Illicit trade harms societies and impedes economic growth and development. It undermines legitimate business activity, fosters corruption, and denies governments potential tax revenue needed to invest in society. This is why the WTO Secretariat, under the leadership of Director-General Ngozi Okonjo-Iweala, has been examining how WTO rules help members address some of the challenges posed by such trade.
In a recent publication on fighting illicit trade in medical products, DG Okonjo-Iweala emphasized that wider efforts are needed to deepen international cooperation and provide the technical assistance required to strengthen members’ capacity to combat illicit trade.
Building on this work, the WTO Secretariat has launched a new publication on illicit trade in food and food fraud to address the role the WTO could play in helping tackle this issue. The publication draws on expertise from various organizations, including the Food and Agriculture Organization of the United Nations (FAO), the International Seed Federation (ISF), SSAFE — a non-profit organization for food safety, the Transnational Alliance to Combat Illicit Trade (TRACIT), and the United Nations Interregional Crime and Justice Research Institute (UNICRI). These organizations examine this issue from different perspectives and highlight strategies for tackling illicit trade in food and food fraud.
Illicit trade and fraud in the agri-food sector have damaging impacts on various stakeholders, ranging from consumers, farmers, and agri-businesses to regulators and other operators within the food industry. Although determining the global cost of fraud to the food industry is challenging due to its clandestine nature, annual estimates range between US$ 30-50 billion, excluding losses associated with illicit trade in alcoholic drinks.
The impacts of illicit trade are far-reaching, affecting different segments of society and the economy. Illicit trade in food and food fraud causes economic losses to legitimate businesses through loss of sales and consumer confidence. Governments not only lose valuable revenue due to tax evasion but also incur costs in combating counterfeit crime and smuggling.
Fraudulent and fake food and beverages damage public health and safety. Adulterated or contaminated food products can pose serious health risks to consumers with potentially deadly consequences. Even counterfeit products that cause no harm but fail to contain advertised ingredients defraud customers and erode consumer trust in the food supply chain.
The WTO rulebook provides members with a range of legal instruments that can help combat illicit trade in food and food fraud. Of particular importance are the WTO’s Sanitary and Phytosanitary Measures (SPS) Agreement—which allows members to regulate food imports based on science—and risk assessment techniques; as well as the Technical Barriers to Trade (TBT) Agreement—which allows members to address deceptive practices in traded goods.
At a launch event for this publication, numerous ideas were proposed by WTO ambassadors for next steps in this area. Suggestions included holding discussions with the World Health Organization (WHO) involving health communities; reviewing actions taken by governments against illicit trade within WTO Trade Policy Review processes; leveraging WTO Aid for Trade discussions; exploring cross-border customs cooperation; studying e-commerce's impact on illicit trade; continuing discussions within TBT/SPS committees; especially considering negotiations around a new Codex standard on food fraud. Any future action will need agreement from all WTO members.