Issue Overview

This is an era of unprecedented openness in trade, travel, communication and finance. This has led not only to economic growth and well-being but also has given rise to opportunities for criminals to legitimatize their business. Illicit trade has gone global and reached macro-economic proportions, with goods being manufactured on one continent, trafficked in another, and then sold and consumed on a third continent. 

Illicit trade is a burden to society and human progress. It distorts markets, attracts a heavy regulatory burden, destabilizes states and favours short-term profit over human development.  

In effect, the value of illicit trade, primarily the sale of counterfeit goods, is estimated at US$ 650 billion worldwide. Including money laundering, this figure increases to an astonishing US$ 2 trillion, compared to a legitimate global trade figure of about US$ 10 trillion. Illicit trade encompasses a wide range of illegal trading activities, from human trafficking and environmental crimes to counterfeiting and drug trafficking. 

As a result of advancements in technologies and mobile communications, practitioners today have been able to develop more effective solutions to achieve supply chain integrity, using both product tracking and authentication technologies. This shift to a data-centric world represents a paradigm change in the way illicit trade exploits the infrastructure of the legitimate economy and how it can be addressed. 

While technology and accountability are critical components in overcoming illicit trade, such tools are not sufficient on their own. The development of a multistakeholder approach, which engages the private sector, governments and civil society, is essential to enforce regulatory frameworks, monitor supply chains and raise awareness of the issue. 

Did You Know?

• Fake medicine is a growing problem: 50% of malaria medication and 10% for tuberculosis are fake, killing 700,000 people annually (WHO/INTERPOL).
• 22,000 human trafficking victims were detected globally in 2006. The profits of this industry are over US$ 31 billion (ILO).
• The number of counterfeit incidents being detected in the US defence and industrial supply chain rose from 3,868 incidents in 2005 to 9,356 in 2008. 
• Research shows that arms trafficking routes tend to go either from the US to Mexico or Eastern Europe to Africa. In the former case, weapons are mostly used for criminal purposes; in the latter arms are linked to political struggles (UNODC).
• Illegal fishing represents about 18.5 billion tonnes annually, while tests in stores and restaurants show that fish are mislabelled 50% of the time. 

Quotes

“For every dollar in foreign aid money that flows into developing countries, about ten dollars flow out illicitly. This dynamic is the exact opposite of sustainable”
Raymond Baker, Director, Global Financial Integrity, USA

“Due to complexity and lack of visibility international supply chains have become a safe haven for both legitimate and illicit actors.”
Allen Bruford, Deputy Director, Compliance and Facilitation Directorate, World Customs Organization (WCO), Brussels

“New technologies against illicit trade are becoming more sophisticated enabling new interoperability and collaborations thereby making the process more efficient and universal.”
Carlos Moreira, Chairman, Chief Executive Officer and Founder, WISeKey, Switzerland

Further resources

Illicit Trade Estimates
Responses to Illicit Trade: Compendium of Case Studies and Best Practices
The Globalization of Crime: A transnational Organized Crime Threat Assessment
Transnational Crime in the Developing World

Calendar

Conference of the Parties to the United Nations Convention against Transnational Organized Crime and the Protocols Thereto
15-19 October 2012
Vienna, Austria

43rd World Intellectual Property Congress
20-23 October 2012
Seoul, South Korea

WCO Enforcement Committee
18-22 March 2013
Brussels, Belgium

7th Global Congress Combating Counterfeiting and Piracy
24-26 April 2013
Istanbul, Turkey

GOVSEC (Government Security Conference & Expo)
13-15 May 2013
Washington, DC, USA

Council Insights

Since its inception the Council on Illicit Trade strives to raise awareness on the issue of illicit trade, measure its impact and develop public-private partnerships required to tackle social, economic, environmental and political challenges related to this issue. 

Specifically, the Council developed a publication that not only defines illicit trade, but also provides estimates on the various types and the policy response at the global level. Given the complexity of this issue, the Council has published a compendium of case studies and best practices in the field of illicit trade, tackling issues ranging from human trafficking and mobile security, to supply chain integrity and the legal framework needed to fight illicit trade. 

To address illicit trade in a systemic way, the Council is currently developing the Engaged Society Partnership to Reduce Illicit Trade (ESPRIT). The ESPRIT platform will gather corporate leaders, civil society and international organizations with the shared goal of increasing compliant trade through education, simplification and enforcement. 

This term, the Council will focus on: 

• The Economic Argument of Illicit Trade: Given the current global economic situation, countries are focusing on their economies: boosting growth and trade. The Council will consider how governments and businesses can work to minimize revenue lost as a result of illicit trade.  
• The Human and Social Dimension of Illicit Trade: While consumers often appear unaffected by the sale of counterfeit products, the human and social angle of illicit trade seems to touch their hearts. The Council will make displaced people a priority for the coming term. 
• Raising Awareness and Educating People: The Council will launch a mobile application entitled "Shall I Buy This?", to raise awareness of illicit trade. Further, the Council will continue developing its website and write blogs on the different facets of illicit trade. 

Contact Information

Council Manager: Tiffany Misrahi, Senior Associate, Global Agenda Councils, tiffany.misrahi@weforum.org
Forum Lead: Martina Gmur, Senior Director, Head, Global Agenda Councils, martina.gmur@weforum.org