illicit trade and FTZs

A Downside of More Trade: The Growth of Illicit Trade in FTZs

While FTZs come with the promise of lower regulations, they were never meant to be places of business without any government oversight at all.  In many jurisdictions, however, government regulation has become increasingly lax, allowing for growing levels of illicit trade and other criminal activities through FTZs.  To clamp down on illicit trade in products flowing through FTZs, many governments need not create new regulations or legislation.  In many circumstances, officials simply should use legal tools they already have in their possession.  For example, customs officials have the authority to supervise flows of goods in and out of FTZs.  As the OECD recommends, such measures include requiring sufficient information on goods that move through supervised FTZs; applying penalties for the misuse of zones; and enhancing security screenings.