Innovative solutions required to fight the dark side of commerce

With so much pressure in Davos this week, spotting some tiny rays of sunlight among the heavy clouds hanging over the global economy is not the easiest of tasks to draw attention to the deeply murky issue of illicit trade.

Estimates compiled by the Forum’s Global Agenda Council on Illicit Trade suggest that illegal and unethical components of international commerce have an annual value in the hundreds of billions of dollars and cause significant economic, environmental, social and political harm. They include human trafficking, illegal trade in natural resources, supply of counterfeit goods, smuggling of excisable goods, trade in illegal drugs, as well as a variety of illicit financial flows.

Like the amounts of money involved, the harm caused is substantial – counterfeit malaria and tuberculosis medicines, for example, have been estimated to kill as many as 700,000 people a year, hundreds of thousands of people are lured into human trafficking, and recovery of the world’s heavily depleted marine resources is crippled by illicit fishing.

What can be done to deal with this challenge? Well, as a specialist in tackling unsustainable and illegal trade in timber, fisheries products and other wildlife commodities, I’ve been surprised to learn through the Global Agenda Council dialogue supported by the Forum just how much there is in common across different sectors of the illicit economy. All too often it is a matter consigned to the “too difficult” tray by policy-makers, assumed to be economically insignificant, crudely legislated for, given low priority by enforcement agencies, seen as someone else’s problem by the private sector and knowingly ignored by consumers.

In fact, there is a great deal that can be done to reduce harm and get the errant financial flows back into the legitimate economy. A good example is the rapidly improving technology for trade tracking, risk profiling and supply chain management emerging from corporate sector innovation. There are now a range of cost-effective marking and transparency measures available that could greatly decrease opportunities for illicit trade in counterfeit goods, illegally sourced timber and fisheries products. Use of these new tools could also reduce bureaucracy and help overcome the corruption and lack of political motivation that have constrained past efforts to tackle this problem.

That’s not to say that all solutions are immediately to hand. Harmonization of trade rules for some sectors remains long overdue and experience shows that multistakeholder approaches such as those adopted to keep conflict diamonds out of the market will only work if designed carefully and applied rigorously. There is also a clear need for tough global action to rein in the shadow finance system to which illicit trade is so often inextricably linked.

Illicit trade is all too often seen as a faintly regrettable side-effect of global commerce, but my message at Davos this week is that the solutions to sort it out are not a great leap from the mainstream actions needed for wider economic reform. Furthermore, there are great opportunities for corporate sector innovation to play a leading role in positive change. The results of success will be more financial flows in the legitimate economy and some giant leaps towards more responsible business. That sounds like sunshine to me.

Steven Broad is Executive Director of TRAFFIC, the wildlife trade monitoring network, and a board member of the Fairwild Foundation. He chairs the Forum’s Global Agenda Council on Illicit Trade

Pictured: Trade central, Containers on docks in Hong Kong, Flickr