On January 20, the European Union Intellectual Property Office (EUIPO) and the Organisation for Economic Co-operation and Development (OECD) jointly released a research report revealing a close correlation between the illicit trade in counterfeit goods and labor exploitation. The study explicitly points out a significant and recurring link between the intensity of counterfeit trade and poor working conditions, strongly suggesting that such labor environments structurally facilitate the production and circulation of counterfeit products.

    Clear Link Between Exploitative Labor Practices and Counterfeit Supply Chains

    The joint EUIPO-OECD report on counterfeit goods and forced labor draws conclusions based on global customs data and existing labor statistics. Utilizing an econometric model while controlling for variables such as income levels, trade openness, and institutional quality, the study found that for every 1 percentage point increase in the prevalence of forced labor, the volume of trade in counterfeit goods increases by 0.0076%. The global scale of such trade reaches an average of $467 billion annually. The report notes that these findings confirm labor exploitation is not merely a byproduct of counterfeit trade, but rather a symbiotic relationship where the two mutually reinforce each other in global trade.

    The joint EUIPO-OECD report highlights various forms of labor exploitation that facilitate the production and distribution of counterfeit goods. By reviewing multiple studies on illicit trade infringing intellectual property rights, the report details how factories manufacturing counterfeit branded apparel, cigarettes, and footwear extensively utilize child labor and undocumented immigrants. In many instances, these workers operate in environments lacking safety protections and remain under constant surveillance, unable to leave the factory premises.

    The trade in counterfeit goods also plays a significant role in human trafficking activities. The study documents numerous cases where migrants sell counterfeit handbags and DVDs to repay debts to traffickers. Organized crime groups often utilize the same smuggling routes for human trafficking and the distribution of various counterfeit goods, including pharmaceuticals, luxury items, and cigarettes. The EUIPO-OECD report acknowledges that while much of the current evidence linking counterfeit trade to labor exploitation remains anecdotal, the report consistently demonstrates that exploitative labor practices are widely employed in the production of counterfeit goods to reduce costs.

    Data analysis from the EUIPO-OECD report shows a clear positive correlation between the illicit trade in counterfeit goods and labor abuse. Countries identified as major sources of counterfeit goods tend to report higher incidences of hazardous child labor, victims of forced labor, and fatal occupational injuries. Furthermore, these countries generally exhibit higher proportions of undocumented or unregulated employment, alongside lower levels of union representation and collective bargaining. While the report emphasizes that these correlations do not necessarily reflect causal mechanisms, it points out that environments with weak labor protections may facilitate the development of illicit trade networks.

    Call to Enhance Labor Enforcement Mechanisms and Establish Clean Trade Zones

    Weak governance, lack of rule of law, and social vulnerability are prominent characteristics of environments where counterfeit trade thrives amidst exploitative labor practices. With the increasing recognition of the link between these illicit activities, countries are adopting regulatory and enforcement measures to address forced labor. However, these measures have yet to establish enforcement mechanisms specifically designed to prevent organized crime groups from abusing labor; their original intent was primarily to prevent counterfeit goods produced by forced labor from entering the market.

    The EUIPO and OECD point out that the report reveals counterfeiting as essentially a labor market issue rather than purely an international trade enforcement issue concerning intellectual property. This clearly indicates that anti-counterfeiting actions need to address the social root causes that underpin the profitability of the counterfeit industry more deeply. Strengthening enforcement mechanisms against modern slavery could both eliminate the key cost advantages supporting counterfeit trade and potentially increase global GDP by over $600 billion. Additionally, enhanced data sharing between labor practice investigators and counterfeit enforcement agencies would help identify illicit activities in both sectors more effectively.

    The EUIPO-OECD report ultimately proposes several policy directions regarded as effective measures to combat counterfeit trade. In addition to strengthening labor governance and inspection efforts and improving data sharing among investigative agencies, the report suggests that enterprises should more strictly adhere to OECD Due Diligence Guidance and standards for multinational enterprises to better identify and eliminate forced labor risks in supply chains. Simultaneously, the report urges the expansion of the OECD's Certification Program for Free Trade Zones. By increasing the number of certified "Clean Trade Zones," the principles of decent work can be more deeply integrated into the global logistics network system. (Compiled from ipwatchdog.com)

Source:https://ipr.mofcom.gov.cn/article/gjxw/gbhj/om/oum/202601/1994902.html