ACTA in the EU: Assessment of Potential Export, Economic and Employment Gains

ACTA in the EU: Assessment of Potential Export, Economic and Employment Gains

This practical analysis describes the benefits of ACTA for improving trade in the EU’s innovative, cultural and branded goods; establishes a factual review; examines the need to address large-scale counterfeiting and piracy; and provides an overview of the function and legal framework of ACTA.

The Anti-Counterfeiting Trade Agreement (ACTA) is based on a set of economic principles, as stated in the preamble to the Agreement, on why it is critical to contain the rapid, global growth of counterfeiting and piracy. 

  • The effective enforcement of intellectual property rights (IPRs) is critical to sustaining economic growth across all industries and globally.
  • The proliferation of counterfeit and pirated goods, as well as of services that distribute infringing material, undermines legitimate trade and sustainable development of the world economy, causes significant financial losses for right holders and for legitimate businesses.
  • Enhanced international cooperation and more effective international enforcement of IPRs can combat the proliferation of counterfeiting and piracy.

The European Commission summarized the more specific job creation and protection benefits of ACTA:

  • Protecting IPRs means protecting jobs in the EU. A stronger enforcement of IPRs will ensure that innovative jobs remain in the EU.
  • ACTA ensures the EU’s already high standard of protection for intellectual property goes global – protecting jobs in Europe.

The purpose of this study is to examine the plausibility of these potential benefits. The hypothesis is that expanding Europe’s strong IPR protections to other regions of the globe will result in increased exports of European products – particularly those susceptible to counterfeiting and piracy – resulting in an increase in EU gross value added (GVA) and EU employment.

Findings

The EU is the largest exporter in the world, and ACTA signatory countries1 account for 40% of EU exports. Consequently, the potential export-driven economic benefits of ACTA for the EU are substantial. This study summarizes these benefits and shows that:

  1. If the increased IPR protection expected from ACTA helps EU exports grow by modest amounts, this could increase European gross value added (GVA) by €19 billion and create over
    400,000 new jobs in Europe.
  2. The economic impacts of the inclusion of Brazil, Russia, India and China (BRIC) within the ACTA-based IPR regime – a goal of the negotiating parties is to expand and include additional signatory countries – could reasonably yield export-driven GVA gains in the EU of a further €23 billion, adding an additional 470,000 jobs to the European economy.
  3. If notorious counterfeit producer nations, such as China, were to participate in ACTA and implement ACTA’s relatively stronger IPR enforcement measures, Europe could also
    experience greater protection from illegal counterfeits imported into the European marketplace. Using China as example, a reduction in counterfeit and pirated product imports
    into the European market of just 10% could help domestic output to expand by another €8 billion and 90,000 jobs.

The summary table below sets out the overall, potential gains for EU output and employment from the strengthening of IP rights. Through increased trade to the ACTA signatories, EU output could realistically increase by up to €19 billion. Increasing trade to BRIC countries could increase output by a further €23 billion. With stronger enforcement of IP rights in notorious counterfeit producer countries (i.e. China), thereby precluding imports of counterfeit and pirated products, EU GVA could increase by a further €8 billion.

To put the importance of this potential increase in GVA in perspective, it is important to look at the current economic situation in Europe. An increase in GVA of €50 billion represents about 0.4% of total 2011 European GVA. To put that figure in context, the EU in 2011 grew by just 1.5%. In 2012, the forecast for growth is zero for the EU and -0.3% for the Euro area. Forecasts for 2013 are estimated to be less than 1.5%. In consequence, against a background of weak economic growth, and limited prospects for policy intervention to boost growth (given the sovereign debt crisis in Europe), ACTA represents an opportunity to provide a much needed stimulus to the European economy.