Border reforms will reduce risk and shorten delivery times for UK exporters

26 October 2015

Michael Ellis, Head of Interpol’s Trafficking in Illicit Goods and Counterfeiting unit based in Lyon, France, speaking at this year’s World Trade Organisation Public Forum, said that the scale of illicit trade has grown to such a degree that it is having the effect of destabilising legitimate commerce.

Trade-based money laundering, where the proceeds of crime are disguised through trade, has increased due to the tightening of global financial regulations. Customs officers are responsible for monitoring all cross-border movements of goods, conveyances and people and they hold unique powers.  Analysing data on commercial transactions between countries is one method used to detect illicit trade.

Transactions that are over or under-invoiced, over or under-shipped, involve multiple invoicing or falsely describe goods face scrutiny along with shipments consigned to free trade zones. It seems that FTZs are hotbeds for illicit trade activity.

A recent successful Interpol operation targeted crime networks behind fake goods in South America. Operation Jupiter involved 2,000 raids in 11 countries with the aim of dismantling illicit factories and supply chains.

It led to the seizure of 800,000 fake goods worth USD 130 million and 805 arrests. Seized goods included clothing, fertilisers, windshields, alcoholic beverages, cigarettes, cosmetics, electric and electronic components, mobile phones, accessories, fuel, and construction materials.

The WTO, who estimates that the value of counterfeit and pirated goods alone is equivalent to 7% of the world’s merchandise, has seen 50 countries sign-up to its Trade Facilitation Agreement which will bring customs reforms and new levels of co-operation between customs authorities to help combat crime. The TFA, which will enter into force once two thirds of WTO members have accepted it, should also speed up delivery times. The Geneva-based Global Express Association, representing fast parcel carriers, says that stoppages jump from an average of 13% to 63.5% in countries where no trade facilitation exists.

Over time, UK companies selling to TFA implementing countries, especially emerging markets, will not only find it easier to do business but also less risky.

By Tim Bailey, International Trade Director, Chamber International

One of a series of blogs to be published over the coming weeks.

Follow Tim on Twitter @ChamberInt_Tim