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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

115th Congress }                            Printed for the use of the             
2nd Session    }      Commission on Security and Cooperation in Europe                       

======================================================================

	                     Free-Trade Zones: Productive
	                           or Destructive?

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                         SEPTEMBER 12, 2018

                           Briefing of the
          Commission on Security and Cooperation in Europe
------------------------------------------------------------------------
                         Washington: 2018

         Commission on Security and Cooperation in Europe
                  234 Ford House Office Building                                               
                   Washington, DC 20515
                      202-225-1901
                      [email protected]
                      http://www.csce.gov
                         @HelsinkiComm                    
                                                          
                                                          
                                                          
                  Legislative Branch Commissioners

              HOUSE				SENATE
CHRISTOPHER H. SMITH, New Jersey 	ROGER WICKER, Mississippi,
          Co-Chairman			  Chairman
ALCEE L. HASTINGS, Florida		BENJAMIN L. CARDIN. Maryland
ROBERT B. ADERHOLT, Alabama		JOHN BOOZMAN, Arkansas
MICHAEL C. BURGESS, Texas		CORY GARDNER, Colorado
STEVE COHEN, Tennessee			MARCO RUBIO, Florida
RICHARD HUDSON, North Carolina		JEANNE SHAHEEN, New Hampshire
RANDY HULTGREN, Illinois		THOM TILLIS, North Carolina
SHEILA JACKSON LEE, Texas		TOM UDALL, New Mexico
GWEN MOORE, Wisconsin			SHELDON WHITEHOUSE, Rhode Island
                        
          
                 

               Executive Branch Commissioners
               
               
                    DEPARTMENT OF STATE
                   DEPARTMENT OF DEFENSE
                  DEPARTMENT OF COMMERCE
                            [II]

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            Free-Trade Zones: Productive or Destructive?

                           September 12, 2018

                                                                   Page
                              PARTICIPANTS

    Paul Massaro, Policy Advisor, Commission on Security and 
Cooperation in Europe...................................................1

    Clay Fuller, Jeane Kirkpatrick Fellow, American Enterprise 
Institute...............................................................2

    Jack Radisch, Senior Project Manager, OECD High Level Risk Forum....5

    Stephane Jacobzone, Deputy Head, Division of Public Governance, 
Organisation for Economic Co-operation and Development (OECD)...........5

    Pedro Assares Rodrigues, Representative, Europol Liaison Bureau.....7

 
          Free-Trade Zones: Productive or Destructive?
          
                              ----------                              

                           September 12, 2018

    The briefing was held at 3:00 p.m. in Room 2220, Rayburn Senate 
Office Building, Washington, DC, Paul Massaro, Policy Advisor, 
Commission on Security and Cooperation in Europe, presiding.
    Panelists present: Paul Massaro, Policy Advisor, Commission on 
Security and Cooperation in Europe; Clay Fuller, Jeane Kirkpatrick 
Fellow, American Enterprise Institute; Jack Radisch, Senior Project 
Manager, OECD High Level Risk Forum; Stephane Jacobzone, Deputy Head, 
Division of Public Governance, Organisation for Economic Co-operation 
and Development (OECD); and Pedro Assares Rodrigues, Representative, 
Europol Liaison Bureau.

