From Fakes to Forced Labour

5. Key findings and policy directions

The analysis presented in this report sheds new empirical light on an issue that has long been discussed, but rarely quantified: the relationship between illicit trade in counterfeit goods and the exploitation of labour. The evidence presented here shows that these two phenomena are not merely parallel challenges, but closely intertwined dimensions of a single economic reality in which weak governance, poor enforcement, and social vulnerability reinforce one another.

5.1. Understanding the connection

Counterfeiting has often been described as a problem of intellectual property and trade enforcement. Yet the findings of this report reveal that it is also a labour-market problem. Economies in which forced labour is more prevalent are consistently those in which the intensity of counterfeit trade is higher. This relationship holds even after controlling for the level of income, openness to trade, and institutional quality. In other words, the data indicate that the exploitation of workers and the production of fake goods tends to occur within the same enabling environments – contexts characterised by weak labour protections and limited rule-of-law enforcement.

The relationship uncovered here is not accidental. Counterfeit production thrives where human labour is cheap, unprotected, and easily replaceable. In such contexts, coercion or extreme forms of vulnerability substitute for productivity or innovation as sources of competitiveness. The econometric models demonstrate that forced labour is one of the most robust predictors of counterfeit export intensity. The same patterns emerge with high informality, which together form a structural ecosystem in which illegal manufacturing can flourish. Although informal employment is not included in the final model presented here, testing several alternative specifications indicates a significant relationship between the number of counterfeit goods seized by country of origin and levels of informality (Annex A). For clarity and conciseness, only two models are reported in the main text. However, the exploratory analysis yielded several insights. Notably, the results suggest that informal employment plays a significant role in facilitating more extensive illicit economic activity, which is associated with multiple dimensions of poor labour standards.

Beyond numbers, these results echo the evidence gathered by enforcement agencies: the existence of clandestine factories operating without contracts, warehouses where migrant workers are locked in overnight, or small workshops where children assemble counterfeit products. Quantitative analysis confirms these are not isolated stories, but symptoms of broader economic linkages between criminal trade and labour abuse.

5.2. Broader implications

Recognising this connection changes how policymakers could frame the risk. Efforts to counter illicit trade must also engage with the underlying labour and social dynamics that make counterfeiting profitable, in addition to strengthening border controls and other intellectual-property enforcement. Similarly, initiatives to eradicate forced labour must take into account the trade and supply-chain dimensions that perpetuate the demand for cheap, unregulated production.

This convergence has three important implications.

First, labour rights and trade integrity are mutually reinforcing: strengthening one advances the other. Protecting workers from modern slavery helps remove one of the key cost advantages that sustain illicit production. Conversely, dismantling criminal trade networks contributes to a more level playing field for employers and workers who operate in compliance with labour laws and standards.

Second, data and enforcement need to evolve together. Customs and labour authorities often operate in parallel, yet their information is complementary. Integrating labour-risk indicators – such as prevalence of forced labour or informality – into customs risk-profiling systems could help identify shipments or production clusters at higher risk of illegality. Likewise, labour-inspection strategies could benefit from trade-related intelligence on suspicious operators or supply chains.

Third, the results underline the strategic importance of social protection. The econometric evidence shows that where rule of law (including labour law), is eroded, counterfeit trade arises. This suggests that social policies are not merely redistributive; they are preventive instruments against illicit trade and the exploitation that sustains it.

5.3. Vectors for action

On the basis of these insights, several broad policy directions emerge:

• Strengthen labour governance and inspections. Effective inspection systems, equipped to detect both forced labour and links to illicit production, are a first line of defence. This includes training inspectors to recognise indicators of counterfeit manufacturing and ensuring co-ordination with customs and law-enforcement agencies.

• Integrate labour-rights risk into trade enforcement. Customs and trade authorities could include labour-rights metrics among the criteria used for targeting high-risk shipments, particularly in sectors known for counterfeit production such as textiles, footwear, and electronics.

• Promote responsible business conduct. The OECD Due Diligence Guidance and the Guidelines for Multinational Enterprises provide frameworks for companies to map, assess, and mitigate forced-labour risks in their supply chains. Broad implementation of these tools can reduce demand for illicit inputs and promote cleaner trade flows.

• Expand the certification of clean trade zones. The OECD Free Trade Zone Certification Scheme demonstrates how a trade-integrity framework can simultaneously strengthen controls against illicit trade and reinforce compliance with labour standards. Extending this model to additional regions could help embed decent work principles in global logistics networks.

• Invest in data and transparency. The empirical exercise behind this report depended on access to harmonised data on labour and trade. Fostering such data collaboration will be crucial for monitoring progress and refining risk assessment.

• Promote tailored training for investigators to spot labour exploitation. Targeted training should be developed to help identify and report signs of labour exploitation during counterfeit enforcement operations.

Furthermore, to maintain visibility over these interlinked risks, the OECD could in future work track indicators to monitor forced-labour related vulnerabilities. Such indicators would allow regular updates, cross-country benchmarking, and early detection of emerging vulnerabilities in global value chains.

5.4. Moving forward

This report demonstrates that the relationship between counterfeiting and labour exploitation is real, measurable, and policy-relevant. It calls for a more integrated approach – one that treats trade integrity, decent work, and fair competition as parts of a single policy agenda. Ending forced labour is not only a moral imperative, it is also an economic necessity to protect legitimate trade, safeguard innovation, and ensure that global markets reward compliance rather than criminality.

The OECD and its partners will continue to refine evidence and developing tools that help governments and businesses close the governance gaps that are exploited by counterfeiters and traffickers. The findings of this report are clear: where the playing field is levelled, markets are fairer and illicit trade loses ground. Combating labour abuse, therefore, is not only a matter of human dignity, it is the cornerstone of sustainable, clean trade.