizure-statistics.

[5] EUIPO, D. (2022), Report on the EU enforcement of intellectual property rights in 2021, https://doi.org/10.2814/6921.

[4] OECD (2021), Chair’s Summary of the webinar “COVID-19 vaccine and the threat of illicit trade” organised by the OECD TF-CIT on 21 December 2020, https://one.oecd.org/official-document/GOV/PGC/HLRF/TFCIT(2021)2/en.

[3] OECD (2021), Chair’s Summary of the webinar “Crisis policy, illicit alcohol and lessons learned from lockdown” organised by the OECD TF-CIT on 12 January 2021., https://one.oecd.org/official-document/GOV/PGC/HLRF/TFCIT(2021)4/en.

[1] OECD (2020), Chair’s Summary of the webinar “High Risk Sectors in COVID-19 recovery” organised by the OECD TF-CIT on 16 June 2020, https://one.oecd.org/official-document/GOV/PGC/HLRF/TFCIT(2020)6/en.

[2] OECD (2020), Chair’s Summary of the webinar “Illicit trade in a time of crisis” organised by the OECD TF-CIT on 23 April 2020., https://one.oecd.org/official-document/GOV/PGC/HLRF/TFCIT(2020)3/en.

[8] WCO (2023), Illicit Trade Report 2022, World Customs Organization, https://www.wcoomd.org/en/topics/enforcement-and-compliance/resources/publications.aspx.

[7] WCO (2022), Illicit Trade Report 2021, World Customs Organization, https://www.wcoomd.org/en/topics/enforcement-and-compliance/resources/publications.aspx.

Note

← 1.  As of July 2023, OECD Working Party on Countering Illicit Trade.