Imitation Nation

In this week's episode of the Imitation Nation Podcast, Sven and Shabbir talk with Piotr Stryszowski, a long time expert in the global counterfeit trade problem. Check it out!

Shabbir (00:01)
Welcome to Imitation Nation. This is Imitation Nation, maybe episode 36, and we have our first European guest on. So this is the first time we've tried

Sven (00:11)
Yay.

Shabbir (00:11)
to span an ocean. Our guest today is Piotr Stryszowski from the OECD. We've got a lot of exciting things to talk about. And if you don't follow Piotr on LinkedIn, you should.

Shabbir (00:22)
And he has a he has a lot to say about the counterfeit trade and we're gonna talk a little about that today. But thank you for making time for us. It's very well it's very generous of you.

Piotr (00:33)
Thank you for having me.

Shabbir (00:34)
tell us a little bit about y how you got into illicit trade because you're obviously a international expert in illicit trade, which is why we we are so excited to talk to you. What what's your origin there? What's what was your entree and what do you find most fascinating?

Piotr (00:52)
Well, Shabbir thank you so much for this introduction. I'm really honored. I'm an economist by training, right? So sometimes asking myself, who am I to tell people something? my best skill is to bring people to the table smarter than me, offer them some coffee, excellent French croissants, and listen to them. but back to your question. well, I'm an economist by training.

Piotr (01:15)
Right, I did my PhD in the economics of IP, intellectual property, how actually intellectual property adds value to products, to countries. It's a legal concept, but how to assess economically IP? Is it possible? Right. That was that was my main thesis. and then after I completed this, I got a job at the OVCD.

Piotr (01:41)
Where eventually, after some years, I ended up managing working party on countering illicit trade. Right, so it's it sounds a bit of a stretch from IP to illicit trade, but actually it's not. Right? The our working party is dedicated to understanding illicit trade today.

Piotr (02:06)
At the OECD, well, we are mostly economists, right? we work with data. We want to understand things using data, using numbers. so when you apply this logic to illicit trade, you see that there is lots of counterfeit goods being smuggled today. That's explains the kind of the move from like an IP economist, smart, arrogant, and young.

Piotr (02:32)
To well, I wish humble, humble bureaucrats trying to understand what's the hell is going on out there in this world. but well, thank you for mentioning me being as an expert, right? My my role here at the OECD, I see it, is to understand how illicit trade looks like and to help our member countries with the knowledge, right? But I gather knowledge from data.

Piotr (02:58)
And from talking to people who know more about this subject than me.

Sven (03:02)
Very cool. Well, Piotr, it's really, really nice to meet you. I read your most recent report w with a lot of interest. you know, for me I found it really, really fascinating that the study that we're gonna discuss, kinda report that you've done, it it's it's really the first study I've seen that had been done, and you were one of the lead authors on it that was trying to statistically demonstrate kind of

Sven (03:28)
what the relationship is between forced labor and weaker labor protections and illicit trade. So can you talk about what what you have found in that report? What's the connection between forced labor and counterfeit goods? I I I'd love for you to share that.

Piotr (03:47)
Excellent question. maybe before jumping to this question, some like background information. our work, I mean, we are in the international organization, right? Meaning that our work is overseen by our member countries. We're really proud to work for member countries, right? What we do is supposed to help countries and citizens, people in these countries. we work a lot with the United States.

Piotr (04:13)
With the PTO, with DHS, with the State Department. And because we work for countries, sometimes we don't have the luxury

Sven (04:22)
Yeah.

Piotr (04:22)
of going into our interpretations. We must be very conservative in what we publish, in what we what we do. Right? So I'm just saying this as a preemptive, well, I know how to say it.

Piotr (04:36)
strike to say that our findings are sometimes trivial and obvious,

Sven (04:40)
Yeah.

Piotr (04:41)
right? Well you mentioned link between forced labor and counterfeit trade or trade in counterfeit goods. When you think about it conceptually it's in a way trivial or it becomes straightforward. But our work is really to to change a narrative from seems to into is right so

Sven (05:02)
And

Piotr (05:03)
We need to be comfortable to say, yes, there is a link, right? Or now our work, as I said, we want to gauge the problems, we want to understand the problems using data. And we have a big data set that comes from customs offices around the world of seizures of counterfeit goods, right? Basically.

