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2023 | Book

Introduction Read chapter Read first chapter

Methods of Strategic Trade Analysis

Data-Driven Approaches to Detect Illicit Dual-Use Trade

Author: Christopher Nelson

Publisher: Springer International Publishing

Book Series : Advanced Sciences and Technologies for Security Applications

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book addresses ways that governments, international organizations, and other stakeholders can utilize data to uncover illicit trade in materials and equipment that could be used to support chemical, biological, nuclear, and advanced conventional weapons systems. Key concepts of strategic trade are introduced, including examples of strategic goods and their potential uses in weapons of mass destruction (WMDs) and weapons systems, the interplay between the Harmonized System and strategic trade control regimes, and the data available for analysis in the field. Innovative, yet practical methodologies to analyze strategic trade cover the use of crime scripts, risk assessment indicators, mirror statistics, market share analysis, and transshipment and re-export analysis. There are also chapters on leading-edge techniques involving machine learning and network analysis that have shown promise in other areas of crime and illicit trade investigations. Each chapter provides step-by-step instructions on applying the technique, numerous case studies and examples, and discussions of the strengths and weaknesses of each approach. This volume is designed to provide all types of analysts with practical pathways for understanding, detecting, and disrupting illicit procurement of materials and equipment needed to produce WMDs and advanced weapons.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
Strategic goods consist of chemical, biological, and nuclear weapons (or weapons of mass destruction), other conventional weapons, and the materials, equipment, and technology required for their manufacture and delivery. These commodities, and the technical know-how behind their development and use, can represent a threat to international peace and security if transferred to state and nonstate actors with intentions toward proliferation. In many cases, strategic goods are dual use—they can be employed for industrial/civil and WMD or military end-uses. This section introduces the concept of strategic goods, State obligations toward them, and methods of strategic trade analysis discussed in this book.
Christopher Nelson
Chapter 2. Introduction to Strategic Trade Analysis
Abstract
This chapter introduces the concept of strategic trade analysis within the context of the current international trade environment. It discusses the challenges facing authorities in controlling the transfer of sensitive commodities and the common ways illicit traffickers try to elude detection. It also provides a brief overview of international agreements, United Nations Resolutions, and historic milestones related to the development of strategic trade controls. Finally, this chapter sets the groundwork for the rest of the book by identifying the need for innovative methods of strategic trade analysis due to the priority placed on trade controls, the volume of trade, the nature of the commodities controlled, regulatory challenges, parties involved, and the myriad of data complexities in this space.
Christopher Nelson
Chapter 3. Fundamental Systems of Strategic Trade Analysis
Abstract
The two key nomenclatures in strategic trade analysis are the harmonized system (HS) and strategic trade control classification systems. This chapter first introduces the HS, maintained by the World Customs Organization, which is used to uniformly identify commodities through a single coding system for the purpose of international trade. Strategic trade control classification systems are multilateral and national descriptions of strategic goods and the technical parameters that can allow them to be used for WMD or military-related purposes. After describing how these systems work, the chapter delves into why both form the basis of strategic trade analysis and the challenges in attempting to reconcile these two very different nomenclatures. Finally, an overview is provided of the data available to different stakeholders trying to understand strategic trade flows.
Christopher Nelson
Chapter 4. Introduction to STA Methodologies
Abstract
This chapter provides a brief introduction to the strategic trade analysis methodologies that will be presented in the rest of the book. These are
1.
Designing a script for illicit strategic trade flows.
 