    Mr. Massaro. Okay. Good afternoon and welcome to this briefing of 
the U.S. Helsinki Commission.
    The commission is mandated to monitor compliance with international 
rules and standards across Europe, which include military affairs, 
economic and environmental issues, and human rights and democracy.
    My name is Paul Massaro and I am the policy advisor responsible for 
economic and environmental issues, including illicit trade.
    I would like to welcome you today on behalf of our bipartisan and 
bicameral leadership to discuss an underexamined threat to the national 
security of the United States: free-trade zones, or FTZs. FTZs are 
duty-free areas within a country's borders designed to encourage 
economic development by allowing goods to be imported and exported 
under less restrictive conditions than are present elsewhere in the 
country.
    In many places, these zones generate jobs and wealth. However, they 
are also hospitable to illicit trade and money laundering. In the worst 
cases, law enforcement fails and FTZs become global hubs of criminal 
activity, black holes that enable corruption.
    For all the prosperity that globalization has generated, corruption 
is consuming an ever-greater share of these gains. In order to enrich 
themselves, transnational criminal networks have found innovative ways 
to exploit otherwise productive technologies and governance frameworks 
to flout international rules and standards. This has led to a flood of 
dangerous counterfeits and contraband into U.S. and European markets, a 
spike in wealth inequality as ill-gotten gains are distributed among a 
handful of bosses, and a besiegement of the rule of law as authorities 
struggle to keep up.
    As these criminals have become more sophisticated, their political 
influence has increased. In many cases, transnational criminal networks 
have become so effective at manipulating globalization that they have 
fused with the government, capturing the state and turning it to their 
devious ends. This brand of authoritarianism based on globalized 
corruption, or kleptocracy as we've come to call it, poses a major 
national security threat to the United States as the country finds 
itself economically entangled with autocratic powers that have no 
intention of playing by the rules.
    These powers have wasted no time weaponizing corruption and 
deploying it as their primary tool of foreign policy. By strategically 
placing authoritarian capital, kleptocracies are able to, one, 
influence operations, engage in reputation laundering, and gain access 
to and leverage over elites. While many of the vulnerabilities that 
enable this weaponization of corruption have become a focus of the 
Washington policy community, in particular the national security threat 
posed by anonymous shell companies, others have remained out of the 
limelight. Free-trade zones fall squarely into this category.
    We have a truly distinguished panel here today to help us 
understand the role of FTZs, how they are being exploited by criminal 
actors, and what action can be taken. Speaking first we have Dr. Clay 
Fuller to my left, the American Enterprise Institute Jeane Kirkpatrick 
fellow. He is a leading light in understanding the corruption 
authoritarianism nexus and will set the stage by providing us his 
insights.
    Dr. Fuller, thank you so much for joining us today.
    Dr. Fuller. Do you want me to go?
    Mr. Massaro. Not just yet. [Chuckles.]
    We will then hear from Jack Radisch, senior project manager with 
the Organisation for Economic Co-operation and Development, or OECD, 
High-Level Risk Forum. Jack is here all the way from Paris to discuss 
all the good work the OECD's Task Force on Countering Illicit Trade has 
been doing on FTZs.
    I also want to welcome Stephane Jacobzone, who we've got at the 
front table with us today. He is the deputy head of the Division of 
Public Governance at the OECD, so also from Paris.
    Thank you so much for joining us, Stephane.
    So glad that you both could be here.
    Finally, we will hear from Pedro Assares Rodrigues, Europol's 
representative here in Washington. As the EU's police cooperation body, 
Europol is well aware of the complexities regarding transnational 
criminal networks in the 21st century. Pedro will speak to Europol's 
efforts to combat illicit trade, including through FTZs, and the need 
for transatlantic cooperation to take on globalized corruption.
    Pedro, thanks so much for joining us.
    With that, I will hand it over to Dr. Fuller.
    Thanks so much. The floor is yours.
    Dr. Fuller. All right. Thank you very much, Paul.
    So thank you to the Commission on Security and Cooperation in 
Europe for inviting me here today to provide a few comments on the use 
of foreign trade zones in this superbly named briefing, ``Free-Trade 
Zones: Productive or Destructive?''
    I have given my comments a clever name as well: ``More Data on 
FTZs, Please?'' [Laughter.] My British and Panamanian friends would 
know that I like to say SOPs for the FTZs also, but I'm going to talk 
here about a more nuanced and objective way of thinking about 
transparency. And there's two points that I'm going to make about this 
in the context of the FTZs.
    So there needs to be more and better aggregate data on free-trade 
zones around the world. Private and public sector actors that use and 
study free-trade zones can be instrumental in pushing governments to 
report more standardized and higher-quality data on zones.
    We've known for years that things like corruption, illicit trade, 
illicit finance are huge issues within free-trade zones around the 
world. The law enforcement community, large multinational corporations, 
environmental protection groups, journalists and labor rights 
organizations are keenly aware of the issues, but they seem to be stuck 
without a way to move forward. So thanks to the hard work of the OECD, 
we now have some preliminary empirical evidence that free-trade zones 
do play a significant role in the trafficking of counterfeit goods 
specifically, but further research and better data are needed.
    During the last year at the American Enterprise Institute, I have 
written extensively on issues of kleptocracy, authoritarianism, 
corruption, illicit trade and illicit finance. As I emphasized at the 
last Helsinki Commission meeting on illicit trade specifically, I want 
to reiterate the idea that in all anticorruption efforts, including 
fighting illicit trade and illicit finance, groups interested in 
reforming FTZs would do well to define not just what they are fighting 
against, but what it is they are fighting for.
    So if we define corruption as the abuse of entrusted power for 
private gain, then its natural opposite, or in other words what we 
should be fighting for, is the use of earned power for public gain. 
This begs the question, how do we fight for the use of earned power for 
public gain? Well, the answer is transparency. But not in the classic 
sunlight, disinfectant, investigative or activist sense that we usually 
think of the term ``transparency'' in.
    Transparency can be thought of very simply as the credible 
reporting of aggregate economic data to the public. So think about the 
important roles of aggregate data, like job growth numbers, 
unemployment and GDP growth--transparency defined objectively as 
credible aggregate economic data is a crucial public good that 
governments are best suited to provide, but crucially requires help 
from the private sector in order to collect and define the concepts 
needed to measure it.
    Similar to how a lighthouse provides data to incoming ships in a 
storm or polling and elections provide signals of grievances and policy 
shifts, credible aggregate FTZ data can act as a coordination good 
amongst a host of public and private actors, including businesses, 
financial institutions and law enforcement agencies.
    The U.S. Government is currently one of the best in the world when 
it comes to reporting aggregate data. But in my opinion, it utterly 
fails when it comes to its own FTZs. For example, I cannot find a 
credible number of how many active FTZs we have in the United States. 
My best guess at this point is that it's somewhere between 176 and 250. 
So in fact, the entire world utterly fails at publishing these data. 
The number of FTZs globally is typically estimated by experts to be 
somewhere between 3,000 and 5,000. I think we can do much better than 
that. So the first point of problems in reporting data, problems with 
FTZ data stem from the simple measurement issues that are made 
inordinately complex due to a lack of standardization around the world. 
The most basic problem that we can get to is in simply counting zones.
    So no definitive number of zones exists because they are called 
