The Societal Costs of Illicit Trade

The societal costs of illicit trade

Illicit trade is a serious threat to our economies and societies. While each form of illicit trade has its own characteristics and drivers, it is often the same criminal groups using the same routes, the same means of transport and the same concealment methods behind multiple forms of illicit trade.

One of the key strengths of TRACIT's work is the ability to go beyond a segmented approach, and instead consider the interconnected nature of the problem of illicit trade and to appreciate commonalities and points of convergence across sectors. This is especially true in the work program focusing on the wider societal costs of illicit trade. These societal costs include how illicit trade:

undermines the achievement of the SDGs,
lowers credit rating scores,
drives demand for forced labor, and
fuels corruption.

While each subject area has its own specific characteristics and associated recommendations for actions by governments, what is common across all four policy areas is that government strategies to achieve the UN Sustainable Development Goals, protect human rights, attract investment, and eliminate corruption, necessarily need to include measures to combat illicit trade.

Featured reports

Money Talks: The Crooked Connection Between Corruption and Illicit Trade

Corruption, which erodes controls designed to prohibit illegal goods to move across borders, undermines law enforcement operations to detect or interrupt illicit trade, and contributes to impunity of illicit traders. The report Money Talks: The Crooked Connection Between Corruption and Illicit Trade finds that corruption is affecting illicit trade worldwide. There is not a single sector of illicit trade that is not tainted by corruption, including agrifoods, alcohol, IUU fishing, forced labor, timber, or wildlife, pharmaceuticals, pesticides, precious metals, gemstones, tobacco products, petroleum, or counterfeiting.

The report includes 84 examples of when corruption is encountered during illicit trading and as well as a regression analysis of corruption (as measured by Transparency International’s CPI) and illicit trade (as measured by the EIU’s Global Illicit Trade Environment Index).

The full report is available here.

All materials relating to the launch event, including video recording and media release, are available here.

The Human Cost of Illicit Trade

Among the worst crimes associated with illicit trade is the demand it creates for forced and child labor. The TRACIT report, The Human Cost of Illicit Trade: Exposing demand for forced labor in the dark corners of the economy, studies an overlooked corner of the global economy, namely the incidence of forced labor in illicit market activities.

Occurrences of forced labor are examined in eight sectors where illicit practices are regularly reported. These activities include: (i) counterfeiting of apparel, footwear and luxury goods; (ii) counterfeiting of electronics machinery and equipment; (iii) substandard and falsified medical products; (iv) illegal mining; (v) illegal, unregulated and unreported fishing; (vi) illicit tobacco products; (vii) illegal pesticides; and (viii) illegal timber.

The full report is available here.

All materials relating to the launch event, including video recording and media release, are available here.

The Link Between Illicit Trade and Sovereign Credit Ratings

Illicit trade has a direct negative impact on the very economic, social, and institutional risk factors that credit rating agencies evaluate to determine countries’ ability to honor their debt. The corruption, crime, human trafficking, money laundering, and environmental degradation connected with illicit trade all combine to weaken a country’s economic, financial and institutional stability that underpin its credit ratings.

In light of the strong and widespread impacts of illicit trade on countries’ economic output and performance, the report The Link Between Illicit Trade and Sovereign Credit Ratings investigates whether a correlation can be established between individual countries’ creditworthiness and their vulnerability to illicit trade. The report compares the credit ratings attributed by S&P Global, Fitch Group and Moody's and the scores attributed by the Global Illicit Trade Environment Index, and finds that countries that are poorly equipped to tackle illicit trade also suffer from poor credit worthiness.

The full report is available here.

All materials relating to the launch event, including video recording and media release, are available here.

Mapping the Impact of Illicit Trade on the Sustainable Development Goals

From smuggling, counterfeiting and tax evasion, to the illegal sale or possession of goods, services, humans and wildlife, illicit trade is compromising the attainment of the UN SDGs in significant ways, crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives.

The TRACIT report Mapping the Impact of Illicit Trade on the Sustainable Development Goals investigates illicit trade in 12 key sectors that participate significantly in international trade and are most vulnerable to illicit trade. For each sector, the negative impacts of illicit trade are mapped against the 17 UN SDGs.

