Illicit trade drains $2.2 trillion from global economy
31 July 2019 |
2:55 am
There is an urgent need to jointly combat illicit trade across borders, going by the revelations by the United Nations Conference on Trade and Development (UNCTAD), that economic leakages from illicit trade created a drain of about $2.2 trillion yearly on the global economy.
UNCTAD Deputy Secretary-General, Isabelle Durant
There is an urgent need to jointly combat illicit trade across borders, going by the revelations by the United Nations Conference on Trade and Development (UNCTAD), that economic leakages from illicit trade created a drain of about $2.2 trillion yearly on the global economy.
UNCTAD, in a communiqué after a forum on illicit trade, said the economic losses are nearly three percent of the world economy, while the illegality poses a threat to the achievement of global goals and requires concerted action.
From smuggling, counterfeiting, and tax evasion to the trafficking of humans and wildlife, illicit trade is holding back progress, increasing costs, and pushing Sustainable Development Goals (SDGs) farther away, it stated.
UNCTAD’s Head of 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.”
For instance, she said illicit trade in pharmaceuticals is valued at between $75 billion and $200 billion annually, noting that: “If the trade were an economy, it would be the eighth largest in the world.”
Moreira said illicit trade on the black and grey markets significantly endangers all aspects of SDGs, as it deprives governments of revenues for investment in vital public services.
Director-General, Transnational Alliance to Combat Illicit Trade (TRACIT), Jeffrey Hardy, highlighted the impact of illicit trade on 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.
He noted that the statistics are indicative of the problem, adding that wildlife crimes are worth $23 billion.
“Insufficient attention has been given to the substantial impact that illicit trade has and how it is holding back progress,” Hardy said.
He said TRACIT has mapped the impact of illicit trade on SDGs to help governments and businesses better understand where and how illicit activity undermines progress on each of the goals.
Presenting a new report, he said: “Illicit trade has ‘macro impact’ as it cuts deeply across many of the SDGs, undermining the achievement of the economic goals for poverty reduction, decent jobs, and economic growth.
“When it generates revenue for organised criminal and terrorist groups, illicit trade undermines goals for peace and stability,” Hardy said.
He argued 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.
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, the communiqué said.
Ambassador of Zimbabwe to the United Nations Office at Geneva, Taonga Mushayavanhu, said curtailing illicit trade is particularly critical for developing countries as they struggle against odds to finance SDGs through domestic revenues.
He said illicit trade was a drag on his country’s minerals sector, which generates over 60 percent of the nation’s foreign export earnings and constitutes 13 percent of its GDP.
The country’s clothing and tourism sectors have also taken a big hit from trade in illegal markets.
To remain on track towards the SDGs, UNCTAD said countries must prioritise efforts to reduce the deterrent forces of illicit trade and plug the fiscal leakages associated with it.
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