Piotr (05:28)
Customs officers that the are supposed to do 10,000 jobs, right? Seizing everything from well, narcotics to substandard medicines. They also need to seize counterfeits. And we

Sven (05:41)
Mm-hmm.

Piotr (05:42)
receive regularly data from customs offices around the world about seizures of counterfeit products. What's been seized, where from, where to, quantities, brands, all the information.

Piotr (05:56)
These data are confidential. We work with them in-house, we don't disclose them. What we disclose is just aggregates results. And we use this data really to understand better the trends in counterfeiting and relation of counterfeiting with other measurable phenomena.

Sven (06:16)
Mm-hmm.

Piotr (06:17)
But this is just to say that measuring counterfeiting is difficult, right? Customs data are not perfect.

Piotr (06:24)
It's not like, you know, your weight, you put on a scale and say, crap, it's too much. I wish

Shabbir (06:28)
Yeah.

Piotr (06:29)
my weight was measured with such precision as counterfeiting sometimes.

Shabbir (06:33)
Ha ha ha ha.

Sven (06:33)
Well yeah, since it's

Sven (06:35)
no since it's clandestine in nature, it makes sense. It's much harder to see and you you try to

Piotr (06:39)
Exactly.

Sven (06:39)
triangulate it with all the data. So when when you looked at all of it and you're triangulating it all and you're looking at all the seizure data, what did what did you see? And how did you now make the correlation to force labor?

Piotr (06:50)
Exactly. So I mean it it's it's not it's in a way easy, right? Our research is easy because we don't want to go too deep to keep robustness of results at a high level. We looked on the one hand at available measures of counterfeiting, right? Because these customs data provide us inputs into aggregated measures of counterfeiting. these measures are done at country level.

Piotr (07:17)
We want to assess to what extent exporting countries export counterfeits. Right? So for each country in the world, we have a like an artificial index that assigns certain intensity. Of course, some countries are general exporters of everything, right? So this should be also taken into account. But we have this one on the one hand, we have index of counterfeiting. And here, on the other hand, we have existing measures of forced labor.

Piotr (07:46)
Here we talk about available indices, right? And we need to take into account all other measures that could impact this relationship, right? So here, like being an economist, I'm throwing everything that comes to my mind, ranging from economic variables through some trade measures to also other socioeconomic variables. I look at trends, anything, anything that comes to mind. Just to check if there is a direct link.

Piotr (08:15)
between both counterfeiting, export of counterfeits, and well protection of labor that cannot be explained by anything else. And here importantly, when we look at forced labor, we also looked at in accidents. So like I would say how safe labor conditions are, and at child labor, right? So like all different indices.

Piotr (08:44)
yeah, that's what that was the that was the black box, right? That's

Sven (08:47)
Yeah.

Piotr (08:48)
in a way simple, right? We want to keep it simple. And and the findings are again not surprising. There is a link, there is a correlation between both. Counterfeiting, yeah.

Sven (09:00)
So when you when

Sven (09:02)
you just said there's a correlation, is there did you find a correlation or did you find a causation? Like which which link did you find?

Piotr (09:09)
Well look here, I'm really no that we could not establish causality, right? but also when you think about it, I what would be what would be the origin of a problem? The fact that there is bad guys that export goods that are counterfeit, or the fact that these guys do not only I mean these guys don't it's not like they only don't care about IP laws but also about labor laws right? It's it's like

Piotr (09:37)
Two sides of the same coin. And here I would say it's more a philosophical question about causality. It just says that there's bad guys who don't care about IP and who don't care about, well, human rights, right? Who just look for money, no ethics.

Shabbir (09:53)
Yeah.

Shabbir (09:58)
You know, we have talked on the on the podcast a lot about the change, the constant change in shipping requirements and and entry requirements in different countries. The biggest story, I think, for us that affects illicit trade is the change in what we in the US call de minimis shipping. I guess you might call it the same thing in Europe, but the rules around de minimis have been changing for the past two years, and they've had a really notable effect on illicit trade.

