Global Trade Without Corruption

Global Trade Without Corruption

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Author(s):
OECD
17 Oct 2017
Pages:
60
ISBN:
9789264279353 (PDF) ;9789264279346(print)
http://dx.doi.org/10.1787/9789264279353-en

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This report provides an analytical framework for studying integrity in trade, combining insights from OECD work on trade facilitation, responsible business conduct and integrity in customs. It provides data and evidence supporting the view that trade facilitation and integrity are mutually supportive objectives, and suggests measures to effectively tackle corrupt practices affecting global supply chains.

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  • Foreword

    More evidence than ever demonstrates that trade facilitation and reinforcing integrity are mutually-supportive objectives, but lack of integrity in trade remains a challenge for both public and private sectors. Indeed, lack of integrity in global supply chains represents a significant non-tariff barrier to trade, which significantly hampers economic activity and entails enormous costs for global society as a whole. OECD work on trade facilitation, responsible business conduct and integrity in customs identify transparency and integrity as critical factors for leveling the playing field in international economic transactions and for the participation of firms in global supply chains. In the field of customs, transparent and efficient border procedures may both stimulate trade and curb corruption. A common understanding has been achieved among different stakeholders whereby trade facilitation and effective controls against corruption both warrant simplified administrative procedures in customs.

  • Acronyms and abbreviations
  • Executive Summary

    International trade has driven the global economy and development during the last few decades. Trade has risen in nearly all parts of the world, becoming one of the most dynamic sources of growth and a powerful enabler of economic development for many countries. In 2014, total world exports of goods and services amounted to USD 23.6 trillion, of which OECD countries generated USD 14 trillion, and total imports of goods and services reached USD 22.8 trillion, of which 13.9 trillion were accounted for by OECD countries.

  • How trade is shaping the world today

    International trade is the motor of the global economy and despite a recent slowdown, it still represents increasingly large volumes of exchanged goods, services, and financial flows. That is why lack of integrity in the global supply chain, which represents an important non-tariff barrier to trade, significantly hampers economic activity and entails enormous costs for global society as a whole. Thus, targeted anti-corruption measures aimed at protecting the global supply chain do not only produce economic advantages for the private sector, but also for governments and citizens. The objectives of promoting integrity in the global supply chain and of facilitating trade are mutually-reinforcing, as both of them will stimulate international exchanges of goods and services and ensure a more effective distribution of the benefits arising from international trade, thus contributing to sustainable, fair and inclusive economic growth.

  • The issue: The cost of corruption hampering trade

    Considering the importance of international trade for global economic welfare, the costs generated by non-tariff barriers such as the lack of integrity can be quite significant for the public and private sectors, citizens and society at large. Moreover, trade barriers created by ineffective policies, and burdensome rules and procedures can constitute an important incentive to engage in corrupt behaviour. Therefore, all relevant stakeholders have an interest in elaborating and promoting mutually supportive trade integrity and facilitation policies that would remove ineffective trade barriers while maintaining effective checks and balances on fraud and corruption.

  • Mapping integrity risks in the global supply chain

    The inherent complexity of global supply chains creates vulnerabilities that may encourage some businesses and individuals to engage in corrupt transactions and as such, these complexities must be ironed out as much as possible to remove any incentive to engage into corrupt behaviour, while preserving effective integrity checks and balances.

  • The twin devils of corruption and illicit trade

    Organised crime and illicit trade can also benefit from complexities and vulnerabilities that are present in global supply chains, and inflict important economic and social costs on society as a whole. Corruption facilitates various forms of illicit trade and may, for instance, allow sub-standard goods to reach consumers by evading quality controls. It is thus critical that the ironing out of unnecessary complexities inherent to global supply chains not be done at the expense of implementing appropriate checks and balances to prevent criminal activities. Policies and controls targeted at preventing fraud and corruption will contribute to both reinforcing integrity in the global supply chain while preventing illicit and counterfeit trade.

  • Towards integrity strategies for clean trade

    The aim is thus to find the right balance between easing red tape while having appropriate controls, taking into account the local context and its inherent risk areas. The main elements of a strategy to promote integrity in trade must respond to identified integrity risks and target the most harmful illicit rents arising from the global supply chain as well as from illicit trade.

  • Measures to promote integrity in global trade

    Reinforcing integrity in international trade may require significant efforts to design and implement a whole-of-government approach in collaboration with businesses and citizens, but such efforts will likely be outweighed by even higher returns on the investment. Promoting integrity in global supply chains produces increased benefits for the global community as a whole.

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