Global Illicit Trade Environment Index: A Call to Action

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Written by Silvana Smith

New York, NY: The Transnational Alliance to Combat Illicit Trade (TRACIT) and the Economist Intelligence Unit have just released the Global Illicit Trade Environment Index as means for the international community to address illicit trade and prioritize finding solutions.

The index, initially developed from a model specific to Asia, was expanded to include 84 countries. Each country is evaluated and numerically scored based on four thematic categories; government policy, supply and demand, transparency and trade, and customs environment. The index sheds light on the current illicit trading landscape both globally and regionally, providing individual scores in each category as well as overall ranking. These scores are not necessarily based on how effective each country has fought illicit trade. In the full report, TRACIT makes the distinction that the index is based on “their structural capability to protect against illicit trade” and not past performance.

The rankings reveal alarming trends in underdeveloped countries, which tend to lack much ability to restrict illicit trade. Low ranking countries such as Venezuela, Cambodia, and Ukraine demonstrate economic and political environments that are unsuccessful in preventing activity such as illegal trading of goods, counterfeit currency, or human trafficking. This is due to the lack of technological innovations, such as cyber security and high levels of corruption. However, even countries whose score ranks high overall does not necessarily indicate they scored high in each category equally. For example, Austria ranked highly in three of the four main categories but failed to score as high on the customs environment due to their lack of automation in their systems.

Other key findings describe how overall categorical scoring, across all countries, is higher in customs environment while the lowest average score was in a country’s ability to encourage or discourage the supply or demand of illicit goods and services. These results stem from well-developed and high scoring countries having the structure in place to focus on implementation issues such as customs environment, while lower scoring nations must take smaller steps to work towards building an environment that discourages the presence of illicit trade.

Along with the index, TRACIT included specific recommendations and strategies for governments to implement based on the data. The “checklist” provides clear direction for policy decisions. However, the methodology of accomplishing those goals is left to the interpretation of data and the judgment of each nation and their own resources. TRACIT promotes the list as “universal” in nature, to inspire common goals in “policy makers and all stakeholders”. The recommendations are also aimed at strengthening government relationships through treaties, sharing data, and interagency cooperation. Other goals are more broad including; reducing corruption and strengthening law enforcement.

There is a true urgency concerning illicit trade. TRACIT Deputy Director-General Stefano Betti directly calls on high ranking countries to act as leaders in preventing illicit trade for other nations. He encourages using the index and its data “as a tool for informed decisions” and to prioritize finding solutions as soon as possible. Both public governments and private business need to prioritize the issue together. Betti continues, stressing how widespread the threat of illicit trade is on a global scale. Beyond economic repercussions, illicit trade poses serious threats “against the health and security of our societies.”

With the Global Illicit Trade Environment Index, TRACIT hopes to bring awareness to this global crisis and encourage enacting specific strategies rooted in data. The success of their proposed recommendations is now up to international cooperation and the willingness of global leaders to address illicit trade with urgency and tact.