By Seth Hays*
Trade in counterfeit goods accounts for about 2.5 percent of world trade ($461 billion) – and over 80 percent of these counterfeits are manufactured or traded in the Asia-Pacific region. Digital commerce in Southeast Asia alone will grow to $1 trillion by 2030. But as commerce moves online and e-commerce increases, so does the trade in counterfeit goods.
What is unclear, however, is the scale of this problem and the extent to which e-commerce counterfeiting will negatively impact consumers and business innovation. In order to better manage digital commerce, Asia-Pacific countries should take smart measures to prevent trade in counterfeit goods and promote confidence in e-commerce.
The Asia-Pacific region is at the heart of the world’s most innovative and expansive trade deals. The high-standard Comprehensive Progressive Trans-Pacific Partnership (CPTPP) includes seven Asia-Pacific countries, while the broad reach of the Regional Comprehensive Partnership (RCEP) includes 30 percent of global GDP and 15 Asia-Pacific economies. Innovative agreements such as the Digital Economy Partnership Agreement and the Singapore-Australia Digital Economy Agreement signed by Singapore, Australia and New Zealand, among others, serve as models for a new form of trade agreement.
Asia-Pacific countries are even joining “softer” projects that don’t qualify as “hard” trade deals, such as China’s Digital Silk Road or Washington’s Indo-Pacific Economic Framework (IPEF). What all these agreements have in common are digital trade provisions. That makes sense – the future of commerce in the region and the world will inevitably have a digital footprint.
Selling “counterfeit” products and services online is the fastest growing form of intellectual property infringement. They are fueled by the global increase in e-commerce. The United Nations Office on Drugs and Crime reported in 2019 that in Southeast Asia, “the proliferation of counterfeit goods via the internet and e-commerce has transformed what was once a low-risk, high-profit transnational crime into an even more borderless one risk and greater profits by providing counterfeiters (as well as digital pirates) with a powerful global platform to market and distribute their wares to a greater number of potential consumers at minimal cost.”
The pandemic has exacerbated this trend, especially in the Asia-Pacific region. South Korea’s Intellectual Property Office recorded a nearly doubling of reported online counterfeit sales in 2021, while the Singapore Consumer Association cited a nearly tripling of reported counterfeit online sales in 2020. Addressing this issue requires awareness and action from all stakeholders – consumers, trade associations, brands, platforms and governments.
The digital divide – the divide between those with and without access to the internet and telecommunications – in Asia Pacific is well documented. However, the question remains whether increasing access to smartphones and reliance on e-commerce will create a new digital divide where price-conscious and vulnerable consumers are targeted by online counterfeiters.
Clean online marketplaces should be accessible not only to affluent consumers who are willing to pay a premium, but also to those who do not have the means to protect themselves from counterfeit goods. Governments across Asia Pacific should enact smart policies such as: B. Running public awareness campaigns or using brand record systems at customs to better identify and stop counterfeits at the border to build a reliable and trustworthy digital commerce, free from counterfeit goods and leading the world at the elimination of counterfeits on the Internet.
Digital economy agreements emerging across the region contain important chapters on online consumer protection. They usually contain specific mentions of fraud prevention, refunds for defective products, and ways for consumers to resolve disputes with online platforms and sellers. These provisions should go further and mention the buying and selling of counterfeit goods that infringe trademark rights and allow trademark owners to take legal action against online sellers of counterfeit goods.
Other actors must make their contribution. Asia’s technology companies are among the largest and fastest growing in the world. Industry standards will play an important role in developing the best products and services of the future. The International Organization for Standardization (ISO) – the world-recognized international organization for setting standards – comprises the secretariat for the ISO/TC 321 technical committee for e-commerce standards, based in China. Future ISO standards for e-commerce must set high standards to prevent the sale of counterfeit products and services on the Internet.
Private businesses — including sellers, platforms, and brands — must adopt best practices to combat the sale of counterfeit goods online. The International Trademark Association has published a set of recommendations for businesses and intermediaries to combat online counterfeiting. This includes knowing your customer, proactively removing fake listings using AI and technology, and preventing repeat listings from the same bad faith sellers.
The pieces are in place to further accelerate digital commerce in Asia Pacific, but its success is not guaranteed. As innovators bring new products and services to consumers, they must rely on established brands and reliable e-commerce platforms to build trust in these new and unfamiliar digital ecosystems.
If consumers cannot make their purchasing decisions without doubts about the quality and safety of those products and services, trade in the region will stall in the last century.
*About the author: Seth Hays is the principal representative of the International Trademark Association in Asia Pacific. He was a visiting scholar at the East-West Center and the Korea Foundation, where he researched US-South Korea intellectual property cooperation in Southeast Asia.
Source: This article was published by the East Asia Forum