different things in different places. In China, in Dubai, they are 
often called special economic zones. In the United States, they are 
called foreign-trade zones. And elsewhere, they are called free-trade 
zones or export-processing zones or industrial parks or a host of other 
names. Furthermore, there's even more questions. Should we count things 
like subzones and operators? Should we count the number of firms? 
Should we count the number of employees, square kilometers or the 
volumes of trade? Or should we categorize zones by the economic sectors 
that they service?
    My point is that while complex questions exist, these are far from 
insurmountable and they can be easily overcome by the national 
governments that write these zones into laws and with the help of the 
firms that operate within them, through simple standardization and 
reporting mechanisms.
    To date, other than the data I have personally collected and 
analyzed on trade zones around the world, only the World Bank and the 
OECD have attempted systematic global studies of the effects of these 
zones. These are great and informative studies, but what I'm saying is 
that to make these studies better there needs to be better and 
standardized national-level data.
    So the last point--pushing for better data. Credible reporting of 
aggregate economic data is transparency. Transparency in this objective 
sense is good for both economic growth and the rule of law. For the 
private sector, it's the term ``aggregate'' that's key, right, because 
private firms are rightly jealous of their privacy. Without it, 
competitors and bad actors will find ways to use and abuse their data 
to gain an unfair advantage and perpetuate further criminal activities. 
But there's no harm done in asking national governments to clearly 
define, count and report basic aggregate information on zones to the 
public. There are a host of ways in which this can be done while still 
protecting the privacy of firms located within the zones.
    Now, for governments and law enforcement agencies, the term 
``credible'' is key here. In order for transparency to work as a public 
good, it has to be credible. To use my previous examples, a lighthouse 
is only as valuable as it is dependable, a poll is only as reliable as 
it is scientific and an election is only as valuable as it is free and 
fair. But governments around the world are currently facing credibility 
issues across the board, and I would argue that this is partly due to a 
lack of transparency in this objective sense.
    Foreign-trade zones, I think, are a great place to start building 
back trust between the private and public sector because, one, they are 
relatively small; two, they are geographically delineated to specific 
areas; and three, because of these previous two points they are 
theoretically more easily monitored jointly by public and private 
entities.
    In the almost 10 years of studying and following the use of FTZs 
worldwide, it's become my view that there is no more pragmatic way to 
promote lasting economic growth free of the corruption that feeds 
economic inequality, organized crime, illegal immigration and a host of 
other complex issues than to report more credible aggregate economic 
data on foreign-trade zones.
    So the work of the OECD is an important first step and it 
establishes a solid baseline for understanding and working around these 
issues concerning FTZs. However, improving transparency of foreign-
trade zones will require bottom-up, private/public pressure on national 
governments to publish better data. Then once leading national 
governments develop these aggregate data, it is up to them to persuade 
their trading partners to standardize and share these aggregate data 
with each other to act as a coordinated public good.
    Ultimately, without a clearer picture of how the world free-trade 
zones work and their effects, public and private sector initiatives to 
minimize their subversion by criminal elements will remain futile.
    Thank you for your time and I look forward to any questions.
    Mr. Massaro. Thank you very much, Dr. Fuller. I'm so happy you also 
were impressed with the OECD's work on free-trade zones. That's why we 
invited them here today.
    So with that, I'd like to hand the floor to Jack and Stephane to 
talk about that very work.
    Mr. Radisch. Thank you very much, Paul.
    And thank you very much to the Helsinki Commission for this 
invitation to present some of the OECD's findings related to free-trade 
zones.
    I'd like first to just contextualize that research that we're doing 
on free-trade zones. It's not to look at the economic benefits, which 
are undoubtable in many cases. Our research is focusing on the role of 
free-trade zones pertaining to illicit trade. And that's the topic of 
our panel today, and so that drives very much the approach we take and 
the information that we gather and analyze with regard to free-trade 
zones.
    The Task Force on Countering Illicit Trade at the OECD was set up 
to study, to map, to quantify different sectors of illicit trade. And 
some of you might be familiar with the work that we've done on 
counterfeit trade. That's an area where we actually have a high level 
of confidence in our estimates of the quantity and the flows of that 
sector of illicit trade. The OECD estimated that up to $461 billion is 
conducted in trade in fakes based on the years that we studied. And 
we'll continue that research next year with updated years of data so we 
can begin to compare and see if there's any trends that emerge. For 
now, we have pictures over a couple of different years successively. 
But $461 billion in trade in fakes is a lot of money. And where does 
that money go, but oftentimes recycling into the criminal hands behind 
these criminal enterprises.
    And we analyzed through trade data and seizure data the flows of 
that trade in fakes. And we noticed that oftentimes it's going through 
free-trade zones. So that led us on to another line of inquiry to 
analyze the correlation between free-trade zones and the trade in 
global fakes.
    So I'd like to ask my colleague Stephane to say about a few of the 
findings on the economic impacts and correlations in that report.
    And also, we have more recent reports on the conditions that 
attract the trade in fakes.
    Stephane.
    Mr. Jacobzone. Yes, thank you very much, Jack.
    I just wanted to say that the OECD is an economic cooperation set 
up after World War II to promote economic cooperation among nations. 
It's part of the George Marshall Plan, is heavily committed to 
transparency.
    And the work we are presenting today is part of our work to step up 
global anticorruption efforts that we do in partnership with the U.K.--
I see some of our colleagues here--with the U.S. and also this work on 
free-trade zones in partnership with the European Union Intellectual 
Property Office.
    So what are we looking at? We are in fact looking at governance 
gaps. These are the sort of grease of globalizations because 
globalization is meant to be good for everyone. But there are people 
who can see the gaps who make enormous profits above this sort of 
benign neglect, or blind-eyes policy, where people can let things go 
just as they are so that you can maximize profits.
    What we found--and you are very right, Dr. Fuller, to say that 
there is no standardized data on the free-trade zones, because to do 
our work we had to rely on some academic databases--because academics' 
interest in the topic have had armies of students and people 
researching the facts, that gave us a database of nearly 3,000 free-
trade zones. It may not be exhaustive, but sufficient to get good 
statistical results. And that's how we built our results.
    And when we did our analysis, we did find that for nearly each 
additional free-trade zone in the country, I think the propensity to 
export free goods in that country would jump by, let's say, 5 or 6 
percent. So that was a statistical, proven link between the increasing 
numbers of free-trade zones and the propensity to export fake goods. 
And that's part of a general analysis where we look at governance gaps.
    And we see that countries where there are, let's say, sufficient 
production capacities, logistics capacities, the ability to facilitate 
shipments and trade flows, but which at the same time do not have the 
same governance standards as, let's say, a country such as the United 
States, have become the hubs of the dark economy globally and can be 
used by traffickers to shape counterfeit products.
    We have another related publication on why do countries export fake 
goods.
    And then you would say, what do you do with that? You have to do 
something. You have to get some form of a joint effort by nations to 
step up the pressure. And with Jack, we have also been developing some 
