draining development.pdf - Khazar University

Tax Havens and Illicit Flows 363Figure 11.3. Zambian Trade: Swiss Role, 1995–20086,000 total exports (left axis)60total imports (left axis)5,000exports: Switzerland (right axis)imports: Switzerland (right axis)50US$, millions4,0003,0002,000403020% of total1,0001001995 1996 19971998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008year0Source: UN Comtrade (United Nations Commodity Trade Statistics Database), Statistics Division, Department of Economicand Social Affairs, United Nations, New York, http://comtrade.un.org/db/.that Zambian copper is of the same quality as any copper in the Switzerlandtrade data in the same detailed commodity categories (for example,coils of copper at thicknesses of less than 0.35 millimeters), so that Zambiancopper exports to Switzerland should be priced at the same level asthe declared Swiss trade in the same items, then the implied illicit capitalflow out of Zambia is in the region of 30 times the declared export value.Clearly the impact on Zambian GDP would also be dramatic.However, the declared Swiss imports from Zambia and the declaredtotal exports from Zambia are a tiny proportion of the Zambian-declaredexports to Switzerland; so, such an estimate of the illicit flow cannot besupported on this basis. The use of Switzerland for transit in commoditiesin this way is well known, but remains highly opaque (for example,see Berne Declaration 2011). What is absolutely clear is that declaredZambian copper exports, on which the country depends economically,effectively disappear once they leave the country. The potential for thisopacity to undermine the country’s development is equally apparent.