Counterfeit IP products are only 0.02% of imports

"The Organisation for Economic Cooperation and Development said trade in fake goods represented two per cent of world trade. It said physical trade in counterfeit goods was worth $200bn a year."

Trouble is the OECD number is just a guess, they plucked a percentage from the air, multiplied it by the value of imports, then tried to explain why these counterfeit goods remain undetected.

On the other hand, the US General Accounting Office has actually measured it by opening up containers at random and inspecting them.

http://www.gao.gov/new.items/d07735.pdf

It was on average 0.02% of goods by value. So it's likely negligible in terms of imports into Europe.

As for stamping out counterfeiting in China sold internally in China, the problem you have there is that the goods are made in China. Your expensive Italian designer bag only has it's handle's sown on in Italy and the badge sown on to qualify as 'made in Italy'.

I don't see how China will change their laws. Those luxury goods makers will continue to make their goods in China, finish them in Europe and continue to pass them off as European luxury goods. So China has nothing to lose and everything to gain by us protecting those fake European luxury goods import channels.

In the wider context...

The EU "asks", confirming the often repeated concept of the sovereignty of the member states, but under the Lisbon treaty the Commission will no longer need to ask permission for such things. It strikes me that the EU commission is embarking on a number of projects that require the acceptance of the treaty before they can actually succeed, so whilst on one level this might just seem to be a story about copyright law, on another it's part of the push for "ever closer union" as laid out in every treaty since the coal and steel union.

Don't be surprised if this and other similar issues are used to brow-beat national legislatures into ratifying the treaty.

$200 billion * K / 130 million = $512 per item

A quick reality check, say Europe is 1/3rd of world trade (it's GDP is the larger than US, so this is a reasonable estimate).

That would mean each of these 130 million fake items costs $512. So a $2000 Fendi bag costs $50 to import, yet the fake costs $512?

And those $150 Nike shoes, that cost Nike $9 to make in Malaysia, but the fakes cost $512???

I doubt it, fakes are sold heavily discounted to the real thing, to be worth faking there has to be a huge difference between the price they are sold at and the price they could be made and sold for. i.e. they have to be hugely overpriced.

There simply aren't many goods that match that 'overpriced' condition, the market usually drives the price down to the minimum profit margin making it pointless to counterfeit them. A few training shoes, some handbag, some perfume and Microsoft office software are the only likely candidates.

My guess is they'd like to block the 'clone' market, this is not a counterfeit market, it's products that look similar and compete with EU/US products. The EU has been handing out ever broader design patents to block these competing products.

For example, here is an MP3/4 player that looks like an Apple iPod touch:

http://www.globalsourcesdirect.com/servlet/the-3178/MP4-Player-1GB-Touchpad/Detail

It is $65 a unit in quantities of 4. Nobody is confused that this isn't an Apple iPod Touch, it doesn't work the same, isn't packaged the same, is labelled differently, but it is black and has a touch screen.

This is what I think this current push is about, trying to expand vague IP rights as a market protection measure.

Using the GAO figure gives $5 per fake

Just to add a few points I missed,

if you take the GAO figure (1/100th the size of the OECD ass pulled number), it would be $5 a fake, since regular goods are marked up 3:1 for real products and about 6:1 for fakes (to be worth the risk of selling them), that would mean fakes retailing at $30 which seems much more plausible. i.e. GAO number passes a common sense check, whereas OECD new logo is Goatse man.

As for the safety angle, that usually comes from the drug companies, who want to sell drugs at marked up prices to Europe while blocking the same drugs they sell at cheaper prices abroad. Like the US block on importing drugs from Canada, to prevent 'counterfeit' drugs. Yeh, right.

But even the lobbyists seem to be weak on that:

http://www.icc-ccs.co.uk/bascap/Extracts/Fatalities.htm

Reaching for deaths in Russia and Panama and Kazakstan as proof to the risk in Europe? I'm pretty sure we buy Aspirin from the big Bayer factory in Cologne it just wouldn't be worth buying it elsewhere since the cost is pennies. Fake wine laced with Ethelyene glycol? Not since France did it.

IP what IP

If intellectual output were really property the government would tax it even if you didn't sell it or make money from it just as they do real property there is no such thing as IP there are just people trying to obtain trade sanctions and corner markets for fleecing.

@Anonymous Coward

Your math is accurate, but your reasoning lacks. The 130m figure references the number of objects seized at EU borders, not the total number of objects illicitly traded. The $200bn figure references the estimated total value of the counterfeit trade, which presumably entails a large number of successful, undetected deliveries.