form of a guidance which in the future--at least the countries inside 
the OECD to start with, which represents at least still 50 or 60 
percent of the global economy--would commit to monitor, track and 
publish information on their free-trade zones--answering to your 
comment--and where we would also invite the free-trade zones to adopt 
codes of conduct so that free-trade zones means, okay, you are duty 
free, you don't pay taxes, you have a good environment for business, 
but it doesn't mean that you are not subject to any checks, for example 
customs check, and so that we can sort of detect any illegal activity 
that would go through you. So that's the sort of effort that we are 
pushing through.
    Mr. Radisch. And if I can follow up on that, because we've 
conducted this empirical work, we've seen that there really is a 
problem going through the free-trade zones. It's not just anecdotes, 
it's not just a hunch--we've shown this correlation. And the question 
really is what to do about it. And yet, many of these economies do 
depend on free-trade zones for their economic benefits. Not all of them 
have panned out the way they might have anticipated. And the question 
is what to do about the illicit trade that's going through some of 
them. And this is the work that Stephane is referring to.
    Through the OECD, we're developing a standard that would be helpful 
to law enforcement around the world to have a better idea of what's 
going on inside particular zones at any given time. So talking about 
information requirements, this is not focused on the, say, the economic 
benefits or the employment gains, but rather what merchandise, what 
consignments are coming in and going out, who owns the merchandise, 
where is it going.
    The idea is to have a situational awareness of what's present 
inside a free-trade zone at any given moment so that when there's an 
investigation on the premises, it can really make a difference. This 
doesn't add up on what the audit trail points, that there is a 
discrepancy on what the inventory says. And this is the type of 
information that the law enforcement community and customs need in 
order to fight this scourge.
    Mr. Massaro. Thanks so much, Jack and Stephane. And thank you for 
all the data you've been collecting, your good work, and also 
specifically for highlighting the work you've been doing on developing 
guidance. I think at the end of the day when we're looking at results 
and policy, that's going to be extremely helpful. And you mention that 
that would be very helpful to law enforcement.
    Well, it just so happens we have a law enforcement representative 
at the table, so I'd like to hand it over to Pedro now to speak to 
Europol.
    Mr. Rodrigues. Thanks so much, Paul, for the floor. And thank you 
also to the Helsinki Commission for the invitation addressed to 
Europol.
    So, indeed, my name is Pedro Assares. I'm one of Europol's liaison 
officers here to Washington, and just to tell you a little bit about 
Europol, to provide you some context on what we do and who we are, 
Europol was created in 1992 as a European drugs unit, and since then we 
have evolved into dealing with serious and organized crime, terrorism, 
and all other forms of criminality that affect the European Union's 
interests. And within these interests, obviously, we include fraud, 
counterfeiting, money laundering--so all the criminal activities that 
basically are connected, as we have heard before, to free-trade zones.
    Europol's main role is actually to support its member states, the 
member states in the European Union and other partners we work with, in 
preventing and combating crime, and we do it by basically acting as a 
central information hub. We host a large database of criminal entities 
of various different natures, and we also provide our partners with an 
information exchange platform. We have one system which is called SIENA 
that is basically connecting all the 28 European member states plus all 
the countries and international organizations that we have agreements 
with. Obviously the U.S. is also included in this group of partners. We 
also provide analytical and operational support, and we have 
specialized teams that deal with this type of criminality.
    And to mention the last very particular characteristic of Europol 
which makes us, I would say, unique, is our network of liaison 
officers. So we have between 220 and 230 liaison officers in house, 
based in The Hague, where Europol is headquartered. And basically this 
network of liaison officers allows all the countries and organizations 
represented at Europol to interact directly in real time. So if I have 
an issue on counterfeiting, and it's involving my own country and 
another country across the world--the U.S., for example--I can just go 
up one floor or go down one floor, knock on the door of that specific 
liaison officer and basically ask a question.
    The majority of times liaison officers have direct access to their 
databases--national databases, so it can just be a matter of asking a 
question and getting an immediate answer. Other times they just need to 
basically relay the questions back home, and it will be dealt with by 
law enforcement agencies in this case, or by customs authorities also 
in what relates to this conference today.
    Just to give you an idea of our interaction with the U.S., we have 
around 25 U.S. liaison officers based permanently in The Hague, within 
the building, and we have them from 10 different Federal agencies, so 
just to name a few--I have a list because there are quite a few. So 
ATF, CBP with direct intervention in free-trade zones, DEA, Defense 
Security Service, FBI, FDA, ICE, IRS, the Secret Service, TSA, and also 
the NYPD is represented at Europol.
    Cooperation with the U.S. began in 2001 with the signature of a 
strategic agreement, and the year after, in 2002, we signed an 
operational agreement with the U.S. and with its agencies that allows 
Europol basically to exchange information and to allow for a platform 
for member states to exchange information with the U.S. as well, and 
also to provide mutual support for each other's high-priority 
investigations in this case.
    I can say that the cooperation between the U.S. and the EU is a 
success story; it has been increasing ever since it began. In recent 
years, for unfortunate reasons--so as a result of the terrorist attacks 
in the EU, there has been more and more information exchanged, and the 
core criminal areas where Europol actually interacts with the U.S. are 
counterterrorism, citizen organized crime, cybercrime, and also illegal 
immigration since 2015 with the advent of the migration crisis that 
existed in Europe.
    I would also call attention to the TFTP program. Free-trade zones--
although I'm not an expert in the matter; my area of expertise is 
different, but I've done some reading, and there are suspicions that 
free-trade zones could act as a platform for financing terrorism. So 
there is a big component of cooperation between the U.S. and the EU on 
financing of terrorism. We have a terrorist financing tracking program 
in place which basically keeps the liaison bureau here in the U.S., 
actually, and we occupy it as part of our daily business to exchange 
information on this kind of topic.
    I made mention to SIENA, the Secure Information Exchange Network 
Application--so the information exchange system that Europol has in 
place is also connected here to the U.S., and this has been a major 
advantage. It allows law enforcement agencies to interact with U.S. law 
enforcement agencies very directly, securely, without even the need to 
involve Europol, for example. So if there is a need to reach out to any 
state, local, national law enforcement, customs authorities as well, 
this channel can be used directly to exchange information.
    Going into a bit more specifically on free-trade zones, basically 
they are being described as an environment with few inspections and 
large cargo coming in and out, and as such, fertile ground for criminal 
activity, for organized crime groups to take advantage of these relaxed 
procedures, I would say, or controlled procedures to basically just 
make profits and, again, take advantage of some measures that were 
meant to boost economic growth. As any other low-risk and high-reward 
situation, it's easily identified by organized crime groups, and they 
will obviously take advantage of it and try to make their own profits 
out of it. So Europol's response to this type of criminality is 
basically delivered by three main clusters: the fraud cluster, the 
counterfeiting cluster, and the financial intelligence cluster.
    We do have one operations department which has five different 
subunits, so we have one information central hub which is the gateway 
for all the information that reaches Europol. We have a serious and 