Shabbir (10:27)
especially for illicit goods that come out of China into the US. At least that's that's the part I'm familiar with. what do you see in the in the regulatory environment and and how is it how do you see these changes in rules around small package, small value parcel shipping affecting the illicit trade market?

Piotr (10:47)
Excellent question. Well, like firstly, we just talked about forced labor, right? Forced labor it's it's disgusting. It's it's awful. There is nothing good about forced labor, it's it's disgusting crime. I don't want us to think the same about small parcels. Small parcels are amazing.

Piotr (11:10)
I would not survive COVID without small parcels.

Shabbir (11:12)
Ha ha.

Piotr (11:13)
So here we we deal with different phenomena, right? Small parcels are amazing. There's a huge revolution in how commerce operates, in how trade operates. It's being non-native speaker, I lack proper language, proper vocabulary to express the dynamism of small parcels. I know explosion, volcano.

Piotr (11:35)
Billions of small parcels flying around the world. Amazing, amazing. And it is great, great for consumers. But at the same time, there are challenges, right? And the challenges are on the enforcement end. As I said at the beginning, like customs, they are like Swiss Army knives. They need to deal with 10,000 problems these days. And this of this explosion of small parcels, billions.

Piotr (12:00)
of small parcels, right? Doesn't help the situation. So here the challenge is really how it's not like with forced labor, how to really crunch it, but how to make sure that customs are able to to do their job properly without really hindering consumers. And here the policies around the minimis rules, in my opinion, right, it's in my opinion, are a very relevant move, right?

Piotr (12:28)
To end the abuse by many bad actors of this fantastic solution that is that is small parcels, right? But again, it's I think it's a bit too early to say how it will work. From what we see is that counterfeiters and bad guys are very smart. So it might be that those

Shabbir (12:44)
Yes.

Piotr (12:45)
bad things that used to enter the US are right now being rerouted and going to other countries.

Piotr (12:52)
We've seen it like the COVID was a great example of such thing where many borders were closed. It's like a labyrinth with some you know walls moving, and you can see that illicit trade finds a new route. So we've seen seizures in places that a few years ago were relatively free or not so intensely abused by bad guys. Here with de minimis, we certainly need to wait to see the results, how the impact will look like.

Piotr (13:21)
And also we would need some coordination between different countries, introducing de minimis, right? Not to say that okay, the dam is right now here, so the water will just will just go this way.

Shabbir (13:33)
Yeah, I mean I think given the fact that we've watched we watched data come out and it's sometimes a year or two old from let's say the UK Customs Authority, I think we're gonna probably be studying the effects of of these regulatory changes for for years before we really have a good handle on it.

Piotr (13:52)
Exactly. But again, small parcels are great. It's just like from my perspective, for many years the regulatory environment, maybe not regulatory, but the policy environment, international environment around small parcels, was not updated, right? So in many countries we still deal with paper, right? So it's it's pretty old.

Piotr (14:15)
And here we talk when

Shabbir (14:15)
Yes.

Piotr (14:16)
we talk small parcels, we also talk about e-commerce, which which shrinks the whole global trade into one computer or one iPhone, right? So it's there is this discrepancy between advancement in technology that allows consumers to kind of shop everywhere, and relative rigidity of enforcement. And not only national enforcement, but also international collaboration in enforcement.

Piotr (14:41)
enforcement.

Sven (14:43)
Yeah, it was it was really interesting for me when I when I read the when I read the report, kind of what you talked about, finding the, you know, correlation between, for example, child labor, forced labor, and counterfeiting, and then reading even further. And I found it fascinating when I read that there's a negative correlation actually to unions. So the more unions a country has, the less likely it actually is that they have either forced labor and or therefore have counterfeiting.

Sven (15:11)
And now talking about de minimis, that kind of all makes sense. Like the more lax and a regulatory environment of a country is, like the less they have or the less organized it is, the more porous it is, so to speak, the more and more it is able for people to conduct counterfeit operations in that country because you just have a very porous regulatory environment. So that was a really cool correlation that your report laid out there.

Piotr (15:38)
Well, thank you. I mean, we try to look at these correlations all the time to understand better the environment around counterfeiting. And here kind of a trivial statement that counterfeiting is not something that I would say poor countries can specialize in, right? It requires a certain degree of development. It requires good production network.

