U.S. STATE DEPARTMENT OFFICIAL'S REMARKS AT THE OECD HEADQUARTERS

FROM: U.S. DEPARTMENT OF STATE
Public-Private Partnerships to Shut Down the Global Illegal Economy and Build the New Markets and Investment Frontiers of Tomorrow

Remarks
David M. Luna
Director for Anticrime Programs, Bureau of International Narcotics and Law Enforcement Affairs
OECD Headquarters
Paris, France
April 2, 2013

Bonjour à nouveau!

I am honored to co-chair this first formal meeting of the Task Force on Charting Illicit Trade with my friend and colleague, Mr. Rolf Alter, Director for Public Governance and Territorial Development here at the Organization for Economic Cooperation and Development (OECD).

Many of you have been with us from the beginning of this bold initiative. Some of us represent governments, others multinational corporations, international organizations, think tanks, and civil society.

In October 2012, we spent a productive day exploring the harms posed by illicit trade and the illegal economy on global supply chain integrity, economic growth, market security, and development.

We agreed that no single government or company can design and implement an effective solution to this complex problem alone, nor does any single entity have a complete understanding of how vast the problem really is.

We recognized that inaction was not a viable option. But through collective action and a multi-sector approach, we could strive to shut down the global illegal economy and help communities to nurture transformative and sustainable markets. Instead of harmful counterfeits and illicit products that pose health hazards to our people, we could work together to build more dynamic economies focused on innovation, competitiveness, and, above all, a brighter future.

Illicit trade, corruption, and crime impede these aspirations and weaken the potential of our commitment, especially in the developing world.

Last fall, we decided to join forces to identify and quantify the risks and harms of illicit trade, to look at our policies with a critical eye, and to brainstorm how we can work together to block illicit trade and protect the supply chains that stimulate economies in countries at the level of production, transit, and consumption.

Today, we meet in Paris to carry forward this commitment. We applaud the OECD and Secretary-General Jose Angel Gurria for their leadership in taking on this challenge through the High-Level Risk Forum, which seeks to increase societal resilience to global risks and emerging threats such as natural disasters, pandemics, and, increasingly, crime.

I would like to extend a special thanks to the private sector participants who have agreed to share their expertise and confront this problem as equal partners with the government representatives in the room. This includes members of the OECD Business and Industry Advisory Committee, the World Economic Forum, and many others.

I also thank all the international organizations and governments who brought their commitment and expertise to develop effective public-private partnerships to combat the global illegal economy and help build and sustain tomorrow’s new markets and investment frontiers.

Illicit Trade: A Risk We Can Control

As humans, we tend to exaggerate the risks of spectacular events that are extremely rare but that result in many losses immediately—a factory fire, a terrorist attack, a natural disaster.

Meanwhile, we underestimate the risks of long-term events that affect us every day in small ways, adding up to a major impact.

Illicit trade is one of these risks.

In order to combat illicit trade, we must understand the risks and costs. We have the data. Now we need to aggregate and share it.

We need tools and maps to inform the public about the breadth of illicit trade and the challenges it poses.

We need to visualize the illicit networks and nodes we all know exist, because we experience their impact every day: when governments cannot afford to provide vital public services because customs revenues are being siphoned away by smugglers, criminals, and corrupt officials; when people die because the drug they were told would cure malaria actually contains chalk; when our nationals are subjected to forced labor to secure ill-gained finances for unscrupulous businesses in the global supply chain; when businesses suffer the loss of revenue from counterfeiting or black market distribution of their products.

When men, women, and children are trafficked to support the illegal economy, human trafficking further promotes breakdown of families and communities, deprives countries of human capital, undermines public health, creates opportunities for extortion and subversion among government officials, and imposes large economic costs.

When illicit financial flows and dirty money enter the global financial system, they taint and weaken the integrity of markets while giving false hope to victimized communities that illicit enterprise can replace fair and open markets.

When illicit actors and networks continue to profit from drugs, criminal activities, and corruption, legitimate commerce loses out as the illegal economy expands, and the legitimate one shrinks. This is an outcome we cannot afford in these austere financial times.

And when illicit trade, blood money, and corruption converge to create permissive sanctuaries, safe havens, and illicit financial hubs, insecurity and destabilization in some parts of the world can have a devastating ripple effect that threatens our shared agenda for enduring peace, prosperity, and market stability.

I look forward to working with all of you today, tomorrow, and in the coming months as we build a clearer panorama of the harms posed by illicit trade and illicit financial flows, develop innovative policy solutions to combat it, and promote effective public-private partnerships across the OECD, WEF, and other communities around the world, to improve the state of our world.

With these introductory remarks, let us begin our work.