organized crime center, we have a cybercrime center, we have a 
counterterrorism center, and we have horizontal operational support 
where financial intelligence is included. The other two, fraud and 
counterfeiting, are part of the serious and organized crime unit, and 
there are two specific teams within the fraud cluster which are of 
relevance for today's discussion, which are Apate, which is dealing 
with fraud, and in this case with special relevance in fake invoice 
fraud. Then we have Smoke, which as the name suggests, deals with 
cigarette smuggling. Then we have another team called Copy within the 
counterfeiting cluster, and basically they deal directly with 
counterfeiting, and then a team called Sustrans--that's short for 
suspicious transactions. Colleagues there deal with money laundering 
and trying to detect and disrupt criminal cash flows which are linked 
to organized crime.
    To know more on Europol's take on free-trade zones, I would invite 
you to read a joint report between Europol and the European Union 
Intellectual Property Office that was drafted in 2017. \1\ It's a 
situation report on counterfeiting and piracy in the EU, and it 
basically contains a section which is topic-specific to free-trade 
zones, and it highlights that this remains a threat in the 
counterfeiting landscape in the EU, mainly for the reasons that were 
highlighted by the previous panelists, but also highlights that this 
type of criminality is linked with other forms of organized crime such 
as drugs trafficking, excise fraud, human trafficking and human 
smuggling, document fraud, corruption, and so on.
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\1\  https://www.europol.europa.eu/publications-documents/2017-
situation-report-counterfeiting-and-piracy-in-european-union
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    So what is being done at the European level that Europol is either 
participating in or trying to show some initiative in? In 2016, in 
July, Europol launched--together again with the European Union 
Intellectual Property Office--the Intellectual Property Crime 
Coordinated Coalition--which is a really long name and acronym--and has 
a sister organization based in the U.S. But mainly the intention was to 
provide operational and technical support to law enforcement agencies 
within the European Union on cross-border investigations in regard to 
counterfeiting, but it also served the purpose of monitoring new trends 
and emerging criminal--or modus operandi in relation to counterfeiting 
and piracy as well.
    There is also something else to highlight: The existence of an 
enforcement database, which is integrated with Europol and with the 
European Anti-Fraud Office, and because it is built on existing 
European databases on trademark information and registered designs, it 
allows customs authorities and national police authorities basically to 
access information or to view information on products' details, and 
actually makes it easier to spot counterfeits and to take the necessary 
and subsequent action.
    I would finally just also mention Europol hosts an online platform 
for experts which has a number of different sub-platforms on different 
types of criminality, and one of those is called Customs Enforcement, 
and it's basically just an online secure platform where customs 
authorities and other types of law enforcement can apply for membership 
and discuss or exchange non-operational information on this platform at 
different levels--at the national level, at the Customs Cooperation 
Working Party level, or at the World Customs Organization level. So 
basically it's a restrictive online group that can be accessible by 
request. It allows for sharing knowledge, sharing best practices, 
information, statistics, if necessary--so it's an interesting platform 
for information exchange.
    And this basically concludes my intervention, and I'm happy to take 
any questions.
    Thank you.
    Mr. Massaro. Thank you very much, Pedro, for the insights into how 
Europol is approaching this problem.
    I'll say I think everybody in this room and everybody at the table, 
we want to make sure that law enforcement has the tools it needs and 
the data it needs to take this problem on, so having you at the table 
is really meaningful. Thanks for coming today.
    So we'll go ahead and move into the Q&A session, so go ahead and 
think of your questions. I'm going to ask a couple, and then we'll open 
it up to the public.
    My first one is for OECD, Jack and Stephane. I was hoping you might 
be able to speak a little bit to the kinds of items you find in free-
trade zones--what kind of goods are trafficked and how that impacts the 
United States and the transatlantic sphere.
    Mr. Radisch. Sure.
    Mr. Massaro. Thanks.
    Mr. Radisch. I'll say a few words about what kinds of goods, and 
then maybe Stefane--if you could say how it impacts the U.S. economy, 
if you have that data stored away up here, but otherwise you'll find 
it.
    First of all, when it comes to counterfeits, anything that can be 
counterfeited and that you can make a profit on, you're going to find 
it. It really spans the full range of harmonized system [HS] codes. But 
I think an important point here to make today is, it's not just trade 
in counterfeits in free-trade zones. Now that's where we are data rich. 
And of course the OECD is an organization where we want to give advice 
to governments that is evidence based; it is data driven.
    We have hundreds of thousands of data points on counterfeits. Now 
that doesn't mean there isn't other types of illegal goods going 
through these free-trade zones. It just means we have a lot less 
evidence and data on it because really they are based on cases, 
investigations, anecdotes, our interviews, but that's not the kind of 
information that is gathered in trade data. But for example, wildlife, 
arms, money laundering operations, I think--not just in goods, but the 
illegal services going on inside the free-trade zones we have to be 
aware of as well. So money laundering through illegal offshore sports 
betting is a big area, and securities fraud--and the main point to bear 
in mind is that a free-trade zone was never supposed to be an 
``anything goes'' zone, and that is what has happened in some 
jurisdictions.
    For example, a recent case in the Philippines of securities fraud 
by--I won't mention the nationality, but they weren't from the 
Philippines--had set up a boiler room inside a free-trade zone to 
commit securities fraud, defrauded many hundreds of millions--maybe I'm 
exaggerating--it was over a hundred million from investors in South 
Africa. And this was a group that came from a country that had already 
been investigated and arrested for securities fraud in their home 
country. So they find a place somewhere else in the world where they 
can set up shop with lax oversight and start conducting securities 
fraud. So you get an idea that it's not just goods, but also services, 
and that's why it's important, as our colleague from Europol mentioned, 
to have different work streams to address these.
    Mr. Jacobzone. We don't have information specifically on the impact 
of free-trade zones on the U.S. economy. This is something that we want 
to do in the future, which is to look at the specific impacts of 
illicit trade on the U.S. economy, both through the impact on the U.S. 
retail market, but also the global impact on U.S. bonds.
    What is clear is that we know that as soon as the country has more 
economic free-trade zones, then there is more likelihood to export 
fakes, and there are all sorts of correlations about this. So I'm bit 
sorry that--you know, I would be happy to make the data I speak more--
--
    We also have evidence that there should be some financial flows and 
illicit financial flows that are associated with free-trade zones. This 
is in the jurisdictions of another body which is not in OECD, but is 
hosted also in our organization called the FATF, the Financial Action 
Task Force. So I wish they could also shed light on this point.
    I would also say that, from what we understand, the complexity of 
the topic from a policy perspective is the fact that what many people 
call free-trade zones--it's an aggregate that covers a number of 
things. And in fact, I guess there is an Association of Free Trade 
Zones in the United States. I think we met some of their people, and 
many of these zones that operate within the United States, I think, 
would be quite keen to undergo some controls or would be ready to not 
be labeled as misuse of free-trade zones. And there are a number of 
jurisdictions around the globe which I guess would have an incentive to 
not be seen as dark havens or as being singled out for conducting all 
this sort of, let's say, more dirty business.
