Good morning, everyone. It’s a pleasure to be here with all of you. Let me join the other keynote speakers in welcoming you all to this important Pathfinder Dialogue.
APEC, Corruption, & Illicit Trade
As you may know, APEC has various subfora for cooperation, and all of them are important. But as U.S. Senior Official for APEC, I would like to emphasize the importance of Anti-Corruption and Transparency Working Group because the Bogor Goals of free and open trade and investment that APEC has established cannot be achieved without addressing the urgent need for greater transparency, good governance, and strong anti-corruption measures. The non-binding nature of APEC encourages economies to be forward-leaning through experimentation and cooperation that would not happen otherwise in the region, while APEC’s capacity building efforts help economies develop capabilities to enact reforms and meet commitments. At the same time, I would also like to underscore that we need partners beyond APEC in order to successfully prevent and combat corruption. This Pathfinder Dialogue is a valuable opportunity for us to address how corruption and illicit trade affect our shared interests.
Since the endorsement of the APEC Santiago Commitment to Fight Corruption and Ensure Transparency in 2004, APEC leaders have recognized how fighting corruption and promoting transparency are critical to sustaining economic development, growth, and prosperity. We all understand that corruption stifles economic growth, raising the costs of doing business, creating uncertainty, stifling competitiveness, and deterring investment.
Over the past several years, we have further recognized that corruption fuels and facilitates illicit trade flows that may account for an estimated 15-20% of global trade. As captured in the APEC 2012 Vladivostok Declaration, corruption and illicit trade “cost APEC economies jobs and vital tax revenue; corrode the integrity of legitimate supply chains; endanger the welfare, health and safety of our families and communities; and harm the economic interests of our businesses and markets.”
In addition, corruption and illicit trade—including the trafficking of people, wildlife, drugs, and weapons, as well as counterfeiting, money laundering, and other environmental crimes—divert revenue from legitimate businesses to transnational criminal networks that threaten the stability, security, and prosperity of our economies.
Over the next three days, we will focus on money laundering, human trafficking, and wildlife trafficking/environmental crime—and, moreover, on the links between corruption and these forms of illicit trade. While many initiatives, programs, and task forces are dedicated to addressing money laundering, human trafficking, and wildlife trafficking/environmental crime individually, we must understand the nexus between corruption and illicit trade in order to more effectively protect our national assets, our human capital, and our natural resources.
Some while ago, money laundering was simply seen as an activity that occurred after a crime. However, we now recognize that money laundering itself fuels and contributes to crime, corruption and terrorism, enabling criminals and terrorists to fund and continue their illicit activities. Some forms of money laundering, such as trade based money laundering, have siphoned vast sums of money to overseas accounts. The UN Office on Drugs and Crime estimates that the amount of money laundered globally each year is 2 - 5% of global GDP, or $800 billion to $2 trillion.
Global Financial Integrity, a US-based think tank, estimates that China’s economy alone lost a staggering $3.79 trillion from 2000 to 2011. In today’s interconnected world, combatting money laundering is an effort that requires international cooperation and has the potential to suffocate criminal activities of all kinds.
Human trafficking, or trafficking in persons, is one of the largest criminal industries in the world and not only violates individuals’ basic rights and freedoms, but also weakens the entrepreneurial spirit that nurtures innovation and openness; degrades human capital and potential; and stunts entire communities’ economic and political development. The International Labor Organization estimates that trafficked workers globally generate approximately $32 billion annually, with over 20.9 million women, men, and children estimated to have been trafficked globally in 2012. 11.7 million people are estimated to have been trafficked in the Asia-Pacific region (including South Asia) alone.
Meanwhile, environmental crimes such as wildlife trafficking and illegal logging exacerbate climate change, affect deforestation, reduce biodiversity, endanger species and their habitats, diminish eco-tourism revenue for both governments and communities; and destroy the sustainable livelihoods of communities, among other negative externalities. Environmental crime is a lucrative business for criminals who are facing low risk of detection and high reward for compensation, which amounts to $20-40 billion annually. A recent World Bank study found that illegal logging in areas such as that found in Southeast Asia reaps profits of $10-15 billion annually, while the probability that illegal loggers would be punished is less than 0.08 percent.
This conference is a wonderful opportunity to build and strengthen relationships among anti-corruption authorities and experts and law enforcement officials focused on combating money laundering, human trafficking, and environmental crime.
Given the often transnational, cross-border nature of illicit trade, we must partner together to protect our national assets, human capital, and natural resources, including through initiatives that promote economic growth and sustainable futures. As noted by earlier distinguished speakers, no economy is immune to corruption. And no single economy can prevent or combat corruption alone.
This Dialogue is about building partnerships, expanding and strengthening networks, and visioning to leverage our respective expertise and capacities to improve our collective ability to combat illicit networks, both domestically and internationally. Policymakers, law enforcement authorities, academics, and representatives from international organizations, civil society, and the private sector all have a critical role to play, and we hope you will build and strengthen relationships at this Dialogue.
In fact, this Dialogue itself builds upon partnerships with the APEC Business Advisory Council, or ABAC, including the 2011 ABAC-ACT Public-Private Partnership Dialogue on corruption and illicit trade, as well as partnerships with international organizations such as the OECD-World Economic Forum and the UN Office of Drugs and Crime, not to mention partnerships among APEC, ASEAN, and PIF members.
The time is ripe for us to identify channels and mechanisms for strengthening cooperation between anti-corruption authorities and law enforcement authorities focused on money laundering, human trafficking, and wildlife trafficking/environmental crime.
Let us complement the efforts of the Anti-Corruption and Transparency Network of Anti-Corruption and Law Enforcement Authorities that was launched last week in Bali to facilitate investigating and prosecuting corruption and domestic and foreign bribery, money laundering, and illicit trade cases.
Let us realize our economic and social potential through partnerships that take a holistic approach to address corruption and illicit trade and more effectively protect our national assets, human capital, and natural resources.
Let us delve into this Dialogue and continue efforts to address links between corruption and illicit trade in the coming days, months, and years.
Thank you for your partnership here. We look forward to strengthening our cooperation to combat corruption and illicit trade across borders through vibrant partnerships.