What if illicit trade goes unchecked?

Steven Broad
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Illicit Economy

Steven Broad on the impact of the illegal trade in everything from tuna to counterfeit drugs. The interview is part of the Risk Response Network’s “What if?” series.

What is your main field of expertise and current research?
Illicit trade covers a range of different sectors, from illegal trade in natural resources, the supply of counterfeit goods, smuggling, trade in illegal drugs and weapons, and people trafficking. At TRAFFIC, we are specialists in tackling unsustainable and illegal trade in timber, fisheries products and other wildlife commodities.

What would you say is the most under-appreciated risk in your field?
The risks are economic, environmental and social. Firstly, illicit trade and financial flows divert money from the legitimate economy. Environmentally, some of these trades deplete natural resources or have other environmentally negative effects. Socially, the impacts can be enormous. There are the direct effects of human trafficking and the harm caused by counterfeit drugs and medicines.

Can you give an example of the impact of illicit trade?
Across many industries, illicit activities undermine sustainability, and support a range of illegitimate activities, since money from illegal trade is often reinvested in other criminal undertakings.

Illicit fishing is an excellent example. First, it is crippling the world’s already depleted marine resources. Although governments have made agreements that govern the high seas, and these look good on paper, they are difficult to enforce. Quotas have been negotiated to manage the sustainability of tuna, for example. But quotas don’t control fishing from vessels not party to the agreement. Some countries deliberately work around agreed quotas, or exceed the amounts that they are allowed to take, and an illegal supply ends up in the markets. Second, illegal fishing is often not undertaken to the same standard and under the same rules as legal fishing. When illegal fishing vessels with illegal workers on board are challenged, for example, the workers may simply be thrown overboard.

Illegal fishing places an illegal supply of fish on the market and depletes available stocks. The economic loss to legal fisheries amounts to millions of dollars. The environmental costs are also considerable.

What is the worst case scenario?
The worst thing that could happen is that governments continue to consider illicit trade to be someone else’s problem, and ignore this “dark side” of commerce.

The illegal and unethical components of international commerce have an annual value in the hundreds of billions of dollars. They also cause significant environmental, social and political harm. Counterfeit malaria and tuberculosis medicines, for example, have been estimated to kill as many as 700,000 people a year. Human trafficking is also an enormous social problem with hundreds of thousands of people caught up in it around the world.

And how do you tackle such a complex risk?
Longer term, established approaches like the harmonisation of laws in a particular sector can work, if they are designed carefully and applied rigorously. Harmonising creates one set of rules so that law enforcement agencies and businesses can be confident about what is legal, across jurisdictions. But there are also legal gaps. Some countries, for example, do not see counterfeiting and intellectual property as a legal priority, although this is starting to change.

There are new developments, with rapidly improving technology for trade tracking and risk profiling. Illicit activity thrives on the margins of legality and new systems like “Track and Trade” mean products can be tagged to ensure that information is transparent across the entire trade chain. A “legal” watch made in Switzerland, for example, can be marked to distinguish it from a counterfeit watch, assisting customs officials to identify an illegal shipment.

Corporate sector innovation means better supply change management, and tracking technology means that anyone along the trade chain can identify corruption or infiltration of illicit supply. These new tools also reduce bureaucracy, helping to overcome corruption and lack of political motivation that have constrained past efforts to tackle illicit trade.

Is winning the consumer over half the battle?
Demand comes from consumers, so engaging consumers, influencing public opinion and understanding demand behaviour are critical. Take the very simple example of illegally accessing music and video content. Unless consumer demand is changed, the illicit trade will continue. Technology and the Internet are always going to move faster than the regulators or those trying to enforce regulation.

What about areas such as weapons trafficking or human trafficking?
These are problematic. With human trafficking we can assume a connection with the illegal underage sex trade. There are examples of awareness-based systems being used to deal with it. There are now cards placed in some Russian hotels to inform guests of the legal age for sexual relations and also of the effects of the sex trade on the people who are trafficked. Some people won’t be influenced by this, but to effect a change in behaviour, consumers first need to be aware that what they are doing is illegal. Then they need to care about the issue. Finally, they need to know that they might get caught and punished.

Is there anything personal you would like to add?
The Global Agenda Council is a great opportunity to meet with people from different disciplines. Usually we only talk to people within our own sector and I’ve been surprised to learn how the harmonisation of laws, enforcement, and efforts to influence demand behaviour are common across different sectors of the illicit economy. Solutions to illicit trade are not a great leap from the mainstream actions needed for wider economic reform and there are opportunities for corporate sector innovation to play a leading role in positive change.

If we can encourage people to buy furniture made from legally sourced tropical timber forests, for example, we can ensure that the profits go to the country that exported it, or to the community managing the forest. More financial flows in the legitimate economy contribute to social, economic and environmental improvements. In the end, it’s about working towards sustainability.

Pictured: Soldiers in Brazil patrol for drug and gold smugglers along the Oiapoque River (Reuters)

Steven BroadSteven Broad is the Executive Director of TRAFFIC, a Board Member of the Fairwild Foundation and Chair of the World Economic Forum’s Global Agenda Council on Illicit Trade.

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