The value of illicit trade – primarily the sale of counterfeit goods – is estimated at US$ 650 billion worldwide. If we include money laundering, the number jumps to an astonishing US$ 2 trillion, compared to a legitimate global trade figure of about US$ 10 trillion. The illicit economy is, worryingly, truly vast.
Counterfeiting isn’t only about fake brand handbags and pirated DVDs. The same distribution and supply chains also peddle drugs, weapons and fake medicines. According to research by WHO and Interpol, 50% of medication for malaria and 10% for tuberculosis are fake, killing 700,000 people a year.
Against this background, the University of Geneva and the World Economic Forum organized a debate on 9 May 2012 to discuss the economic, social and political ramifications of illicit trade. Experts from the Forum’s Global Agenda Council on Illicit Trade and senior academics from the University of Geneva contributed to the debate.
What exactly is illicit trade? The Council suggested: “Illicit trade involves money, goods or value gained from illegal and generally unethical activity. It encompasses a wide variety of illegal trading activities, including human trafficking, environmental crime, illegal trade in natural resources, various types of intellectual property infringements, trade in certain substances that cause health or safety risks, smuggling of excisable goods and trade in illegal drugs, as well as a variety of illicit financial flows.”
But we know the world isn’t black and white, illicit and licit. There is a grey market that is also extremely complex. Not all products traded illegally are fake; they could be stolen originals, for example. Think of the trade in art masterpieces.
Illicit trade in the arts is big business, involving people stealing, selling, forging and intermediating. The growth of global trade has led to an increase in the number of intermediaries and a subsequent growth of the grey market.
Tracking tangible products is difficult enough, but in today’s digital age, where many products are intangible and easily distributed via the Internet and mobile technologies, tracking has become ever harder. Criminals are undoubtedly benefiting from these new technologies, but so are law enforcers. For example, we can now track fish by using their DNA as a sort of barcode, and we can identify and track people using biometrics.
Illicit trade is a multistakeholder problem requiring a multistakeholder solution. Laws and codes of practice need to be enforced by governments and regulatory bodies alike. Businesses need to keep track of every stage of their supply chains to ensure that they do not become victims of illicit trade, with all the risks to revenue and brand reputation that implies.
Finally, we need to raise awareness with consumers. They need to understand that by buying a fake bag they could be buying into a criminal enterprise that costs lives.
Special thanks to the speakers who took part in the debate: Timothée Bardet, Wisekey; Justin Picard, Track and Trace; Marc-André Renold, University of Geneva; Jacques De Werra, University of Geneva; Abby K. Wood, University of California Berkeley; and Elaine Dezenski, World Economic Forum
Author: Tiffany Misrahi is Research Analyst, Global Agenda Councils at the World Economic Forum.
Pictured: Illefal DVDs being destroyed by Peru’s intellectual property protection agency. Lima REUTERS/Mariana Bazo