It is an honor as the 2011 APEC Anti-Corruption and Transparency (ACT) Working Group Chair to co-host this workshop with Rodrigo Roque, the APEC Intellectual Property Experts Group (IPEG) Chair.
Over the years, the ACT, IPEG, and other APEC sub-fora have been pathfinders in developing innovative cross-fora approaches to addressing numerous illicit trade issues that are important to APEC economies. Earlier this year at the APEC SOM I meetings, for example, we partnered to advance a dialogue on combating counterfeit medicines and other cross-border illicit threats that impact our economies, especially in areas where they threaten human health and safety.
Corruption and illicit trade are not only barriers to the integrated commercial, transportation, and transactional systems that facilitate free trade and the movement of people throughout legitimate markets, but they also weaken the entrepreneurial spirit that nurtures innovation, openness, and competitiveness and contributes to prosperous economies. Indeed, combating corruption and promoting good governance nurtures the overall business climate and promotes cleaner and more dynamic sectors.
Illicit market actors easily navigate between licit and illicit worlds, investing in legitimate industry and integrating themselves into communities, where they erode supply chain integrity and destabilize institutions through bribery, coercion, and corruption. In some cases, they even establish themselves as seemingly altruistic providers of security and basic services.
Criminal entrepreneurs and illicit networks also engage in bribery, fraud, and violence to corrupt or intimidate vital government institutions in order to gain the upper hand against competitive business. This cycle distort our markets, damaging the ability of legitimate firms to compete, and drives some legitimate small- and medium-sized enterprises out of the market in the APEC region.
In the case of counterfeit or falsified medicines, medical products, and other dangerous counterfeits and defective and tainted products, illicit trade imperils the safety of our people and shakes confidence across our markets. Fake medicines often contain inactive or toxic ingredients than can increase drug resistance, prolong patients’ suffering, and even cause death. The “entrepreneurs” behind these counterfeits and other illicit activities are rapacious opportunists who profit from the low level of risk for this type of criminal activity where regulatory and enforcement structures are weak or ill equipped to address this challenge.
In our fight against the spread of counterfeit medicines, APEC economies must work together and with the private sector and other stakeholder interests not only to investigate and prosecute the illicit actors who produce and distribute counterfeits, but to ensure that all communities have access to safe and effective medicines.
Excising corruption and illicit trade from the global market for goods and services requires all market actors—from businesses to governments to consumers—to act in harmony to restore supply chain control to legitimate businesses that have both the greatest knowledge of their supply chains and the greatest stake in their integrity. We applaud our growing partnership with the private sector and other stakeholders across APEC sub-fora to develop a full-spectrum approach to combating illicit trade that targets not only actors, but also the economic, political, and legal conditions that enable them to operate.
Today’s Workshop on Investigating and Prosecuting Corruption and Illicit Trade: Stemming the Flows of Counterfeits and Dismantling Illicit Networks continues to build upon the partnership we began at SOM 1 and is a model for what we hope will be many more vibrant partnerships across APEC sub-fora to combat corruption and illicit trade and plug vulnerabilities in supply chains and markets.
We can no longer allow illicit criminal networks to hijack our prosperity and twist the globalized value chain. We cannot allow our businesses to experience a loss of profits, a loss of brand identity and reputation, diminished product quality, stifled innovation, and other harmful economic consequences. APEC economies risk an increasingly unstable investment climate, weaker governance structures, and less transparent communities.
The United States is committed to working with our APEC partners in government, the private sector, and other stakeholders to develop communities of vigilance that will promote greater integrity at every step of the supply chain and to ensure that only quality products enter our markets. We must ensure integrity throughout the complex web of producers, manufacturers, re-packagers and distributors, from raw materials to finished products.
As U.S. FDA Commissioner Margaret Hamburg underscored in March 2011 at our APEC SOM I dialogue on this issue in calling for us do everything that we can to prevent the entry of counterfeit, substandard or adulterated medical products into homes and health care facilities in our countries: “[a] supply chain is only as strong as its weakest link, and the proliferation of additional handlers, suppliers and middlemen creates new points of entry through which contaminated, and otherwise falsified medicinal products can infiltrate the legitimate medical products supply.” We must dismantle illicit trade networks at every link in tainted supply chains and prosecute criminal entrepreneurs who arbitrage weak and corrupt law enforcement systems and exploit internal border controls for illicit gain.
On July 25th, 2011, the White House released the Strategy to Combat Transnational Organized Crime. Breaking the corruptive power of transnational illicit networks globally is a key objective for the United States and we will work with international partners to attack the financial underpinnings of transnational criminal organizations; strip them of their illicit wealth; and sever their access to the financial system. In targeting illicit entrepreneurs and illicit networks that pose grave threats to our citizens’ safety—including those that sell and distribute substandard, tainted, and harmful counterfeits—we will also expose criminal activities hidden behind legitimate fronts and protect strategic markets, as well as the integrity of the global financial system.
Combined with a follow-up training, collaboration, and best practices initiative for APEC member economies’ law enforcement, this workshop is the first in a set of deliverables that is intended to promote the development of a harmonized approach to illicit trade and corruption in the APEC region.
Law enforcement tools such as the Illicit Trade Unit (ITU) that will be discussed by the United States will assist with detecting corruption, customs fraud, and counterfeits and can also positively contribute to our efforts to mitigate vulnerabilities, dismantle transnational illicit networks, and strengthen overall market resilience to thwart future threats at every phase of interconnected supply chains.
The presenters at this workshop will build on the themes that emerged in March 2011 at the APEC Dialogue on Corruption and Illicit Trade: Combating Counterfeit Medicines and Strengthening Supply Chain Integrity. I hope that our discussion today will help shape the deliverables that we would like to present to our Senior Officials and Leaders as we work our way to the APEC Summit in November.
Please allow me now to introduce Rodrigo Roque, the APEC Intellectual Property Experts Group (IPEG) Chair to deliver some brief remarks. Thank you.