The Forum published its annual Global Enabling Trade Report last week. Once again, two East Asian economies, Singapore and Hong Kong, topped the rankings of the Enabling Trade Index, while other East Asian nations such as Malaysia, Indonesia and Thailand, continued to progress through the ranks.
If the globalization of trade and supply chains since the Second World War has benefited most countries, it has led a number of East Asian countries to make, literally, a quantum leap in economic development and reduction of poverty.
While there is much to celebrate, the downside is that, as much as East Asia is successful with trade, it is unfortunately equally successful with illicit trade. But why should East Asia be particularly concerned with illicit trade, beyond the usual suspects that are illegal drugs and weapons, contraband cigarettes and goods?
There is illicit trade when a human being is trafficked, a counterfeit medication is swallowed, a rhino is killed for its horn, or a protected forest is logged. Illicit trade seeks an immediate, short-term benefit, at the expense of long-lasting harm to society, human beings, the environment or the economy.
It is estimated that 9.5 of the 12.3 millions of people in a forced labor situation worldwide live in Asia. And this number does not even include the countless people working in sweatshop-like conditions which infringe the labor and worker safety laws of their country.
Parciforum Malaria, the deadliest form of malaria, is concentrated in South East Asia. Throughout South East Asia, 50% of anti-malaria medications are counterfeit, and therefore ineffective. How many silent deaths are caused by the counterfeits? Possibly tens, to hundreds of thousands per year.
Who are the actors behind the crimes? The stereotype is that illicit trade is performed by organized crime, and that it mostly occurs on illegal or “black” markets. However, the reality is that there are many shades of grey to illicit trade. Much of illicit trade occurs under the cover of legitimate businesses, within global supply chains. The end result is seemingly legitimate, although in reality illicit products, which you and I can buy in the local supermarket.
Following the events of 9/11, governments worldwide focused on supply chain security, the risk that global supply chains could be used by terrorists to transfer bombs or weapons. The issue of supply chain and product integrity was however overlooked. I am a firm believer that thanks to the convergence of product authentication and tracking technologies spurred by the explosion of mobile connectivity, we are on the verge of a breakthrough in the way we address illicit trade.
Why is that? With the mobile ecosystem and digital tracking technologies in place, potentially anyone will become able to discern the licit from the illicit. And as supply chain processes become digitally recorded and managed with the proper data granularity, any licit or illicit activity will leave digital footprints that can be made nearly impossible to tamper with or erase. New technologies have benefited illicit traders in the past, but that may no longer be the case.
Author: Justin Picard is the Chief Scientist at Advanced Track & Trace, France. He is also a member of the Global Agenda Council on Illicit Trade.
Image: A Thai policeman rips a fake branded toy during the destruction of pirated merchandise in Bangkok. A bulldozer crushed the pirated cassettes and fake branded watches, clothes and toys seized by police. REUTERS/Str Old.