    So the task ahead in the future, I think, would also be to connect 
the real trade flows and some of the illicit financial flows, which is 
something where the information is a bit patchy, to look at the 
specific impact on countries and also ensure a process whereby some of 
the information can be gathered.
    But the report on free-trade zones, which I am happy to send--and 
just had it in front of me on the screen--it takes quite a bit of 
econometrics and sophisticated data modeling to get to some of the 
policy results that we have in front of you today. And as was mentioned 
by Jack, there is also evidence that not only does this show in our 
statistics and econometrics, but this is corroborated by the experience 
of law enforcement officers whether at Europol, Interpol, our 
colleagues also at the World Customs Organization. So there is also 
qualitative evidence that is consistent with some of the empirical 
findings that we found.
    Mr. Radisch. We could say, Paul--just a last word about that--on 
the basis of our reports, we know that U.S. brands are 
disproportionately affected. We know that, as I mentioned--to be more 
specific, the full range of HS code goods can be found transiting, so 
it's not just high-end, luxury brands--Louis Vuitton, Chanel; but those 
are definitely affected--but it's also pharmaceuticals, it's also 
automobile parts. So do you really want to be driving around in a car 
with counterfeit parts?
    There's real public health concerns here when we're talking about 
counterfeit medicines, we're talking about counterfeit makeup that 
doesn't go through the same testing that the normal brands do and the 
legitimate goods do. Even parts that are going into our critical 
infrastructure--so everything across the spectrum can be counterfeited 
and is going to make its way through free-trade zones because--well, in 
certain respects, because of the lack of oversight.
    So it's a very important gap that we need to get our minds around 
in this age of globalization that has ramped up in a way that really 
wasn't anticipated.
    Mr. Jacobzone. To complement what Jack said and something that is 
quite topical for the U.S. economy today is this issue of public health 
and pharmaceuticals, I think, is a bit more acute in the United States 
than in other countries. And you have also seen the opioid crisis, and 
there are also a range of illicit trade factors that are also at play 
in this complex. And of course free-trade zones is one of the factors 
that fuel illicit trade; not the only one, but one of the factors.
    Mr. Massaro. Well, could I just actually follow up on that real 
quick with maybe just a short question, short answer, and that's, if 
the FTZs want it, and the impact is very big in the United States, and 
the United States is clearly strongly affected by this issue, are there 
barriers to completing a report? Do you intend to do a report? Or are 
there not resources, money, time?
    Mr. Jacobzone. I don't feel we have any barriers in terms of no one 
is preventing us from conducting the work. I think we have some of the 
best data available. We are very grateful we are able to draw on all 
the U.S. custom seizures data, all the European custom seizures data. 
The World Customs Organizations has many people, friends who have 
helped us along the way, so I think we have all the data that is 
needed. I think in that context that's helpful.
    Resources are a bit of an issue because this is not such a huge 
theme, and on the day-to-day basis this can be a bit of an issue. I 
guess in order to go further in this area, what we need is the adoption 
of these guidelines and the possibility to get some teeth in the 
process because once you have some teeth in the process, once you are 
able to get a process through which free-trade zones will have to be 
self-certified, would have to undergo some transparency measures 
through which countries would engage in some peer review mechanism, 
then you are going to sort of drive results and exert some pressure. 
And for that we will need some form of political buy-in and support--
and I'd be happy to come back in the U.S. sometime next year once the 
guidance is adopted as a way to launch it and help set up some forces 
behind it--because if the guidance is just a piece of paper produced by 
the OECD, so what? But if on the basis of guidance there is clear 
action by nations and by countries, and let's have measures by customs 
to target certain products or certain free-trade zones, and concerted 
action, not just by the U.S. but also U.S. and Europe of the main 
importance in the globe, then they will feel the pressure.
    Mr. Massaro. And just to clarify, that guidance would have to be 
adopted by consensus by the ambassadors of the OECD?
    Mr. Jacobzone. The OECD is an international, intergovernmental 
organization, so the guidance, in our language our recommendation is 
adopted by the OECD Council, which means the ambassadors of the members 
of the 34, 35 members of the OECD.
    Mr. Massaro. Great. Thanks so much. So I'm going to ask one more 
question, and then we'll open it to the floor.
    This one's for Dr. Fuller, and I hope I don't set you off too bad. 
I was just hoping you could speak maybe a little bit to how do FTZs 
play into authoritarian economics? How do authorization regimes view 
FTZs, or abuse them, or use them within the context of keeping the 
regime alive, pushing authoritarian influence in the world, et cetera, 
et cetera?
    Dr. Fuller. Thank you.
    I obviously take a more sort of academic approach to all this than 
an enforcement or a regulatory one. But there's this great research out 
there right now that looks at world development indicators and missing 
data as data. So it looks at when countries around the world from 1980 
to 2011 did report data or didn't report aggregate data, like GDP, or 
literacy rates, and stuff like that. And it looks at it and it finds 
this difference between authoritarian and democratic countries. No 
matter how you want to divide it up, between democracies and 
autocracies, democracies are just more transparent in the sense that 
they just report more aggregate, credible economic data. And it's this 
clear trend across the board. And so knowing that research, reading 
it--this is based on formal theory, backed up by empirical evidence--it 
finds this sort of danger zone trap for authoritarian governments where 
when they report more, this can trigger coups and all sorts of other 
things that can be bad for business and supply chains that are 
increasingly becoming more complex all over the world, which is why I 
sort of look toward this promoting of looking inward at our own 
programs and democracies around the world.
    I don't have much concern about U.S.-EU cooperation. I think 
they're doing great. I mean, I'm a big fan of law enforcement--don't 
get me wrong--but I became an academic because I don't like authority. 
So I get into this thinking of it in the fact that we don't need more 
and more enforcement necessarily. What we need is to grow these zone 
programs and to make them shining examples on the hill for the rest of 
the world. So if we get more aggregate economic data for these things, 
it can act as a coordination good in democracies where you have a free 
press, free media, academics who are going to study and report on this 
stuff. This allows private actors to better shop for what zone fits 
their needs better, to locate to them, to know which ones are--because 
everybody uses this risk-based analysis for everything, in trade, in 
finance and everything. And so if there's more data out there for 
private companies and the private sector to use in making their 
decisions, this allows them to make more efficient decisions on where 
to locate, what's available to them, where to go, which in turn grows 
the economy. It grows the zone. It makes the zone more successful. 
Which then, once you have that, then you can turn to the rest of the 
world, in places with these dangerous zones, or zones with more bad 
things going on into them, and then you can say, hey, look at what we 
did here, you should try it, too.
    And then from a position of having these shining programs that are 
clear and transparent in the sense that they report aggregate, credible 
economic data, then you can talk to them from a better position of 
saying, well, look at what we did, and then they can do it, because 
it's going to be different in every single country. Every single 
country has different levels and different types of democracy and rule 
of law and different--other things that are going to need different--I 
mean, this is the beauty of the private sector and capitalism and 
democratic capitalism that built this country and made it so powerful 
and great. And so it needs to be sort of enhanced in that way.
