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How to Save Global Trade From Thieves, Pirates, and Black Market Kingpins

International trade accounts for one in every three dollars of global GDP. But corruption and counterfeiting steal trillions from companies and consumers every year. Let's fight back.

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Reuters

Yesterday, at The Atlantic's America Works Summit in Washington, D.C., we spoke at length about how more and more companies have the opportunity to use their supply chains to combat corruption, counterfeiting, trade secret theft, and piracy, and promote sustainability and ethical business practices. Indeed, businesses have a growing interest in doing so -- using their purchasing power to protect the integrity of their brand and the quality of their products.

Following World War II, visionary world leaders slowly but steadily dismantled the many high barriers to trade and investment -- utilizing the General Agreement of Trade and Tariffs, and then the World Trade Organization -- between the United States, European nations, Japan, and numerous other countries. Since then, world trade and prosperity have flourished. In the past three decades, international commerce has jumped sevenfold. Trade now accounts for 33% of global economic activity.

But, with the benefits of global trade come new challenges. How do we maintain a safe, transparent, and open framework for global commerce that collectively benefits consumers, businesses, workers, innovators, and entrepreneurs around the world?

THE PRICE OF CORRUPTION: $1 TRILLION

Corruption, trade secret theft, counterfeiting, and piracy mar the global trading system and distort competition. We all pay a huge price in terms of monetary losses and compromised product quality and safety. The World Bank estimates that $1 trillion in trade-related bribes changes hands every year. These bribes raise the price consumers pay for goods and services and also foster a culture promoting unethical business practices.

Similarly, counterfeit or substandard medicines, fake automobile and airplane parts, and foods that do not comply with high-level sanitary standards or are made with unsafe ingredients threaten consumer health and safety.

And, because of intellectual property theft, legitimate manufacturers, innovators, performers and other do not benefit from revenues of their products or services. According to the World Customs Organization, intellectual property theft accounts for $500‐600 billion in lost sales each year. Millions of consumers are put at risk and countless number of businesses, workers, and entrepreneurs are denied the fruits of their efforts.

Government action is, of course, critical to reinforce the global trading system and address forcefully and comprehensively all of these distortions and violations. In today's interconnected world, however, the private sector can also play a powerful role. At all points along the supply chain -- from upstream commodity suppliers, to product developers and manufactures, to distributors and shippers, to final consumers -- participants have a strong interest in ensuring the quality, safety, and reliability of the goods and services they produce, sell, ship, and buy. Supply chain lapses -- counterfeit, substandard, or dangerous products -- threaten an organization's brand as well as consumer confidence, safety, and health.

Presented by

Robert D. Hormats and Pamela Passman

Robert D. Hormats is the Under Secretary of State for Economic Growth, Energy and the Environment. Pamela Passman is President and CEO of the Center for Responsible Enterprise and Trade.

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