Inconsistent penalties, insufficient checks on small parcels, and a lack of information on shipments in free trade zones allow criminal networks to traffic billions of dollars worth of fake and prohibited goods each year.

Last week, the OECD introduced a new phase in its efforts to help governments counter these enforcement gaps and better protect consumers and businesses.

A new policy study, “Governance Frameworks to Counter Illicit Trade,” focuses on the ineffective penalties and sanctions around the shipping of illicit goods, the poor screening of small parcels and the insufficient control over goods passing through free trade zones.

“Trade in fake and prohibited products can be dangerous for consumers and costly for companies and governments,” said OECD Director of Public Governance Marcos Bonturi. “This affects industries in all OECD countries and increasingly from emerging markets as well. Tackling policy gaps can start to increase the risks and lower the rewards of illicit trade for criminals.”

OECD work offers a solid evidence base on illicit trade, revealing that, on average, 2.5 percent of internationally traded goods are counterfeit, rising to 6.5 percent for IT and communication products. This new OECD work explores in depth how poor implementation of policies against illicit trade, and a lack of co-ordination across borders, is allowing criminal networks to evade detection and enforcement; how rapid growth in the use of postal and courier services, as well as online sales, is leading to more illicit trade in small shipments, which increases the cost of enforcement; and how free trade zones—separate areas inside a single country that are subject to light or no regulation, duties and taxes—can be safe havens for criminal networks looking to move illicit goods.

The report also documents enforcement practices in BRICS economies. The OECD will release additional data and detailed analysis this year.