    And these aggregate indicators are a coordination good between the 
public and private sector that I feel is a great place to start, again 
because these zones are specifically geographically delineated, and 
therefore, theoretically, then can be monitored by both law enforcement 
and by both the private sector as well. And so I think that's a great 
place to start. While I think the recommendations are great and I think 
they should be adopted and that's a good start in changing norms around 
foreign trade zones around the world, I think the more pragmatic 
approach that's going to have the biggest effect, and that's in the 
national security interests of the United States and in every country 
that wants to do it, is to look at their own zone programs and look at 
ways to report better data on them.
    Mr. Massaro. Thanks so much, Dr. Fuller.
    So first things first, let's get our own house in order, right?
    Dr. Fuller. Yes.
    Mr. Massaro. Okay.
    So just a real quick clarification question on the guidance. If the 
guidance passed, would something like FTZ guidance, where you can 
unanimously vote a country has suspicious activity, or something like 
that? And could you say a country's out of line with the guidance, 
therefore that's the teeth of FTZ, really, is the ability to issue 
these suspicious activities reports?
    Mr. Radisch. At this point, the countries have to decide how they 
want to follow up on what to put in place, whether it's going to be 
through a process of peer reviewing, which is a standard OECD tool for 
compliance, or measuring up to what one has agreed to do. That's one 
option.
    Another option is a certification regime, having firms that are 
professional in auditing going through these free-trade zones--there's 
so many of them--to see whether they are complying with a code of 
conduct along the terms that have been set up--and then having that 
transparently posted, for example, on the OECD website so everyone can 
see and countries can adjust their treatment of noncompliance the way 
they think is best fit, or whether there will be some commonality 
across the countries about what that might entail in terms of how they 
treat noncomplying jurisdictions.
    So those are still some of the fine points that need to be decided 
at this stage of the development of this guidance. That's on course for 
a discussion over the next several months, but it's a fair point to ask 
about and it's one that the countries are debating.
    Mr. Jacobzone. Jack, you were asking before why these countries set 
up free-trade zones. And I think the fact is that if you look at many 
countries that let's say do not have democratic regimes and at many 
semi-emerging economies--they have regulatory frameworks that are 
stifling business activity, you can't get a license, you can't get your 
business up. It's all very bad.
    And so many of these countries, instead of reforming their whole 
economy in a positive way, are just taking a short cut by saying we're 
not going to change the whole thing, it's too hard, too difficult, we 
want to keep control. But we just created this small island, this 
thing, and there people can just do what they want so that it will 
create jobs and growth, and then we can have revenues for the State and 
we don't necessarily need to make change to the rest of the economy.
    And generally the OECD advising--we're engaging with a number of 
these emerging economies--is to help them to adapt their whole 
regulatory framework, to adapt their economy as a whole so that it can 
benefit from globalization and be improved, and not necessarily try to 
take this sort of dual approach where you don't touch the big thing and 
you just allow everything in that small three things--because that's, I 
think, the approach that many countries have been doing as they see 
these ones as this is where you can quickly create a lot of jobs in 
some sort of an island of prosperity in economies that otherwise do not 
develop so well. I mean, I'm talking a bit generally here, but I think 
there is an aspect to this in the conversations.
    And on the powers, the OECD's not FATF. So we have to be very 
clear. FATF is a very special organization that is distinct of the 
OECD. Even if there are close relationships between the two 
organizations, and at the sense of OECD work, there is mutual learning 
and peer pressure, what we call the process of peer review, whereby 
countries come together, discuss, and put things in the open. And as 
Jack mentioned, a lot of this we are serving as a secretariat to this 
organization and a lot of these decisions still have to be taken by the 
member nations.
    Dr. Fuller. So I agree with that. I see that too. These are 
laboratories of experimentation in these authoritarian or, as we call 
them, developing economies. They use these zones as a way to experiment 
with liberal policies, and we have for a long time looked at them with 
the hope that somehow these authoritarian governments are going to 
magically liberalize their entire economy and their entire country.
    And I think we're coming to a point right now--what I've been 
writing about a lot--is to where we're starting to recognize that's 
just not going to happen. They're getting the benefits out of these 
zones and out of these experiments with liberalization, and they're 
using it to survive longer in power, to get rid of term limits, to stay 
in office power, to strengthen their own regimes--and then in some 
cases, in the case of North Korea's free trades zones--threaten the 
United States back with the goods that they've been able to use to 
survive on.
    So I would say this is where I get back to the better strategy, I 
think, in my opinion, while I totally respect and think what the OECD 
is doing is noble and a good cause, in my opinion I would think a 
better sort of foreign policy for the United States would be to sort of 
start disentangling with these zones and authoritarian regimes around 
the world and start focusing on the ones in more democratic countries 
that are better, again, at reporting aggregate, credible, economic data 
to their publics.
    Mr. Massaro. Thank you, Dr. Fuller.
    And with that, we'll take some questions from the audience. Have we 
got any questions in this audience? Just raise your hand. Don't be shy.
    Yes, please, David. Do we have any microphones? Oh, do you mind 
walking up to the mic, David?
    If you'd like to ask a question next, you can go ahead and walk up.
    Questioner. Thank you very much, Paul, and thank you, the 
presenters, for their excellent briefings this afternoon.
    And just building on some of the comments that we just heard on the 
importance of resources, I very much also agree with Dr. Fuller. I 
think it is important that we build up some of the more problematic 
free-trade zones by perhaps exploring pilots with them to provide the 
type of capacities, the capabilities. And I hope that after the 
guidelines are approved by the ministers--and that's a big if--but if 
they are approved, I think as we shift toward the implementation phase, 
that we begin to work within the OECD and other partners to develop the 
type of resources that I think are critical to work with our partners, 
including in Panama and others who I think are facing tremendous 
challenges--not only on the illicit trade across the various 
commodities that Jack mentioned, but on issues related to corruption as 
well--the issue of illicit financial flows is a critical part of the 
challenge in many free-trade zones today.
    So the question to the OECD is, how are you working right now with 
free-trade zones in trying to enhance those type of capacities, those 
type of capabilities? And is there any plan to develop some pilots, as 
Dr. Fuller was mentioning, to support those who are committed toward 
more transparency through greater enforcement in free-trade zones?
    Thank you.
    Mr. Massaro. Please go ahead. Jack or Stephane?
    Mr. Radisch. Sure. The short answer is that, David, we have invited 
some of the well-known free-trade zones of ill repute to our meetings. 
And we will continue to do so. We want to have them at the table. We 
want to work closely with them in precisely the basis that you 
described. That's the most constructive way. And it's only as a second 
order that countries would have as part of their discussion what to do 
if that fails and what kind of pressure can be exerted to make these 
jurisdictions, well, change their ways, change their behavior.
    And there's a game plan for that as well in the OECD history, and 
that's the work on tax havens. So there are many ways of going about 
working with countries to effect the change that's needed, and the most 
constructive one would definitely be working with the countries that 
