G7 Executive Talk Series Branded Story / TRACIT Authored by: Louis Bonnier
Illicit trade: A Global Threat to Development, Economic Growth and Security
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llicit trade is a major and growing policy challenge worldwide. From smuggling, counterfeiting and tax evasion, to the illegal sale or possession of goods, services, humans and wildlife, governments are losing billions in tax revenues, legitimate businesses are undermined, and consumers are exposed to poorly made and unregulated products. The World Economic Forum estimated the value of illicit trade and transnational criminal activities at 8% to 15% of global GDP in 2014.1 With estimations of various illicit activities running upward of $3 trillion; these figures rival the GDP of some G7 countries.2 Illicit trade has a particularly debilitating effect on legitimate business, in terms of lost market share, slower growth, damage to business infrastructure, reputational harm and rising supply chain compliance, security and insurance costs. For governments, illicit trade has an extensive destabilizing impact on global security due to its central role in facilitating transnational organized crime and illegal flows of money, people and products across borders. This in turn undermines the rule of law, giving rise to a hostile business environment that discourages investment. In addition to distorting markets and draining public revenues, illicit trade undermines society’s efforts to achieve the United Nations’ Sustainable Development Goals (SDGs) with negative impacts on consumers, workers and the environment.
The world needs sustained G7 stewardship Representing the world’s seven most industrialized economies, the G7 has shown leadership in curbing several illicit trade issues. At the 2006 St. Petersburg Summit, Leaders agreed to strengthen individual and collective efforts to combat piracy and counterfeiting,3 and six years later at Camp David they underscored the role that high standards for Intellectual Property Protection (IPR) and enforcement have in combatting illicit trade in pharmaceuticals.4 At their 2013 Lough Erne Summit, Leaders affirmed commitments against the illicit trade in endangered wildlife species, corruption, transnational organized crime and human trafficking.5 They also expressed their commitment to support responsible, conflictfree sourcing of minerals and precious stones. The 2015 Lübeck Foreign Ministers’ Statement on Maritime Security,6 and the subsequent 2016 Hiroshima Statement,7 also saw the G7 42 ❙ g20g7.com
