Labour exploitation and illicit trade

Key messages

• New OECD-EUIPO analysis finds a robust statistical association between labour exploitation and the scale of illicit trade in counterfeit goods. A one-percentage point increase in forced labour is associated with an increase of more than USD 35 million in the value of counterfeit trade.

• Economies more exposed to forced labour, child labour, labour informality are systematically more likely to be identified as sources of counterfeit trade.

• Reducing labour exploitation can generate a double dividend: protecting vulnerable workers while lowering the economic footprint of counterfeiting.

• These findings strengthen the case for integrated trade, labour and enforcement policies, and point to concrete next steps for evidence-based policy action.

What’s the issue?

Large scale of trade in counterfeit goods. Illicit trade in counterfeit goods remains a large-scale challenge for the global economy. Recent OECD and EUIPO estimates indicate that counterfeit and pirated products account for up to USD 467 billion annually, or around 2.3% of world trade. Counterfeiting is deeply embedded in global supply chains, exploiting the same trade routes, logistics infrastructure and market access mechanisms as legitimate commerce.

Wide range of economic and social damages. Illicit trade in counterfeits generates wide-ranging harms. Consumers face heightened health and safety risks, particularly from counterfeit medicines, food products, automotive parts and electrical equipment. Legitimate firms experience losses in sales, brand value and returns on innovation, while governments lose tax revenues and face higher enforcement and public-health costs. More broadly, counterfeiting undermines trust in markets and the integrity of international trade.

Criminals running illicit trade in counterfeits operate outside regulatory and ethical frameworks. Unlike legitimate businesses, counterfeiters do not comply with product standards, tax obligations or labour regulations. Their activities are driven by profit maximisation and risk minimisation, making environments characterised by weak enforcement and limited oversight particularly attractive to illicit operators.

Labour conditions represent a critical dimension of counterfeiting. Compliance with labour standards entails costs that criminals deliberately avoid. As a result, exploitative practices—such as unsafe working conditions, excessive hours, child labour and forced labour—are frequently embedded in illicit production and distribution. Qualitative evidence points to the systematic use of vulnerable workers, including migrants and trafficked persons, in counterfeit supply chains.

Putting people behind the numbers. Our estimates suggest a clear association between forced labour and the scale of counterfeit trade. In practical terms, a one-percentage-point reduction in forced labour—equivalent to around 276 000 people globally, based on ILO estimates—is associated, all else equal, with a decline of more than USD 35 million in the value of counterfeit trade.

Potential double dividend: less labour exploitation is associated with lower levels of illicit trade in counterfeiting. Expressed in these terms, the results point to a potential double dividend: reductions in labour exploitation are associated with lower levels of counterfeiting. While forced labour is only one of several factors linked to illicit trade, the findings indicate that even modest improvements in labour conditions can be associated with measurable economic effects.

Illustrative magnitude. A hypothetical scenario of eliminating forced labour altogether would imply a substantially larger reduction in counterfeit trade (on the order of USD 3.5 billion). This figure is illustrative and should not be interpreted as a realistic or causal estimate. It serves to convey the order of magnitude of the association observed in the data.

The results reflect statistical associations rather than causation. Beyond forced labour, economies more exposed to counterfeiting also tend to exhibit higher prevalence of child labour, greater informality, weaker labour-rights protection, lower trade-union density and poorer occupational safety outcomes. These patterns point to broader labour-governance gaps that may create environments conducive to both labour exploitation and illicit trade

Why is this important?

Illicit trade in counterfeits and forced labour are vast, interconnected global problems that generate hundreds of billions in illicit profits, yet have too often been examined in isolation. Illicit trade in fakes is a major global challenge, undermining innovation, distorting competition and exposing consumers to serious health and safety risks. The OECD and EUIPO estimate that counterfeit and pirated goods account for up to USD 467 billion in global trade annually. At the same time, forced labour affects nearly 28 million people worldwide. These two phenomena have typically been analysed separately, despite growing qualitative evidence that they are deeply intertwined.

OECD-EUIPO analysis shows that labour exploitation is systematically associated with counterfeit trade, indicating it is a structural enabler of illicit activity and a core policy concern, not only a human rights issue. The OECD-EUIPO analysis bridges this gap by combining customs seizure data with internationally comparable labour indicators. It shows that countries more frequently identified as sources or transit points for counterfeit goods also tend to exhibit higher prevalence of forced and child labour, greater informality, weaker labour rights and poorer occupational safety outcomes. Econometric results further indicate that forced labour remains positively associated with the value of counterfeit exports even after controlling for income, exports and other structural factors. This matters for policy: it suggests that labour exploitation is not only a human rights concern, but also a structural enabler of illicit trade, lowering production costs and reducing resistance to criminal activity.

What can policymakers do?

• Strengthen integrated responses across policy silos.

  • Combine customs enforcement, labour inspections and anti-trafficking measures, recognising that counterfeiting, labour exploitation and organised crime often rely on shared networks and logistics.

  • Encourage operational co-operation between trade, labour and law-enforcement authorities, including data-sharing and joint risk analysis.

• Target high-risk sectors and supply chains.

  • Use seizure data, labour indicators and risk-profiling tools to prioritise sectors and routes where counterfeiting and labour exploitation are most likely to converge.

  • Support risk-based border measures that focus enforcement resources where the expected impact is highest.

• Leverage responsible business conduct and due diligence.

  • Promote effective implementation of the OECD Guidelines for Multinational Enterprises, OECD Due Diligence Guidance for Responsible Business Conduct and OECD Recommendation on Transparency in Free Trade Zones, particularly in high-risk geographies and lower tiers of supply chains.

  • Ensure that measures aimed at preventing forced-labour imports are proportionate, evidence-based and WTO-consistent, minimising unintended trade distortions.

References

OECD-EUIPO (2026), From Fakes to Forced Labour: Evidence of Correlation Between Illicit Trade in Counterfeits and Labour Exploitation, Illicit Trade, OECD Publishing, Paris, https://doi.org/10.1787/540dc43e-en.

OECD/EUIPO (2025), Mapping Global Trade in Fakes 2025: Global Trends and Enforcement Challenges, Illicit Trade, OECD Publishing, Paris, https://doi.org/10.1787/94d3b29f-en.

Contact

Piotr STRYSZOWSKI (✉ piotr.stryszowski @oecd.org)

Morgane GAUDIAU (✉ [e-mail])