Highlighting the WTO's unique role in promoting open and legal trade, DDG Paugam said WTO rules allow members to exercise control over their borders and enforce their trade laws, leaving less room for illegal trade. “Like in physics where you have matter and antimatter, we (the WTO) are the matter of legal trade, and illicit trade is the antimatter,” he said.

Illegal or illicit food trade typically refers to food fraud — selling sub-standard food products and ingredients — and food smuggling — undertaken to avoid high import and export tariffs in certain economies. According to the Transnational Alliance to Combat Illicit Trade, the annual economic loss resulting from food fraud is USD 30-50 billion.

DDG Paugam said an important aspect of WTO activities is encouraging members to lower trade barriers as lower prices for legal goods can be one of the good ways of reducing the incentive for illegal trade, although “one size doesn’t fit all”.

The WTO's Agreement on Sanitary and Phytosanitary Measures (SPS), the Agreement on Technical Barriers to Trade (TBT) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) lie “at the heart” of the WTO engine in the fight against food fraud, said DDG Paugam.

The SPS Agreement allows governments to regulate food imports based on science and risk assessment techniques. It also enables them to ensure imports conform with national rules and regulations. Illegal practices, such as dilution or substitution of ingredients and concealment of product contents, and enhancements to good practice can be addressed through this regulatory framework, he explained.

The TBT Agreement also allows governments to address illegal practices, such as false and misleading food labels, he added.

The TRIPS Agreement protects the intellectual property content of traded goods and serves as a vital tool in fighting the counterfeiting of food, beverages and agrochemicals.

DDG Paugam highlighted other WTO agreements that also help to tackle illegal food trade. Three WTO agreements directly regulate a wide range of border operations, with the aim of facilitating trade and weeding out fraud, namely the Customs Valuation Agreement, the Pre-Shipment Inspection Agreement and the Trade Facilitation Agreement, he said. 

DDG Paugam underscored the need to update the WTO rulebook and to strengthen open trade as a means of fighting against illegal food trade.

He underlined the importance of ongoing agriculture negotiations, which aim to reduce excessively high tariffs and trade-distorting subsidies, and to address import and export restrictions. Trade opening can reduce the incentives for smuggling and illegal trade, he said.  

Looking forward, DDG Paugam said the upcoming 13th Ministerial Conference in February 2024 is expected to provide “the future direction of negotiations in terms of market opening and other areas which would help minimise the cost of legal trade and optimise its benefits.” 

The session can be watched here.