Piotr (16:02)
It requires good trading infrastructure. So I wouldn't say that this is kind of a way for poor countries to cope with development gaps and go ahead. No, when you look actually at the at the list of countries with respect to their likelihoods to do counterfeiting, you see many wealthy countries there.

Sven (16:24)
No, it's interesting. So actually switching topics a little bit when you say, you know, always interesting to see when you kind of look at broader at the data, what are some of the trends you're seeing coming up in counterfeiting? So we recently on a on a pod last week we talked about some extremely sophisticated, good looking super fakes, fake luxury watches that were so good that a reporter from Wired magazine was actually able to take into a Rolex dealer.

Sven (16:51)
and they actually service those watches. That's how convincing those counterfeit watches were. what what are you seeing kind of as a trend in counterfeiting overall that is of of concern for you.

Piotr (17:03)
great

Piotr (17:03)
question. I would say my biggest concern is that the planet of counterfeiting is so huge, it's really hard to hard to find a common denominator. Right? It's like counterfeiters are smart businessmen that look for money. And because today's world relies on IP, trademarks are everywhere, there is lots of money, lots of opportunities.

Piotr (17:30)
Right? The example you gave about watches. well, counterfeiters no longer just fool casual buyers, they also beat trained experts. well, we call it two types of markets: primary market and secondary market. Secondary market is like cheap counterfeits that you can just buy on the corner of a street that are not supposed to fool even consumers, right? That's I suppose yeah, like luxury goods that you know what you're buying, right? So

Shabbir (17:56)
Mm-hmm.

Piotr (17:56)
cheap.

Piotr (17:57)
Must be fake. But at the same time, there are many counterfeits flying around that are supposed to fool experts. Or at least at least those that introduce them to the official supply chain. Here it's not only about luxury goods, it's also spare parts. Right? You go with your car to a garage, you pay full price for a spare part, and then oof.

Piotr (18:24)
It's also about medicines, food, toys, right? I have three kids. I want to pay a lot to make sure they are safe.

Shabbir (18:35)
Yeah.

Piotr (18:36)
Right? So I'm a potential target for counterfeiters. Right? So there is this primary-secondary market, right? This kind of fooling consumers because it's money. And with

Piotr (18:48)
e-commerce everywhere with such an ease of access right to online shops, it becomes easy. So I would say that's that's the trend. That's what we can see today. Well another another I would say trend or or phenomenon is that counterfeiting impacts all products that have trademark on them.

Piotr (19:10)
Sometimes when it say counterfeit you think like fake, well whatever, luxury bags or some watches in the example. Well, when you look at the data, when I look at our data and imagine that on the horizontal axis you have different product, like product categories, and on the vertical axis you have intensity of counterfeiting. Say 20 years ago it was like pretty skewed towards luxury goods. Now it becomes flatter and flatter.

Piotr (19:39)
Right, so what used to be anecdotal or like funny becomes now like well, it's it's more regular, right? Or

Sven (19:47)
Yeah.

Piotr (19:47)
what used to be free from counterfeiting now becomes anecdotal. here there are many anecdotes that might sound funny, but they're only initially funny, like well, fake guitars, fake cement, fake electricity switches.

Piotr (20:06)
Fake baby formulas, fake cat food, right? Even

Shabbir (20:12)
Yeah.

Piotr (20:13)
yeah, there's everything can be fake. Everything because IP adds value to products. IP is trust, IP is quality. So anything can be a target, especially in the world where customs deal with ten thousand different priorities.

Sven (20:28)
Yeah, no, I I think you make a very good

Shabbir (20:29)
Yeah, we did a s we

Shabbir (20:31)
we covered a story about counterfeit sinks that possessed a a a special mark that's supposed to denote them as being compliant with plumbing standards. And I thought, well, I have seen it all now.

Sven (20:44)
Yeah, no, you you make a really good point. You know, I've been in the in the anti-counterfeiting business for, yeah, at this point, almost, you know, twenty, twenty, twenty-five years. And it it was it was interesting when I started in that kind of business, so to speak, right? I I sat for an advisory board on the youth chamber of commerce. And you're right, at that time it basically was large movie studios, a couple of software piracy issues that that existed, and mostly luxury goods, right?

