The Transnational Alliance to Combat Illicit Trade (TRACIT) and the United Nations Conference on Trade and Development (UNCTAD) co-hosted a meeting to expose where and how illicit trade is retarding efforts to deliver the SDGs in Geneva last week.
The intergovernmental meeting was designed to help governments understand the challenge of illicit trade and to consider policy measures to counteract the negative impacts of illicit trade on the SDGs.
“Illicit trade is compromising the attainment of all 17 of the UN SDGs,” TRACIT director-general Jeffrey Hardy suggested. “It is crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives.”
During the meeting, TRACIT launched a new report, Mapping the Impact on the Sustainable Development Goals of Illicit Trade.
The research charts the 17 UN SDGs against the following sectors: agri-foods, alcohol, fisheries, forestry, petroleum, pharmaceuticals, precious metals and gemstones, pesticides, tobacco, wildlife and all forms of counterfeiting and piracy.
Illicit trade jeopardises ‘fair, safe and sustainable’ food
According to the report, illicit trade in food and agricultural products have ‘many’ significant and negative implications across the SDGs.
The report’s authors examined illicit trade in the sector in ‘many forms and manifestations’, ranging from ‘economically motivated adulteration’, to large-scale smuggling.
Food fraud, it noted, is the ‘intentional sale’ of ‘sub-standard’ food products or ingredients for economic gain. Common types of food fraud include the substitution or dilution of an authentic ingredient with a cheaper product, such as replacing extra virgin olive oil with a cheaper oil; flavor or colour enhancement using ‘illicit or unapproved substances’; and substitution of one species with another, as occurred in the European horse meat scandal.
Smuggling is usually driven by a disparity of price between the place of origin and the destination of the smuggled goods, the report continued. The chief risks associated with smuggled agri-foods include loss of taxes and tariffs as well as ‘severe’ knock-on effects on the economy as a whole, creating unfair competition and constraining local producers. There is also a risk that smuggled goods can introduce invasive species, disease-carrying pathogens or contaminants that threaten human health – as well as the agricultural economy.
Fraud and smuggling impact 'many different' types of foods, ranging from meat, dairy products, fish and seafood, fruit juices, oils, honey, spices and wine.
The report concluded: “Food fraud, commodity smuggling, and illegal agrochemicals undermine sustainable farming, limit crop yields and jeopardise delivery of fair, safe and sustainable food supplies, slowing progress on the goal for zero hunger.”
Illicit trade in agri-foods undermines the SDGs in ‘many ways’. The report noted it:
- Undermines ‘robust and resilient’ agricultural markets that support economic development and poverty reduction, hitting SDG1 ‘no poverty’.
- Destabilises food security and undermines sustainable food production and access to food, undermining SDG2 on ‘zero hunger’.
- Exposes consumers to harmful ingredients or deprives them of active beneficial ingredients, threatening SDG3 ‘good health and wellbeing’.
- Siphons GDP, jobs and tax revenues from national economies and introduces health risks that can jeopardise corporate brands and economic sustainability, which can be linked to SDG8 ‘decent work and economic growth.
- Deprives consumers of choice and ability to make educated and eco-friendly decisions, dampening SDG12 on ‘responsible production and consumption’.
- Illegal profits underwrite smugglers, breed corruption, subsidise wider criminal activity and threaten political and economic stability, undermining SDG16 on ‘peace, justice and strong institutions’.
“The report shows that socio-economic impacts of illicit trade present significant deterrence to SDGs,” said Hardy. “This is holding back progress, increasing costs and pushing achievement of the goals further away.”
Collaboration between governments, NGOs and the private sector
Pamela Coke-Hamilton, Director, Division on International Trade and Commodities, UNCTAD, added that a joined-up approach was needed to tackle illicit trade globally. She said that the different actions to tackle illicit trade from across the private sector, non-profit NGOs and international governments should be connected.
“Today’s discussion and this important report are just the beginning of our joint initiative to unite IGOs, NGOs and the private sector to fight illicit trade. Currently, no fewer than 20 intergovernmental organisations tackle this issue, largely on a sector or subject basis, and we must connect our initiatives to make a significant impact.”
Representing the private sector at the event, Monica Ramirez, global director of regulatory and public policy at Anheuser-Busch InBev, explained how illicit trade constrains government tax collections, precludes employment opportunities and presents health and safety risks to consumers.
“It’s important to help governments better understand the problem through more knowledge and raising awareness,” said Ramirez. “We are committed to be a progressive and effective partner with governments and society, and we have a responsibility to support SDGs in an effective way.”