The UN Conference on Trade and Development (UNCTAD) has responded to criticism of its paper, Trade Misinvoicing in Primary Commodities in Developing Countries, a study it published earlier this year (Trade Based Financial Crime, 25 July 2016).

Experts challenged the paper’s assertions that between 2000 and 2014, some 67 per cent of the value of South Africa’s gold exports was lost through under-invoicing and that the ultimate destination of exports from Zambia should be transparent, (Trade Based Financial Crime, 23 August 2016).

Two challenges

Critics argued that UNCTAD misinterpreted the data with its finding that some commodity dependent developing countries, typically South Africa, are losing as much as 67 percent of their exports to trade misinvoicing.

A second challenge was made against UNCTAD’s argument that when Zambia says it exports its copper to Switzerland, it actually means that a Swiss-based company is exporting the copper, and therefore the report’s authors should not take import and export data seriously when the copper does not arrive in Switzerland.

Transparent records

In response to the first argument, UNCTAD says it does not see a convincing challenge to its data sources, the data itself, or even the methodology used to arrive at its figures for mis-invoicing.

Rather, UNCTAD says that, for a range of historical and legacy reasons, South Africa simply does not record gold exports in the normal way, even if its trading partners do. UNCTAD believes this issue merits further research and discussion.

Named destination

In respect of the second challenge, UNCTAD says it does not see any “practical or moral reason” why the destination country for exports should not be recorded.

“Transparent documentation should make it possible to identify clearly the source country of any cargo, no matter how many times the cargo is sold or traded between source and destination countries,” UNCTAD concluded.