Illicit trade in counterfeit goods remains a persistent and significant threat to the global economy. Counterfeiting undermines legitimate business activity, erodes incentives for innovation, and deprives governments of fiscal revenue. According to OECD and EUIPO research, the value of international trade in counterfeit and pirated goods amounts to up to USD 467 billion annually, which represents as much as 2.3% of global trade. Such a scale demonstrates not only the sophistication of the counterfeit trade, but its deep entrenchment in the global economy.
The harm caused by counterfeiting is multifaceted. Consumers face heightened health and safety risks from substandard or dangerous fake goods ranging from medicines to car parts. Rights holders lose sales, brand value, and the returns on innovation. Governments lose tax revenues and face increased burdens on enforcement and public health systems. More broadly, counterfeiting undermines trust in markets and international trade, while also fuelling organised criminal networks that reinvest illicit proceeds into further illegal activity.
At first glance, the drivers behind counterfeiting are similar to those of legitimate businesses: the pursuit of profit and the minimisation of risks. Both legitimate and illegitimate businesses can engage in economic offences such as fraud and tax evasion. The spectrum of criminality, however, is much wider for counterfeiters and can extend well beyond economic misconduct. Organised crime groups, which range from informal criminal alliances to complex transnational enterprises, frequently operate without ethical or legal constraints and across multiple forms of crime, including such violent activities as human and drug trafficking. Their risk calculations are shaped primarily by enforcement conditions, such as the likelihood of seizures, inspections, and penalties. A weak enforcement environment is thus particularly attractive to counterfeiters. This creates additional vulnerabilities in international trade and supply chains.
A critical dimension of this illicit economy concerns labour. In seeking to avoid regulatory costs and maximise profit, counterfeiters often exploit and abuse labour, including through hazardous working conditions, underpayment, and forced labour practices.
While there are recurring concerns related to the use of state-sponsored forced labour in supply chains, or instances in which legitimate firms can fail to uphold labour standards in their supply chains, this report focuses on the use of forced labour by criminal counterfeiters, who operate outside of all regulatory frameworks. By documenting the extent of labour rights violations among counterfeiters, this report strengthens the argument of the urgent need to tackle counterfeiting as both an economic competitiveness issue and a social one.
There is also anecdotal evidence pointing to a darker convergence: smugglers of counterfeit goods may be exploiting the same routes, logistical networks, and facilitators as human traffickers. If confirmed, such an overlap would underscore the seriousness of the issue, suggesting that counterfeiting not only harms consumers and markets, but exacerbates human exploitation.
This report examines the evidence to support these claims. By exploring the intersection between counterfeiting, labour abuses and broader criminal networks, it aims to provide new insights into the social costs of counterfeit trade and to inform policies that safeguard markets, workers, and consumers alike.