Experts at a forum organised by the United Nations Conference on Trade and Development (UNCTAD) and the Transnational Alliance to Combat Illicit Trade (TRACIT) said to avert the impending tragedy, the menace requires a concerted global action.
Head of UNCTAD’s Competition and Consumer Policies, Teresa Moreira, said ‘’a dark side of globalisation and the expansion of trade has been the alarming emergence of illicit trade’’, pointing out that economic leakages from illicit trade create an estimated annual drain of $2.2 trillion to the global economy, nearly three percent of world economy.
Moreira argued at the United Nations’ European headquarters in Geneva, Switzerland that if illicit trade were an economy, it would be the eighth largest in the world.
Illicit trade – on the black and grey markets – significantly endangers all aspects of the SDGs, as it deprives governments of revenues for investment in vital public services, she said.
TRACIT’s Director-General Jeffrey Hardy, highlighted the impacts of illicit trade in various countries – from illegal fishing affecting marine resources in Costa Rica to counterfeiting draining €83 billion ($93 billion) from the European Union’s Gross Domestic Product (GDP) as well as 790,000 jobs.
The statistics are indicative of the problem. Illicit trade in pharmaceuticals is valued at between $75 billion and $200 billion annually, while wildlife crimes are worth $23 billion, according to TRACIT.
While Hardy said ‘’insufficient attention has been given to the substantial impact that illicit trade has and how it is holding back progress’’, TRACIT has mapped the impact of illicit on the SDGs in a response to help governments and businesses better understand where and how illicit activity undermines progress on each of the goals.
Hardy presented the new report at the forum: ‘’Illicit trade has ‘macro impacts’ as it cuts deeply across many of the SDGs, undermining achievement of the economic goals for poverty reduction, decent jobs and economic growth.’’
He added that when it generates revenue for organised criminal and terrorist groups, illicit trade undermines goals for peace and stability, pointing out that most forms of illicit trade also plunder natural resources, abuse supply chains and ultimately expose consumers to fake and potentially harmful products, affecting related goals.
Illicit trade is also wreaking havoc on the rule of law, participants at the forum heard. It is feeding violence and breeding corruption, undermining trust in institutions, generating enormous illicit financial flows, fuelling organized crime and heightening threats to national and global security, various experts said.
In Peru, the public and private sectors have banded together in a campaign against illicit alcohol for the past five years. The campaign has reduced the consumption of illicit alcohol from 31% to 25%, said Silvia Elena Alfaro Espinosa, Peru’s Ambassador to the United Nations Office at Geneva.
While highlighting the international nature of illicit trade, its pervasive impact on multiple sectors and emphasized the importance of countries working together to combat it, she said, ‘’the whole planet has a debt to pay on the issue of illicit trade,” Ms. Espinosa said. “We have to work together on a multilateral basis to tackle it.’’
Her Zimbabwean counterpart, Taonga Mushayavanhu, said ‘’curtailing illicit trade is particularly critical for developing countries as they struggle against odds to finance SDGs through domestic revenues, adding that illicit trade was a drag on his country’s minerals sector, which generates over 60% of the nation’s foreign export earnings and constitutes 13% of its GDP. The country’s clothing and tourism sectors have also taken a big hit from trade in illegal markets.
Mushayavanhu related his government’s success in cracking down on illegal mining of diamond, which had been triggered by a mineral rush that had started in 2006, causing environmental degradation and violence, which led to some deaths.
To remain on track towards the SDGs, countries must prioritise efforts to reduce the deterrent forces of illicit trade and plug the fiscal leakages associated with it, various speakers urged.
While Hardy said, ‘’removing the economic drags of illicit trade can improve the efficiency and effectiveness of policies and actions to stimulate growth, employment and investment to achieve the SDGs’’, experts also underlined the need for collaboration between countries to smash the networks that facilitate illicit trade across borders.
‘’It’s not a problem confined to developing countries. Every country suffers from this menace, all that varies is the magnitude of the problem’’, Ms. Moreira said.