Abuse of the Belt and Road Initiative in Illicit Trade

China’s Belt and Road Initiative (BRI), launched in 2013, is the largest infrastructure development program ever undertaken by a single country. BRI investments aim to increase Chinese exports through better infrastructure links and expand the import capacity of participating countries. While BRI has improved connectivity and helped increase trade, newly built infrastructure may also be exploited by counterfeiters.

The new jointly written report from the OECD and the EUIPO analyses the nexus between the BRI initiative, China’s export capacity, and recent trends in seizures of counterfeit goods exported from China and from countries participating in the BRI initiative.

Main findings:

• The BRI initiative has helped China maintain a high pace of export growth, continuing a trend that started when it joined the WTO in 2001.

• A statistical analysis shows a positive correlation between the level of BRI investments in a country and the export of counterfeits from that country.

• Since 2015, the number of cases of seizures at the EU’s borders of counterfeit goods arriving from China has increased both in absolute and relative terms, as a share of total number of seizures.

• Over the same period, the value of the seizures of counterfeit goods from China at the EU borders has decreased both in absolute and relative terms, as a share of total value of seizures.

• The reason behind these diverging trends is the declining number and value of seizures of goods transported by sea and, at the same time, the increasing role of seizures of goods transported in smaller volumes, such as by parcel or express courier.

• The decline in the value of seizures of goods from China can be explained by several parallel trends analysed in the report, such as:

• The lower share of counterfeit goods in terms of value when compared to the overall value of genuine, non-counterfeit Chinese exports.

• The declining capacity of EU authorities to detect counterfeit goods due to ever larger volumes of Chinese exports and China’s deeper involvement in managing key transport hubs such as ports.

• The fact that, increasingly, more complex routes are being used, including the use of newly built infrastructure. These more complex routes can then be used to transport counterfeit goods from China.

Source: https://www.euipo.europa.eu/en/news/observatory/abuse-of-the-belt-and-road-initiative-in-illicit-trade