you mentioned yourself on a constructive basis. How can we improve upon 
the capacity to know better what's going on inside the zones and to 
weed out the criminal elements? Because everyone wants to benefit from 
trade, and the idea is that if some of these problematic jurisdictions 
can clean up their ways so that will make them--really they are 
championing a different way of doing business. And that will put 
pressure on the others who are not cleaning up their act, because 
eventually, if there is pressure brought to bear from OECD countries, 
then that will affect the businesses' decisions to actually use those 
free-trade zones or not.
    Mr. Massaro. Great. Okay, thanks.
    Can we get another question from the public? Thanks so much.
    Questioner. Hi. Joe McKellen [ph] with Congressman Donovan's 
office.
    With the unfortunate departure of the U.K. from the European Union, 
do you all kind of envision any difficulties in cracking down on 
illicit trade going to and from that country?
    Mr. Jacobzone. I would say to the country because the U.K.'s still 
a member of the OECD. And in fact, if the U.K. is not any more a full 
member of the European Union, this will step up the incentives for our 
U.K. colleagues to achieve cooperation with other countries through the 
OECD. And we have some U.K. colleagues inside the room, and I think 
that there is a global anti-corruption effort at the OECD that is under 
the leadership of the U.K. or benefits a lot from the U.K.'s influence, 
and the U.K. is strongly engaged and committed on all these fronts and 
working closely inside the OECD.
    Mr. Massaro. Yes, please, Dr. Fuller, yes. I mean, we have the 
British Embassy here today, so we will also have them perhaps say 
something. And I also want to let Dr. Fuller speak, but I also want to 
ask Pedro to say something, because I know a big piece of the Brexit 
debate and the international law enforcement debate is exactly how the 
U.K. will work with Europol following Brexit. So it's an interesting 
question,
    But, please.
    Dr. Fuller. Okay, so the U.K. has actually been leading the fight 
really on this in other ways. I don't want to speak to Brexit or 
anything like that. I want to speak to U.K.'s leadership, especially in 
the area of things like beneficial ownership transparency, where they 
have been sort of leading the fight on this. While I sort of disagree 
with the public reporting of private data, I do find groups that are 
analyzing the data here have come up with very useful insights that are 
good examples of this transparency and credible aggregate data that I'm 
talking about. For example, they've analyzed it and looked through and 
found that there's approximately 1.2 owners per business--that's 
incorporated--and that there's a certain percentage that aren't able to 
identify their number. These are good examples of aggregate data that 
allow private and public actors to coordinate their actions together, 
and which spurs economic growth, because, again, this is what it's 
about, in my view. There's the question of right, so, what am I talking 
about that's going to fight illicit trade? And the answer is not much. 
I'm talking about drowning out illicit trade by growing licit trade. So 
it's a perceptions thing. If you grow the amount of the legal economy 
happening, then the impacts and the effects of the illicit economy 
shrink relative to the size of the legal economy. And so that's what 
I'm trying to make an argument for growing the legal economy and taking 
steps toward that in order to shrink the impact of the illicit economy. 
Because you're never going to get rid of bad actors. They're always 
going to be there.
    Mr. Massaro. Even if they--[inaudible].
    Dr. Fuller. Exactly.
    Mr. Massaro. Could we hear real quick from Pedro? And then, John, 
if I could force you to the mic, if you don't mind?
    Mr. Kay. Yes, sure.
    Mr. Massaro. Yes. [Laughs.] Okay, good.
    Mr. Rodrigues. Okay, so Brexit-related questions are very frequent 
nowadays. And, well, short answer: It remains to be seen. The U.K. is 
one of the largest, if not the largest contributor of information to 
Europol. It's a leading force in many different crime areas, many 
different platforms. And I don't think that will change too much.
    That said, there's a couple of rules which are deeply enshrined in 
Europol's regulation, and one of those which is very important is that 
for Europol to be able to provide the full extent of support that we 
provide to our partners, the investigation in question needs to have 
the involvement of at least two EU member states. So if in the past we 
could support full investigation between the U.K. and France, for 
example, now we would need the U.K., France, possibly, if negotiations 
don't--I'm pretty sure that the U.K. will negotiate its own terms with 
Europol. It's in everyone's best interest that the U.K. remains close 
to Europol, and I'm pretty sure that an operational agreement will be 
signed and in place. But one of the possibilities or one of the 
discussions is that, for example, the U.K. would actually need two 
additional member states in this case to be able to bring an 
investigation to Europol so it could be supported as a high priority 
case, which means that we can devote a full range of services and 
support.
    Mr. Massaro. John.
    Mr. Kay. Okay, thank you for the--[inaudible]. [Laughter.]
    My name's John Kay. I work out of the British Embassy here in 
Washington, but I'm a career U.K. customs officer. My current employer 
is HM Revenue--Her Majesty's Revenue & Customs. So I'm here as actually 
one of the U.K. law enforcement liaison officers based in Washington 
working with our partner agencies in the U.S. and other nearby 
countries.
    To echo my friend from Europol, Pedro, we do have an international 
network of liaison officers not just in the globe but in particular in 
Europol, and that will continue. The U.K. is seeking to remain a member 
of Europol and will continue to have a number of agents from police, 
National Crime Agency, and HM Revenue & Customs based in Europol.
    And again, answering the question in particular, this is not a 
political question, and it's certainly not something I'm answering on 
behalf of the ambassador here for the U.K. in the U.S. But speaking as 
an HM Revenue & Customs officer, we do value international 
collaboration. We work bilaterally with all our colleagues in a number 
of law enforcement agencies--not just in the U.S., but globally. And 
the fact that we may be moving toward an EU exit next March, in the 
forthcoming year, doesn't mean that we won't continue to collaborate 
with law enforcement.
    And especially when it comes to illicit trade, counterfeit trade, 
the U.K. is absolutely committed to a level playing field for economic 
prosperity for everyone. And one thing I would emphasize is just 
because the U.K. may be leaving the European Union doesn't mean that we 
don't want to take our ball home with us and go to bed. We literally do 
want to continue to be a full member of the international economic 
community for economic prosperity, both across the globe, in Europe, 
but obviously important for the U.K. as well. And that means leveling 
that playing field, encouraging private sort of enterprise to move 
economic goods across international boundaries. And where free-trade 
zones are used to help prosper internationally, they should be 
obviously subject to some sort of support by domestic revenue and 
customs authorities to enable that to happen in the correct way.
    Mr. Massaro. Thank you very much, John.
    KAY: And finally, the only thing I would say is thank you to the 
OECD for their work on this, and the U.K. continues to support your 
activity in this regard.
    Mr. Massaro. Excellent. Thanks very much.
    Do we have more questions from the audience? Step right up. Get 
your exercise.
    Okay. Well, I'm going to ask one more question. If there's any 
last-minute questions after that, we can take them. Okay?
    So my final question for OECD is, have you highlighted any of the 
worst offenders, the worst FTZs? Can you speak to anything like that? 
[Laughs.]
    Mr. Jacobzone. I would say we're economists. We're not law 
enforcement officials, so we're not treating individual cases. We are 
treating aggregated sets of data. So I think this sort of question 
should be more directed to our colleagues in law enforcement, our 
colleague from the U.K. or from Europol, than to the OECD as an 
organization, I'm afraid.
    Mr. Radisch. At this point in time.
    Mr. Massaro. Got it. Thank you.
    Okay. If there aren't any more questions, anybody want to say 
anything else on the panel? Then we will close the briefing.
    Thank you so much. [Applause.]
    [Whereupon, at 4:07 p.m., the briefing ended.]
  

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