What Is Illicit Trade? What Are Its Consequences?

Illicit trade is a complex problem and a menace to the world’s economic growth. It poses a serious threat to consumers’ health and the reputation of legitimate manufacturers while stunning a country’s economic growth.

The world’s population is growing, and the demand for novel, customizable products is increasing at a fast pace. This rapidly growing market provides space for the expansion of illicit financial flows.

The current wave of globalization has enabled all segments of society — suppliers, manufacturers, end-consumers — to enjoy the fruits of liberalization. It has, inadvertently, also allowed parties that are involved in the trade of counterfeit or illicit products to enter a bigger market. While some profiteers carry out illicit activities to evade taxes and make more money, this form of trade is often identified as a facilitator of organized crimes and terrorism.

A Brief Historical Overview

In the 17th century, British authorities recognized smuggling as a big problem. This illegal activity continued despite the many efforts of governments to stop the entry of contraband items in their territories. In England, the smuggling of wool and hides rose exponentially when the then-government imposed high taxes on the export of these products. Some people smuggled other goods to avoid embargoes and prohibitions on particular trades.

The US saw the epidemic of illicit trade in the 1920s during the Prohibition era. During this time, there was a nationwide constitutional ban on the import, production, sales, and transportation of alcoholic beverages.

Current Scenario and Future Prospects

Why Is This Trade Widespread?

E-commerce is often celebrated as mobilizing the international market space, but it has also played a major role in the spread of illicit trade. With sale transactions taking place on websites and online market places under minimal to zero regulations, it has become easy for people with vested interested to sell illicit products.

What Sectors Do Illicit Trade Cover?

Impact of Illicit Trade

1. Government tax collection

2. The reputation of legitimate manufacturers

3. Consumers health

4. Law enforcement and adherence to regulations

It is important to closely analyze its effects on each category mentioned above:

1. Government Tax Collection

Illicit trade is an assault on the government’s principles and philosophy of equitable distribution of wealth. It allows profiteers to make more money and consolidate power through unfair means. This deprives citizens of their economic and social rights.

2. The Reputation of Legitimate Manufacturers

3. Consumers Health

The dire consequences of the consumption of such items are often irreversible. Both the public and the government end up with a health crisis on their hands caused by illicit goods.

4. Law Enforcement and Adherence to Regulations

How to Combat Illicit Trade

Passionate about Latin American politics and int. geopolitics, with solid experience in anti-illicit trade strategies, public affairs and communications.