The Illegal Trade in Chemicals

Illicit pesticide products commonly but not exclusively appear in the markets in developing countries and countries with economies in transition, with one estimate of the quantity of substandard pesticides sold in developing countries put at 30 per cent (Vaagt 2005). The easy access to chemicals is determined by socioeconomic factors including standards of living. In these markets the illegal pesticides cost considerably less than legal products. Among the factors accounting for this pattern are patent protections, the lack of knowledge and awareness, and weaknesses in regulation and enforcement. In addition, the high level of poverty in developing and transition countries means that many small farmers are poor, and opt to purchase low-cost counterfeit pesticides to protect their yields. Patents on active ingredients in pesticides protect the patent- holding manufacturers of the products from the introduction of cheaper generic versions typically for 10 years. This protection provides the patent holder with the opportunity to avoid market competition until the patent expires, at which time the price of the product typically drops in response to the availability of generic substitutes. This system clearly provides an economic opportunity for illegal traders who can produce and distribute substitutes prior to the expiration of the patent. These illegal traders easily find ready markets, especially in countries with developing and transition economies in large part because of the widespread lack of knowledge regarding the risks associated with the use of counterfeit pesticides, and because of low standards of living. The information on the registered brands is not particularly user-friendly, and the information on the counterfeit products is next to nothing. Some countries allow the temporary registration of pesticides for testing purposes without limiting the quantities, and as a result, illegal traders can introduce commercial quantities in the market with only a temporary registration. Control systems such as quality testing facilities are underdeveloped and lack formal definitions for counterfeit and substandard

pesticides, and staff capacity and expertise are inadequate. Criminal liability is minimal, and among governmental authorities, competition is more common than coordination. For instance, none of the countries of Eastern Europe, the Caucasus and Central Asia has a system for the collection and disposal of pesticide containers, and illegal traders seize this opportunity to acquire original containers for use in selling counterfeit products. Nor do any of the countries have early warning systems to flag counterfeit products moving across their borders. This set of circumstances may increase the risk of corruption among officials, law enforcement, customs, and company staff, and this potential or actual corruption adds to the difficulty in controlling the illegal trade in chemicals in these regions (OSCE 2015). The grassroots reporting of Toxisphera Environmental Health Association from Brazil finds that most observers attribute the illegal trade in chemicals in the country to the lower price for illicit products. Dorfman and Rekowsky (2011) report that, “The price of the product is significantly lower in Uruguay, where substances usually imported from China are sold with lower profit margins, and are exempted from some charges (certification, packaging reverse logistics, etc.).” Uruguay and Paraguay have more lenient regulations that allowsomeactive ingredients that arebanned inBrazil.The lack of controls and inspections and the absence of mechanisms for supervising sales facilitate illegal trade. In addition Uruguay and Paraguay – unlike Brazil – have no requirements for agronomic prescriptions to authorize the sale of pesticides. This situation further encourages the cross-border trade in illegal pesticides. Information on the illegal trade is widely available in Brazil, and consumers are likely aware that they are buying illicit products, but the significant price difference between the legal and the illegal products appears to be a sufficient incentive. Paraguay imports more pesticides than it needs for its own applications (Comtrade 2018; FAO 2018), and the inference that the remaining pesticides are illegally transported to Brazil by clandestine routes is easy to draw.

The Illegal Trade in Chemicals

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