De Gucht’s “most conservative” counterfeiting numbers

On March 1, EU Commissioner De Gucht used overstated counterfeiting numbers, and called them the “most conservative estimates”. Will he do this again today at 6 pm?

On 1 March, De Gucht said: “The most conservative estimates of the size of the global counterfeiting and piracy industry put it at 250 billion US dollars a year.”

This estimate is massively overstated.

The numbers are based on OECD reports. The OECD 2008 report: “To date, no rigorous quantitative analysis has been carried out to measure the overall magnitude of counterfeiting and piracy. (…) Analysis carried out in this report indicates that international trade in counterfeit and pirated products **could have been up to** USD 200 billion in 2005″ (emphasis added). The OECD only provides the highest estimate.

Felix Salmon used the OECD’s own data to try to come up with a realistic estimate: “If 8% of counterfeit imports are worth $385 million, then the total value of counterfeit trade is $4.8 billion. A far cry from $200 billion, to be sure.” Then he analyses how the OECD arrived at its $200 billion number. He concludes: “And that, ladies and gentlemen, is where the $200 billion number comes from. You guess what the maximum amount of counterfeiting is in the countries where it’s most prevalent, being careful to use no empirical data in the process. You then double that number, double it again, and apply it to the amount of world trade: presto, you’ve got $200 billion.”

In 2009, the OECD published an update. Using a complicated calculation, the estimate is raised. The complicated calculation hides the fact it still is an estimate.

A 2010 US Government Accountability Office report is critical about the OECD estimate: “While experts and literature we reviewed provided different examples of effects on the U.S. economy, most observed that despite significant efforts, it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole. For example, as previously discussed, OECD attempted to develop an estimate of the economic impact of counterfeiting and concluded that an acceptable overall estimate of counterfeit goods could not be developed. OECD further stated that information that can be obtained, such as data on enforcement and information developed through surveys, ‘has significant limitations, however, and falls far short of what is needed to develop a robust overall estimate.’ One expert characterized the attempt to quantify the overall economic impact of counterfeiting as ‘fruitless,’ while another stated that any estimate is highly suspect since this is covert trade and the
numbers are all ‘guesstimates.'” (pages 28 and 31)

Professor Michael Geist refers to a 1997 US Government Accountability Office report: “Second, the data contained in the GAO report suggests that the claims associated with counterfeiting are massively overstated. The Industry Committee previously heard from witnesses who noted that there have claims that 5 to 7 percent of world trade involves counterfeit products (some even argue that is growing). The GAO study points to the U.S. Compliance Measure Program, a statistical sampling program, that randomly selects shipments to check for their compliance with the law, including IP laws. Of 287,000 inspected shipments from 2000 – 2005, IP violations were only found in 0.06 percent of shipments – less than one tenth of one percent. This large random sample suggests that counterfeit products are actually only found in a tiny percentage of shipments. Moreover, the GAO notes that despite increases in IP seizures, the value of those seizures in 2005 represented only 0.02 percent of the total value of imports of goods in product categories that are likely to involve IP protection. In other words, the evidence from an independent, U.S. government sponsored agency points to a far different reality from that presented to the two parliamentary committees investigating counterfeiting.”

The Netherlands Court of Audit is very critical about the counterfeiting numbers as well (“major shortcomings”). The Court also writes that the shortcomings are known, but still the numbers are used in public documents and for new policy.

And then, 84.92% of counterfeits in EU come from China. China will not sign ACTA, this will not be affected.

Or will De Gucht just use overstated growth and jobs numbers?

Or the usual myths?



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3 thoughts on “De Gucht’s “most conservative” counterfeiting numbers

  1. Pingback: ACTA-bloggen » Upplagt för dramatik inför morgondagens ACTA-omröstning

  2. Lets do some math. Start with the made up 250 billion figure for the world, that would be around 62 billion for the EU, assuming EU is 25% of world economy. Let us then apply the more realistic figure from the GAO study, that found 0.02 to be the value of actually found counterfeited goods (instead of 6%). So, if 6% would be 62 billion for the EU, the diff. between 6& and 0.02% says the figure rather should be an actual value of 208 million.

    Then we apply China to this equation and thus have to erase 84.92% from this figure, now we are down to 31.4 million. 31.4 million of the 17577 billion EU GDP (17,577,691 million US$ for 2011 according to the IMF) is 0.00018%. 31 million can be compared to the turnover of a local supermarket!

    Now lets break down this 31.4 million to the country of Sweden that have a GDP of 538 billion US$, now we are down to 962 thousand dollars, or 6.6 million SEK. That can be compared to the turnover of a hot-dog stand or the little kiosk on the corner. Now put that figure in perspective to what some politicians want..

    Please double check these figures, i may have made some fatal error