In 2007, the Organization for Economic Cooperation and Development released a report estimating the annual value of the international, physical trade of counterfeited consumer products at approximately $200 billion (U.S). This equals around 2 percent of the entire world trade and exceeds the GDP of 150 states.

Counterfeiting is a form of trademark infringement that occurs when a mark is used in a manner that is likely to cause confusion as to the source, sponsorship or endorsement of the product with which the mark is being used. Although most consumers think of fake watches, designer clothes, sunglasses and other goods that are directly offered to consumers, the issue may hold larger ramifications in business-to-business markets.

Nowadays, counterfeit products can be found in the auto parts, jewelry, cosmetics, software, medical devices and food products industries, to name a few. Even the aircraft market is hurt by fake goods. The consequences are obvious. Not only does it cause job losses at American and European companies, counterfeiting also raises a number of health and safety issues. Who would want, for example, to fly in a plane with parts sold on the cheap in the black market?

Counterfeiting also hurts investments and innovation — points raised recently by publishing houses, movie studios and recording companies. The U.S. film industry, for example, says it loses more than $6 billion a year due to the sale of pirated movies. But the United States is not alone on this. In October 2007, the European Commissioner for Trade, Peter Mandelson, announced that the European Commission would seek a mandate from European member states to negotiate a new Anti-Counterfeiting Trade Agreement (ACTA) with major trading partners. These trading partners include Canada, Mexico, South Korea, Japan, Switzerland and New Zealand in addition to the United States.

Even though such an agreement is more necessary now than ever, quick action is not likely. ACTA’s goal is to provide a high-level international framework that strengthens the global enforcement of intellectual property rights and helps in the fight against counterfeit products to protect consumers from the health and safety risks. It would also strengthen efforts to protect American and European intellectual property around the world, which is a key part of the EU’s so-called Global Europe Trade Strategy. ACTA is supposed to contribute to fighting counterfeiting in three ways:

• Building international cooperation that leads to harmonized standards and better communication between authorities.
• Establishing common enforcement practices to promote strong intellectual property protection in coordination with right holders and trading partners.
• Creating a strong modern legal framework that reflects the changing nature of intellectual property theft in the global economy, including the rise of easy-to-copy digital storage mediums and the increasing danger of health threats from counterfeit food and pharmaceutical drugs.

Both the U.S. and the EU have realized the counterfeit problem and have been seeking strategies to combat counterfeiting in their respective territories. But this is not enough. Given the important role trade plays in both the American and European economies, industry representatives on both sides of the Atlantic should be reminding regulators of the need to curtail counterfeiters.

Geiger is founder and managing partner of Alber & Geiger, a leading EU government relations law firm with offices in Brussels and Berlin. Before that, Geiger was head of the EU Law Center of Ernst & Young, and president and CEO of Cassidy & Associates Europe. He has written a handbook on lobbying the EU.