The full report is available here.

All materials relating to TRACIT's work on the UN SDGs are available here.

Featured publications

A 10-Point Primer on Stepping Up the Fight Against Forced Labor, Child Labor and Human Trafficking

Progress on stopping child labor has been painfully slow. Let’s change that! In observance of the 2023 World Day Against Child Labor, TRACIT launched a 10-point primer to accelerate the fight against forced labor, child labor and human trafficking.

Affiliations

TRACIT is a member of the ILO Global Business Network Forced Labour (GBNFL), an umbrella network of networks offering a forum for collaboration convened by the International Labour Organization (ILO) where business and business networks come together behind a common objective of leveraging comparative advantages and collective action towards the elimination of forced labour and human trafficking. More information can be found at flbusiness.network

WORK PROGRAM

MEDIA CENTER

Media releases from report launches

TRACIT media release on the launch of Money Talks: The Crooked Connection Between Corruption and Illicit Trade, February 22, 2024

TRACIT media release on the launch of The Human Cost of Illicit Trade, October 18, 2022 

TRACIT media release on the launch of The Link Between Illicit Trade and Sovereign Credit Rating, January 20, 2021

TRACIT media release on the launch of Mapping the Impact of Illicit Trade on the UN Sustainable Development Goals, 18 July 2019

FEATURED EVENTS

Investigating the societal costs of IP infringement, Panel Discussion, INTERPOL IP Crime Conference
Willemstad, Curaçao, 24 September 2024

Roundtable Discussion on Money Talks: The Crooked Connection Between Corruption and Illicit Trade
TRACIT webinar, 22 February 2024

Investigating the societal costs of IP infringement, Panel Discussion, World Intellectual Property Organization Advisory Committee on Enforcement (ACE) Sixteen Session. Media Release / Report
Geneva, 2 February 2024

EUIPO Meeting of the EU Observatory Expert Group on International Cooperation
EUIPO-virtual meeting, 28 November 2023

2nd Illicit Trade Forum
UNCTAD / TRACIT co-hosted event
Geneva, 6-7 September 2022

Roundtable Discussion on the Human Cost of Illicit Trade
TRACIT webinar, 2 December 2021

Fourteenth United Nations Congress on Crime Prevention and Criminal Justice
Kyoto, 7-12 March 2021

Roundtable Discussion on the Link Between Illicit Trade and Sovereign Credit Ratings
TRACIT webinar, 20 January 2021

Illicit Trade Forum
UNCTAD / TRACIT co-hosted event
Geneva, 3-4 February 2020

Dialogue on Illicit Trade and the SDGs
UNCTAD / TRACIT Co-hosted event
Geneva, July 18, 2019

Featured podcast
The Underground World of Fake Football Shirts

TRACIT's Dr. Ulrika Bonnier is interviewed in the New York Times / the Athletic's investigation of the illicit trade of counterfeits, highlighting the role that forced labor plays in these criminal organizations across the world and breaking down why buying that fake jersey is far from a victimless crime.

Listen: Apple Podcasts I The Athletic

Read the full reporting and interviews:

Inside the underground world of fake football shirts, The Athletic, March 10, 2025

Fake football shirts survey: 78% have bought one, 66% happy to stick with counterfeits, The New York Times, March 12, 2025

Featured podcast
Child and forced labour, human trafficking and illicit trade

TRACIT's Ulrika Bonnier joins the International Labour Organization's (ILO) Global Business Network on Forced Labour to discuss how child and forced labour are linked to crimes and criminal networks, as well as possible solutions. The podcast is part of ILO’s series that looks at how forced labour is linked to child labour, environmental degradation and illicit trade, and how these issues can be tackled successfully together. More...

Listen on: SoundCloud I Spotify I Apple Podcasts

The current global health, socio-economic and geopolitical climates provide an optimal environment for criminal activity to not only increase but manifest itself in different ways. Illicit trade is no different. We are confronting a crisis of the global common good.

Minister Paula Gopee-Scoon, Ministry of Trade and Industry, Trinidad and Tobagory