Remarks at the Department of Homeland Security's Symposium on Illicit Trade

Charles H. Rivkin
Assistant Secretary, Bureau of Economic and Business Affairs
Arlington, VA
January 12, 2016

Thank you, Bruce. And thank you to the Department of Homeland Security for assembling this fantastic group of leaders from government and business here today. I also want to thank Raúl Perales, who made the fight against illicit trade a priority while serving as Assistant Secretary for the Private Sector at DHS. It’s a pleasure to be here to discuss an issue that matters to the State Department and matters to the world.

Secretary of State John Kerry frequently says, “Economic policy is foreign policy – and foreign policy is economic policy.” And he’s right. Many of the challenges we face around the world today are economic in nature. And, very often, these challenges are exacerbated by the illicit flow of resources.

Illicit trade not only harms our businesses and consumers – it undercuts our foreign policy interests. From counterfeit drugs to conflict diamonds to looted antiquities, the trade in illicit goods has fueled instability and insecurity around the world. Profits from counterfeiting and other forms of illicit trade aren’t accountable to taxation, and often benefit organized crime, and – in some cases – terrorists, including ISIL.

While this shadow economy is – by definition – difficult to measure, we’ve seen the threat it poses to our shared prosperity. Some international organizations have estimated that the illegal economy makes up 8 to 15 percent of global GDP.

Because these global challenges have economic roots, the State Department – working with the other U.S. agencies in this room – is using economic tools to address them. I’d like to give a few brief examples of action we’re taking.

First, this Administration has put together the highest set of standards for a trade deal in history. The Trans-Pacific Partnership strengthens the rules of engagement for global trade, and when implemented, it will launch a race to the top.

The agreement includes provisions requiring all members to combat wildlife trafficking, illegal logging, and illegal fishing. The TPP also includes an entire Transparency and Anticorruption Chapter that requires our trading partners to fight trade-related bribery and corruption.

Second, in our efforts to dismantle criminal and terrorist networks, in Syria and Iraq, we’re working to cut off ISIL’s funding streams, which include human trafficking and the illegal sale of oil, natural gas, cigarettes and antiquities.

The State Department has developed an illustrative list of parts, equipment and supplies that ISIL needs to maintain its oil and gas infrastructure. We’re sharing this information with coalition governments and private companies to ensure that they do the enhanced due diligence necessary to prevent these products from being sold across borders to ISIL.

We have also documented ISIL’s antiquities trafficking, and promoted international law enforcement cooperation to combat it. This includes publishing “Red Lists,” which help border officials identify artifacts coming from ISIL-controlled territory.

And we’ve pressed other countries to act as well. In 2015, the U.S. sponsored and the UN Security Council adopted two resolutions that require all UN member states to take steps to prevent ISIL’s oil sales and antiquities smuggling.

But, of course, governments cannot tackle illicit trade alone. We need to build new partnerships – and strengthen existing ones – with the private sector. My Bureau of Economic and Business Affairs works closely with U.S. businesses on a range of issues.

For example, in the Democratic Republic of the Congo, armed groups have exploited natural resources to fuel a civil conflict and commit human rights abuses. In response, we’ve sponsored a Public-Private Partnership on Responsible Minerals Trade where we work closely with leading U.S. companies to help build systems in the Great Lakes Region of Africa – particularly the DRC – so that minerals like tin and tungsten can be sourced conflict-free.

We’ve also partnered with the private sector on the Kimberley Process Certification Scheme, an international effort to stem the trade in illicit diamond sales used to finance armed conflict. Now, U.S. companies have taken it upon themselves to raise the bar. They are helping to create an even higher standard to protect consumers and tackle the violence associated with diamond production.

Finally, let me address pharmaceuticals. Supply chains are increasingly compromised with counterfeit – and highly toxic or useless – medications. The World Health Organization estimates that, in some countries, one in five drugs is fake.

Now, a relatively comprehensive system of laws, regulations, and enforcement has kept drug counterfeiting in the United States relatively rare and kept Americans safe. But as supply chains become increasingly complex, enforcement agencies around the world face enormous challenges. Nearly 40 percent of the drugs Americans take are made abroad. And about 80 percent of the sites where active ingredients are manufactured are outside our borders.

With new technologies, counterfeiters are making drugs more easily than ever, and selling them anonymously directly to consumers through the Internet.

The State Department engages with foreign governments to address this serious problem, and delivers law enforcement training and technical assistance to developing nations. State also works with the White House’s National Intellectual Property Enforcement Coordinator, who brings together private firms with domestic and foreign officials working to secure the supply chain.

These efforts are preventing millions of illicit drugs from reaching unsuspecting patients – and it’s saving lives. The U.S. government, working with INTERPOL and the private sector, shut down 13,700 websites that trafficked counterfeit medicine in 2013 alone. In one operation this past June, the U.S. and over 100 other countries seized 81 million dollars worth of potentially dangerous medicine. While we measure this in dollars, the real value is measured in the lives that have been saved.

This symposium is a fantastic opportunity to expand on this cooperation between government and business and build new understanding and partnerships. It’s through these partnerships that we’ll find new tools to shut down illicit markets, put criminal entrepreneurs out of business, and help create a safer, more prosperous future.

I look forward to a productive discussion. Thank you.