Joint Action Against Illicit Trade That Fuels Conflict and Endangers Human Security Across Borders

David M. Luna
Chair, Anti-Illicit Trade Expert Group (AITEG)
Business at OECD
CEO, Luna Global Networks & Convergence Strategies LLC
10th Meeting of the OECD Task Force on Countering Illicit Trade
16 March 2022
Paris, France

Prepared Statement

Good afternoon.

It is a great pleasure to be participating at this 10th Meeting of the OECD Task Force on Countering Illicit Trade (TF-CIT).

I am proud to have attended all 10 of these Task Force meetings, including serving the first five years as the Chair of this dynamic working group. It is wonderful to see how it has flourished through the collective energies of our Task Force members over the years across governments, international organizations, businesses, civil society groups, and academia.

I also applaud the OECD and its member states for continuing their support of the important work of addressing governance gaps and developing policy guidance to counter illicit trade, especially using holistic, whole-of-society approaches.

On behalf of the Business at OECD (BIAC) and our Executive Director Hanni Rosenbaum, and the Anti‑Illicit Trade Expert Group (AITEG), let met me first thank the TFCIT Bureau and co-Chairs from the UK (Chris Martin) and US (Steve Francis) for their continued leadership of the Task Force, and Paul Maier and our partners with the European Union and the Observatory in IP Infringement/EUIPO.

I agree with ED Rosenbaum’s recent comments on the occasion of Business at OECD’s 60th organization across an array of policymaking initiatives that have meaningfully impacted the international community. “The OECD has been and will continue to be vital for business, as it stands for openness and multilateral cooperation to achieve sustainable economic growth, policies for better lives, and the development of a flourishing world economy.”

Let me also thank Elsa Pilichowski, Director of the Directorate for Public Governance (GOV) Piotr Stryszowski, Senior Economist, OECD GOV, and their OECD colleagues for their dedicated efforts to elevate our new partnership between OECD and Business at OECD, especially during these complex and volatile times around the world.

As I underscored to Secretary General Mathias Cormann during his last visit to Washington, DC to meet with the United States Council for International Business (USCIB), U.S. affiliate to Business at OECD, and its member the U.S. Chamber of Commerce, corruption and illicit trade finance insecurity, chaos, and instability across markets around the world.

As we have seen in recent weeks in conflict zones: kleptocracy, illicit economies, and money laundering are becoming nefarious tools of war, to finance autocrats’ weaponization of coercive diplomacy, disinformation, cyberattacks, and kinetic operations to destabilize peace, pursue unjust wars, and foment insecurity.

Whether in Ukraine, Afghanistan, Central America, Syria, or other conflict zones, such criminalized violence imperils our collective global security, prosperity, and humanity.

In these arcs of geopolitical instability and a more complex globalized world, businesses also incur great economic and reputational costs as many have had to close or suspend their operations, something we are witnessing in both Ukraine and Russia.

Sustaining their corporate responsibility standards, doing business is becoming more difficult in conflict zones financed by authoritarian states such as Russia which is facing worldwide condemnation and harsh economic sanctions from Europe, the United States, and other governments for their invasion of Ukraine and atrocities on innocent civilians.

At the same time, as the world addresses the devastating economic impact of COVID-19 and other global crises and threats, private sector businesses will be the key to jobs recovery, innovation, strategic know‑how investments, and the jobs growth our economies need.

No aggression by a ruthless and corrupt autocrat should endanger the freedom of any free society, endanger our collective security and prosperity, or threaten a community of democracies around the world with nuclear or Weapons of Mass Destruction (WMD).

This is why, I would like to propose that the AITEG-TFCIT Chairs encourage the OECD to work with us to examine more closely – including through evidence-based studies – how corruption, illicit trade, money laundering, black markets, and gray zones help to finance today’s autocrats, who use their dirty money to finance conflicts, shadow wars, violence, and destabilization that impact our economies, digital marketplaces, and community of democracies.

We hope to submit our concerns on these crime convergence threats to our collective security and prosperity more concretely in a letter to Secretary General Cormann and the OECD Council for their consideration and action.

During the current pandemic, we see how criminals exploit market vulnerabilities and illicit economies, including across online digital platforms through cybercrime and frauds, or the sale of counterfeit personal protective equipment (PPE), medicines, vaccines, and other illicit goods that harm and endanger communities and consumers alike.

Illicit trade, which includes a convergence of numerous trafficking, smuggling, financial, cyber, and fraud crimes, fuels a multi‑trillion‑dollar illegal economy globally every year. It is a fact that illicit trade continues to boom, fueling transnational crime and corruption. It corrodes the rule of law and undermines democracy, social stability, and the safety and health of all people.

In some OECD and non-OECD states, illicit trade has also enabled organized crime to penetrate markets, infiltrate public institutions, and co-opt the rule of law. In these instances, cartels, gangs, criminal syndicates, and oligarchic business elites corrupt public officials and sustain their illicit-licit commercial investments through intimidation, violence, or assassinations of politicians, judges, and police and security officials.

The world is on fire on so many fronts – from conflicts, organized crime, pandemics, cyberattacks, and climate change.

Through collective actions, energies, resources, and will we must work together across sectors and communities to confront such threats.

Business at OECD supports the Task Force’s continued efforts on countering illicit trade across today’s arcs of insecurity.