Sven (21:12)
we were there, I was there with Philip Morris and we were tobacco was was a large issue as well. And then you're right, the table started to fill over over the decades and it became more and more of every product that can be counterfeited, started to be counterfeited. As long as there's a margin there, as long as there's a market there, as long as they can make money there, and with the increasing, you know, global proliferation of trade and making the internet purchase easier and easier, you're right, that table started to fill up.

Sven (21:41)
quite a bit with with new members.

Piotr (21:44)
Everything right and actually it's not funny, it's it's scary. It's scary because at the end of the day we are exposed to unknown goods that can that can harm us, that can steal our jobs, that can really rip off taxes. So it's a real problem. It's not a funny anecdote that's yeah makes

Sven (22:02)
Agree.

Piotr (22:02)
us laugh, it's it's it's a problem.

Sven (22:05)
Yeah, there's two key takeaways I have from from today with you that just reiterated for anybody who is listening, right? So if if you work in a company and you have a trademark or you work on a product and you you start to listen to these podcasts because you think Shabbir and I are interesting, but you thought deep inside you're like, that doesn't happen in my company. I I I warn you and I beg you to take a deeper look. There's a if your product is selling, if you have a good market, there's most likely counterfeit somewhere and

Sven (22:31)
I think what also Piotr here said, understand that that counterfeit is not just a it's a nuisance or it's a it's a you know kind of funny story as as Piotr called it. But no, it actually has large crime implications. Plus, it can thrive in countries that have really, really bad human labor standards. And so therefore it fosters human slave forced child labor, all of that. So I think you make a very good.

Sven (22:55)
point Piotr. I think a lot of people underestimate and think like, it's just luxury bags. No, it's not. If your product sells, you you most likely will have counterfeit somewhere.

Piotr (23:06)
Absolutely. You said it Sven Yeah.

Sven (23:09)
No, you said it. I just recapped it.

Shabbir (23:11)
Well, and I'll say, you know, that the the the the report, your your fakes and forced labor correlative report really just reiterates something that is has been a a theme for me in the world of counterfeits, which is that if you're willing to break one law, you'll break all of them. Right. So you don't violate the IP but then obey all the material safety standards to you know, and which is how you end up with a hat that has

Shabbir (23:37)
Formaldehyde chemicals in it that's also a copy of a you know a World Cup logo hat. Once you start breaking laws, you it's easy to break them all.

Sven (23:46)
Yeah, not a lot of not a lot of unionized counterfeiters.

Piotr (23:47)
Absolutely.

Shabbir (23:50)
Yeah.

Piotr (23:50)
Well

Piotr (23:51)
but not only hats, spare parts, right? Pharmaceuticals, medical devices, food, toys, IT equipment, batteries. There's lots of lots of stuff there that's really dangerous.

Shabbir (24:05)
Yeah. Piotr, before we go, do you is there anything you want to touch on that we didn't cover?

Piotr (24:12)
Well thank you. I it was it was amazing. And again, thank you so much. Well, I bet once I disconnect I'll think, I should say this or that. But yeah, that's that's life. That's my messy nature. So thank you for having

Shabbir (24:22)
Well, I'm I'm

Piotr (24:24)
me.

Shabbir (24:25)
I'm gonna suggest that people do what I do, which is I follow you on LinkedIn. And that also leads me to the blog at OECD that you occasionally contribute to, where you where when you when you are have published something or have something to say, it often appears there. is there anywhere else that people should follow you or follow your work?

Piotr (24:44)
Well LinkedIn of course and for those that you don't know me, my surname looks like a sale of consonants, but I'm the only Piotr I think on the OECD. So just type Google Piotr OECD to find me. Otherwise OECD illicit trade is kind of a website of our small small unit here that monitors illicit trade, tries to understand what's going on out there.

Shabbir (25:08)
We will put all that in the show notes and thank you for joining us today and staying up so late in f in France so that you can make this interview.

Piotr (25:17)
Thank you for having me.

Sven (25:18)
Well Piotr it was an absolute pleasure meeting you and with that, Shabbir, read us out.

Piotr (25:24)
Thank you.