According to the World Trade Organization (WTO), illegal trade and food fraud can cause significant damage to international markets and public health.
Contributors to the WTO report stressed the importance of focusing on prevention as it is a more cost-effective strategy for governments and the food industry.
The recently released document also includes input from participants at the WTO's annual Agriculture Symposium, held in December 2023, which addressed the topic.
Fake or contaminated products can pose serious health risks to consumers. Counterfeit goods that do not contain the advertised ingredients mislead customers and undermine trust in the food supply chain. Illegal food trade can also raise trade barriers due to safety concerns.
The role of the WTO
Tools that can help address this issue include the WTO's Agreement on Sanitary and Phytosanitary Measures, which allows member countries to restrict food imports based on science and risk assessment techniques, and the Agreement on Technical Barriers to Trade, which allows countries to address deceptive practices.
WTO Director-General Ngozi Okonjo-Iweala said the issue affects all continents and most agri-food sectors, including olive oil, honey, essential oils, wine and spirits.
“We need to use these agreements and all the tools of the WTO to fight illegal trade and food fraud. A level playing field must extend to the elimination of all forms of illegal trade and fraud,” she said.
The global cost of food fraud is estimated at $30-50 billion per year.
Addressing the issue requires a combination of regulatory action, enforcement, industry cooperation and consumer education, according to the report.
Experts said illegal food trade and food fraud can give fraudsters an unfair competitive advantage, disrupting supply chains and putting legitimate businesses at a disadvantage. It could prompt ever-increasing regulation, raising the costs of trade and leading to widespread trade barriers. It could also result in legitimate products being unwittingly caught up in regulatory efforts to root out fraudulent food trade.
The negative effects of fraud
Geoffrey Hardy, executive director of the Transnational Alliance, warned that illegal food trade is likely to become more prevalent in the near future due to rising food demand and population growth, adding that as long as traffickers' profits outweigh the risk of being caught and appropriately punished, their illegal business will continue to thrive.
Máximo Torero, Chief Economist at the Food and Agriculture Organization of the United Nations (FAO), highlighted vulnerabilities such as e-commerce, new food sources and production systems, the informal sector and organized crime.
Helen Medina, CEO of the World Spirits Alliance, highlighted the threat to the industry, with one in four bottles of spirits being traded illegally, mainly through smuggling, fraud and tax evasion.
Quincy Resser, executive director of SAFE, said the more links in the supply chain and the longer the distance food travels from where it was first grown or produced to when it is finally consumed, the more opportunities there are for fraudsters to operate.
Risser said testing alone is not the solution, and customs officials do not have the resources to inspect every shipment of food across the country.
China's Ambassador to China, Li Chengang, spoke about his country's efforts to combat illegal trade at the border, including fighting trademark infringement, introducing a modernized government system to monitor the safety of imported food, and using social media to increase transparency and public awareness.
(Click here to sign up for a free subscription to Food Safety News.)