Through our dynamic partnership with the OECD and TFCIT, we are committed to also work with OECD member states to counter the harms caused by dangerous and illicit goods that have serious effects on our environment, workforce, innovation, and again the health, safety, and security of our people.

A New TFCIT-AITEG Public-Private Partnership to Counter Illicit Trade

Public-private partnerships can be force multipliers to counter illicit trade and illicit economies.

As we finalize our AITEG 2022-2024 Road Map, Business at OECD is proud to continue to support AITEG‑TFCIT collaborations that can excite and innovate new opportunities to strengthen international cooperation across source, transit, and demand markets to protect supply chains and communities against counterfeiters, fraudsters, kleptocrats, and threat networks.

Our AITEG initiatives include support for the following OECD TFCIT actions:

Free Trade Zones

We must build on our achievements and momentum in recent years on combatting the abuse of FTZs in expanding illicit trade, and make this project our highest priority.

We support the effective implementation of the OECD Recommendation of the Council on Countering Illicit Trade: Enhancing Transparency in Free Trade Zones and promoting compliance with its Code of Conduct through best practices, standards, and enforcement measures.

We support the current certification scheme and processes to ensure strong compliance with the provisions of the Code of Conduct and for selecting certification bodies. In this process, we look forward to providing more private sector input and applaud experts from the testing, inspection and certification industries experts are actively involved.

E-Commerce: Trade in Fakes and Counterfeits

We must continue to address the abuse of e-commerce platforms and online marketplaces in fueling illicit trade.

We support Phase 2 of the TFCIT‑AITEG and the continuation of the e-commerce project, including conducting additional research on existing anti-counterfeiting industry best practices and exploring the viability of a counterfeiting code of conduct for online marketplaces.

Misuse of Containerized Maritime Shipping in the Global Trade of Counterfeits

Following the excellent workshop on Misuse of Maritime Transport for Counterfeit Trade held in Alicante last October, we must continue the critical collaboration between key Supply Chain actors (Rights Holders, Maritime Operators, LEA’s and the entire related ecosystem) in order to highlight best practices and address governance & enforcement loopholes and gaps.

We must conduct more evidence‑based research on the governance gaps related to the misuse of containerized shipping and maritime transport channels for illicit trade including ongoing efforts and initiatives, and the sharing of best practices, by the AITEG and our Cross-Industry advisory expert subgroup, of which members are present today.

Dangerous Fakes and Illicit Goods and Illicit Trade in High-Risk Sectors

We support continued attention to dangerous fakes and illicit goods and illicit trade in vulnerable, high‑risk sectors and global supply chains including in areas that present significant health and safety risks.

Leveraging our expertise in the private sector, the AITEG looks forward on identifying, analyzing and disseminating effective policies and good practices to assist OECD member states to better disrupt the trade of dangerous fakes and illicit goods and to regulate against illicit trade in high-risk sectors and hubs of illicit trade.

Targeting Corruption and Money Laundering as Critical Elements to Counter Illicit Trade

Corruption, money laundering and trade-based money laundering (TBML) are threat multipliers that help finance illicit trade and criminal activities that impact the OECD’s efforts to promote economic development, trade and investment, shared prosperity, market security, and successful implementation of the Sustainable Development Goals (SDGs).

In many cases, the profits generated from illicit trade are laundered through the use of anonymous shell companies, TBML, hubs of illicit trade, Free Trade Zones, criminalized ports, and other legal and illegal processes exploited by criminal and corrupt facilitators and enablers.

We will integrate corruption and money laundering/TBML as critical elements into our core TFCIT-AITEG work streams, and seek greater coordination with other OECD bodies and international fora, to more comprehensively combat illicit trade.

Partnerships and Collective Action: Force Multipliers

Moving forward, we must ensure that governments and the private sector take the necessary actions to mitigate the future risks posed by illicit trade to our prosperity and security.

Together, we must mobilize our political will by elevating the fight and securing greater commitments for coordinated action at the OECD Ministerial Council meetings, Community for Democracy, World Trade Organization (WTO), the Asia‑Pacific Economic Cooperation (APEC), World Bank Group/IMF Annual meetings, and other diplomatic fora.

Finally, after 10 years of outstanding work, innovative public-private partnerships, and impactful results across the international community, the time is ripe for the OECD Council to institutionalize the TFCIT as a Part II programme in the OECD budget similar to the work of the Financial Action Task Force (FATF) and other ad hoc bodies and Council Working parties or committees on steel, shipbuilding, and chemicals.

I had the distinct honor of briefing earlier today Jack Markell, United States Ambassador to the OECD, and the USOECD Mission, on our tremendous record of success and achievements in the joint work of the TFCIT and AITEG since their inception. We appreciate Ambassador Markell’s support and hope that he joins Aleksander Surdej, Ambassador of Poland to the OECD, as well as other OECD Ambassadors to work with Secretary General Cormann and the OECD Council to ensure that our collective action across sectors to counter illicit trade and illicit economies remains an elevated priority at the OECD for the next 10 years, and beyond.

I am confident that in working together our TFCIT-AITEG partnership at the OECD, we can unite against the corruptive influence of today’s bad actors and threats networks that are financing today’s conflicts and instability across sectors, sabotaging legitimate commerce and global supply chains, by dismantling the hubs of illicit trade and criminalized markets, prosecuting the complicit enablers and facilitators of today’s violence and insecurity, and ensuring greater justice, safer communities and sustainable peace.

Thank you.