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here are rarely swift solutions to international trade issues. The obstacles can be protectionist, political or bureaucratic. Sometimes even when there'€™s a will it'€™s hard to find a way.

At the recent APEC leaders'€™ summit in Bali, the US government again pushed for a speedy conclusion to the Trans Pacific Partnership Agreement (TPPA) '€” now increasingly unlikely to meets its self-imposed conclusion of year end.

Another regional problem discussed in Bali, as it was at the APEC meeting in Vladivostok last year, is illicit trade. The difference is that at least there'€™s universal recognition of the need to address the issue. It'€™s a long-time issue that requires a long-term strategy.

The 2012 Vladivostok Declaration was unequivocal. It recognized that corruption and illicit trade '€œcost APEC economies jobs and vital tax revenue; corrode the integrity of legitimate supply chains; endanger the welfare, health and safety of our families and communities; and harm the economic interests of our businesses and markets.'€

Bali added teeth, endorsing the establishment of the APEC Network of Anti-Corruption and Law Enforcement Authorities (ACT-NET), to provide APEC members with a new platform for cooperation in
law enforcement to tackle among other things, illicit trade in the Asia- Pacific.

Interestingly, a survey released just as APEC was convening gave a very clear example of why such concerted action and coordination is required '€” not just for enforcement but also in addressing the issues that create the opportunity for such activities to flourish.

The Asia-11: Illicit Tobacco Indicator 2012 study, conducted by the International Tax and Investment Center (ITIC) and Oxford Economics, brought into sharp focus the regional aspect of a massive global illegal trade issue created by weak enforcement, high taxes and sophisticated criminal networks.

In the case of tobacco it'€™s extraordinary that governments that are so motivated on the front line to discourage smoking through high taxation and marketing restrictions, are leaving their back doors wide open to a highly lucrative trade in illicit cigarettes.

The cost can be counted in many ways and this first-ever study of the issue in Asia produced some staggering numbers: in just the 11 countries surveyed some 66 billion illegal cigarettes were sold in 2012, amounting to US$3.4 billion in lost cigarette tax revenues.

It is also clear that the widespread availability of cheap, illegal cigarettes '€” sold in countries like Malaysia at a third of the price of leading legal brands '€” also undermines health-related initiatives intended to discourage smoking.

The study covered Australia, Brunei, Hong Kong, Indonesia, Malaysia, Pakistan, the Philippines, Taiwan, Thailand and Vietnam. What emerged was that the illegal tobacco trade hurts both developed and developing countries, occurs in both high and low tax jurisdictions, and thrives even in societies with strong law and order infrastructures.

In the case of Brunei, a massive 339 percent tax increase in 2010, led to the collapse of almost the entire legal market, with all legitimate tobacco companies now having left the country.

Legitimate tobacco products are now almost completely substituted with illicit. Malaysia lost around $622 million in tobacco tax revenue in 2012 '€” no small amount for a country with a significant budget deficit.

Interestingly, Australia '€” a country many would assume to have strong customs and border controls '€” lost close to $1.14 billion in potential tax revenue to the contraband cigarette trade in 2012.

Further planned excise tax increases in Australia over the next few years risks encouraging a substantial growth in illicit trade.

The drivers of this trade are consumers who want to save money and criminals who want to make money. In the latter case, the problem is now taking a more sinister turn.

According to a 2012 US Congressional Research Report on Terrorism and Transnational Crime (John Rollins and Liana Sun Wyler), the production, smuggling and sale of illegal tobacco products are now a lucrative form of financing for organized crime as well as terrorist groups, such as Hezbollah and Hamas.

The illicit tobacco trade appeals to criminal groups because of the limited attention it gets from law enforcement agencies compared to other crimes. The product itself is small, lightweight and heavily taxed. The '€œprice advantage'€ of tax-free contraband over legitimate product is huge.

Illicit trade, of any kind, offer multi-agency, multi-policy challenges that do not respect borders or sovereignty.

The Asia-11 study points to some lessons that could be applied
to a number of sectors: the need for an analysis of existing legislation and regulations to ensure they work, do not have unintended consequences and that penalties are adequate deterrents; education of the judiciary to ensure they are aware of the seriousness of the crime, and its implications; vigilance with respect to monitoring of free zones and transit operations; and sufficient financial resources for adequate law enforcement capacity at borders.

Vladivostok and now Bali have highlighted the threats that illicit trade presents to APEC economies. There'€™s been a call for action and, through ACT-NET, the creation of an additional framework for a cooperative response. The last thing Asia-Pacific trade needs is more foot-dragging.