Effects of Counterfeit Product on Global Economy

¶ … Counterfeit Product on Global Economy

Counterfeiting may be described as crime with 'fakes' comprising a purchase which is alternatively cheap, and the parties involved see this as of low risk in terms of prosecution having light penalties as compared to the large profit which is always made. Counterfeit products trade internationally is approximated to be more than global trade by six percent. The effect is not only felt to business and investment opportunities but also on society and global economy negatively.

Trade involving counterfeit goods is profitable and proofs indicate that on top of connection historically involving organized crime and counterfeit, terrorist groups take advantage of this to get money for their activities globally which is dangerous to the community. The variety of products of counterfeit is very extensive and the tendency shows that counterfeiters have expanded from dealing in luxury goods to exploiting of the consumer goods, even in medicine, vehicle parts, aircraft and baby food. Apart from this being illegal it posses great danger to the safety and health of the public for such products are not passing safety checks. (First Global Congress on combating counterfeit, 25-26 may 2004)

Reports from industry and companies association indicate that packaging quality used by counterfeiters is becoming better, which is not easily differentiated to whether fake or real by the enforcement personnel or consumers. They have many times prove to be adaptable, well organized making them to use greater covert and measures which are sophisticated to keep away from detection and prosecution.

There is growth in counterfeits exports and trans-shipments problem. Shipping of products by counterfeiters globally for final assembly and distribution increases hence reducing seizures risk in the components producing countries. Owners of trademarks are progressively getting product counterfeit and distribution operations in Russia and earlier Soviet Republics; India, the Middle East, China, some Latin countries and Africa. Property intellectual crime makes public and businesses hundreds of billions of U.S. dollars each year, damages innovation and investment, cause economic disastrous for small businesses, severally it escapes taxation due to forged or invalid document if not smuggled of such goods into the countries.

From the statistics of government, anecdotal accounts and press reports shown by individual companies and industry associations reveals that the worldwide increase in the scale of product counterfeit was in 2003. Japan, U.S. And EU experienced a large rise in seizures of counterfeit goods in 2003.Report from U.S. customs revealed that there was a rise by 12 per cent of the figure of seizures in 2003 over the previous year, and this was the same to the value of fakes seized. In 2002 and first half of 2003 from the report of seizures by EU indicate a great increase in the figure of the recovered of counterfeit goods at the borders of EU. From Quality Brands Protection Committee (QBPC), survey is connected with this trend.

US and EU trends indicate an important diversification of activity of counterfeit. The intercepted of the number of toys which are fake in EU by customs had reached 56 per cent in the first half of 2003 as compared to 2002. In miscellaneous seized products, U.S. Europeans customs are seizing additionally goods which are not assembled for example bottles, corks, labels. Over the internet experiences rise in trade as shown by some reports causing counterfeits delivery via the mail.

In the year 2003 as it ends, European Commission publish a number that indicate the customs seized about to counterfeit of about 85 million or articles which are pirated at the external borders of EU (2002) and 2003 first half of 50 million. In 2002, seized 66 per cent of many of counterfeit goods in Europe came from Asia specifically in China and Thailand.

As per the European Commission and Organization for Economic Co-operation and Development, 100,000 loss their jobs every year due to counterfeit goods. (OECD 1998). The estimate of City of New York losses yearly of U.S.$500 million of taxes of state sale due to counterfeit goods. According to survey done in Nigeria shows that 80 per cent of the drugs supplied in main pharmacies in Lagos' capital city were counterfeit.