Risks related to the smuggling of drugs, weapons, and cash are huge and well understood. But the phenomenon of illicit trade is much wider, and includes counterfeit goods, illicit medicines, excise goods (e.g. alcohol or tobacco), wildlife products, raw materials (e.g. oil or minerals), cultural heritage goods, waste, scrap, and industrial gases. This wide scope poses challenges for government agencies in co-ordinating their enforcement activities. But the scale of the threat is significant: trade in counterfeit goods alone amounts to USD 460 billion annually.
Illicit trade
The integrated global economy provides opportunities for citizens and businesses, but also for criminals running illicit trade networks in, for example, counterfeits, illicit medicines, wildlife, narcotics, excise goods, and raw materials. Countering illicit trade is essential to prevent wide-ranging damaging effects, from exposure of citizens to dangerous products to loss of needed tax revenue.
Key messages
The damaging effects of illicit trade are wide-ranging. They are felt not only in lost government revenue, but across legitimate businesses and by citizens who can be exposed to sub-standard and even dangerous products. Illicit trade results in lost jobs, reduced tax revenues, and lower profits for innovative firms, with implications for longer-term innovation and growth. In some cases, these effects can be measured; for example, the total volume of forgone sales by Italian rights owners due to infringement of their intellectual property in 2018 amounted to EUR 16.9 billion, or 2.5% of their total sales that year. Beyond direct economic damage, illicit trade poses risks for consumer health and safety, and for the environment. Illicit trade also fuels corruption and provides revenues for, and encourages the proliferation of, criminal networks.
All smuggled goods carry risks and can pose threats to consumers. Some goods that are illicitly traded, including foodstuffs, pharmaceuticals, and cosmetics, are frequently subject to safety alerts and recalls. Concerns are particularly acute in the case of counterfeit medicines for the treatment of serious diseases such as malaria, HIV/AIDS, and cancer. In 2016 alone, international trade in counterfeit pharmaceuticals was estimated at USD 4.4 billion.
Context
Illicit trade harms innovative small- and medium-sized firms
Many small- and medium-sized firms (SMEs) are negatively affected by illicit trade, in particular in counterfeit goods. Counterfeiters target all types of innovative goods produced by SMEs, with electrical machinery and electronics, clothing and fashion goods, perfumery and cosmetics, and toys and games the most frequently faked. Many of these fake goods are substandard, and can pose health and safety threats to consumers. Moreover, an SME whose intellectual property (IP) has been infringed has a 34% lower chance of survival than SMEs that do not experience IP infringement. That is, by making further operations unprofitable, counterfeiting significantly increases the risk that an SME may be forced to close or declare bankrupcy.
Illicit trade includes counterfeit medication for diseases, such as malaria, HIV/AIDS and cancer
According to customs data, counterfeit antibiotics, lifestyle drugs, and painkillers were the pharmaceutical products most often seized by customs authorities from 2014 to 2016. Other counterfeit pharmaceuticals often seized by customs authorities worldwide include treatments for malaria, diabetes, epilepsy, heart diseases, allergy, blood pressure, cancer, and stomach ulcers ailments, as well as local anaesthetic.
Latest insights
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Illicit trade in counterfeit goods is a growing threat in our globalised innovation-driven economy, challenging the integrity of supply chains, while negatively affecting business profits, economic growth, and consumer health and safety. Its harmful impact on global markets and on innovation should not be underestimated.Learn more
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위조품의 불법 무역이 혁신 주도의 글로벌 경제를 점점 위협하면서, 공급망의 무결성을 유지하기가 려워지고 있으며 기업의 수익과 경제 성장, 소비자 건강과 안전에도 악영향을 미치고 있다. 글로벌 시장과혁신에 미치는 유해한 영향을 과소평가해서는 안 된다.Learn more