2.
Risk assessment for strategic trade.
 
3.
Mirror statistics.
 
4.
Market share analysis.
 
5.
Transshipment and re-export analysis.
 
6.
Machine learning.
 
7.
Network analysis.
 
Christopher Nelson
Chapter 5. Scripting an Illicit Strategic Trade Transaction
Abstract
Crime scripting is a method that provides a structure for the analysis of the actors, decision points, and actions involved in a criminal act. This chapter presents a baseline crime script for the illicit transfer of strategic goods across borders. These scripts allow analysts to not only put available information in the context of a typical crime but highlights information gaps that should be filled based on previous experiences. This chapter outlines three typical acts in an illicit strategic goods transfer: arranging the acquisition, purchase and pre-shipment arrangements, and transport. Finally, it discusses how this script might be used by strategic trade analysts in their work.
Christopher Nelson
Chapter 6. Strategic Trade Risk Assessment
Abstract
Risk assessment for strategic trade analysis involves developing numerous, multifaceted criteria for identifying shipments that have a high probability of containing strategic goods and being part of an illicit trade pattern. This chapter discusses numerous risk indicators that can be developed as part of a customs risk management system. These indicators can have overlapping layers and differing levels of analytic complexity, but they are all designed to assist analysts in prioritizing the highest risk shipments and trade flows for further scrutiny. Some indicators include assessment of the destination country, use of nonspecific HS codes, suspect transport or logistics companies, and many more. We also examine some more advanced risk indicators that combine information from shipment records with subject matter expertise to greatly enhance potential targeting.
Christopher Nelson
Chapter 7. Mirror Statistics
Abstract
Mirror statistics is a method through which trade data is compared at the HS code level to corroborate trade flows of strategic goods or to find anomalies in reported data that may raise concerns. The primary source of this data is the United Nations Comtrade database that provides aggregate trade statistics by HS code reported by national trade statistics organizations. Using the HS codes associated with specific strategic goods can provide insights into trade patterns of these goods, confirmation by two reporting sources of strategic goods transfers, or areas where there is an asymmetry of reported data that may indicate suppression, smuggling, or other concerns. This chapter provides real-world examples of using mirror statistics for strategic trade analysis, highlights the challenges of this approach, and shows how complementary research can enhance our conclusions.
Christopher Nelson
Chapter 8. Market Share Analysis
Abstract
Performing market share analysis allows analysts to identify the key players in global trade for strategic goods. Through the use of HS codes corresponding to strategic goods, we can identify the primary exporters and importers of these commodities. This chapter identifies two approaches for market share analysis depending on the data available to the analyst. The first is a generalized approach that relies on openly available data from UN Comtrade. The second relies on data that is usually restricted to state authorities that further refines the general approach by applying an HS to export control classification number correlation percentage to the calculations. The latter technique identifies how often an HS code is used for strategic trade in one country’s exports and applies that as an estimate to global trade flows.
Christopher Nelson
Chapter 9. Transshipment and Re-export Analysis
Abstract
Transshipment and re-exporting are common practices in efficient global trade, but they create significant challenges in tracking the transfer of strategic goods. By allowing cargo to change vessels or enter and then leave customs zones, the opportunity arises for bad actors to obscure their clandestine efforts to traffic in strategic goods. This chapter identifies some additional risk indicators specifically designed toward transshipment and re-export detection. It also provides two methods for using trade data to understand transshipment and re-export of strategic goods: import–export matching and a transshipment/re-export estimation formula.
Christopher Nelson
Chapter 10. Machine Learning for Strategic Trade Analysis
Abstract
Machine learning techniques are supporting advances in more effectively gaining knowledge from data in many fields—strategic trade analysis should be no exception. This chapter introduces some potential uses of machine learning approaches to support identifying illicit strategic trade from within international trade data. First, an overview is provided of three case studies that utilized various machine learning algorithms for similar purposes, demonstrating the effectiveness of different approaches that could be tailored to strategic trade analysis. The majority of the chapter focuses on three types of machine learning techniques: supervised classification, unsupervised learning, and natural language processing. Within each of these, multiple methods are introduced with a focus of how analysts can specifically use international trade data and other information sources to investigate strategic trade. This discussion represents attempts to introduce machine learning into this field and serve as a starting point for future research and applications in this area.
Christopher Nelson
Chapter 11. Network Analysis
Abstract
Proliferation is not a matter of a single transaction, strategic good, duped manufacturer, or bad actor. WMD and weapon system capabilities are complex constructions requiring a wide range of equipment, materials, technical knowledge, willing and unwitting accomplices, and opportunity. Proliferation needs a network. As described in Chap. 5 on scripting, illicit strategic trade is not necessarily hierarchical but is a web of actions that may be repeated across individual criminal acts and involvement of diverse entities from manufacturers, banks, logistics and transport companies, state-run organizations, and governments (Albright et al. 2020). Network analysis shifts the focus from the entities themselves to the relationships between entities. Most of the STA methods thus far have been focused on identifying individual instances of illicit behavior, primarily between the exporter, importer, and possibly some entities involved in transshipment/re-export. Network analysis broadens the scope by
Christopher Nelson
Chapter 12. Applying Strategic Trade Analysis
Abstract
The final chapter demonstrates some ideas on how the methods of strategic trade analysis in this book might be utilized at a strategic level. If given priority and resources, interested parties can greatly enhance their strategic trade investigations, understanding of strategic trade flows, and knowledge of global industrial base capabilities for WMDs and other military equipment. They can also use additional expertise in this area to boost international efforts to better correlate the HS and strategic trade control lists, which would enhance all of the techniques in this book. Perhaps most importantly, this chapter discusses how these analyses can support domestic and international outreach, helping to raise awareness of the dangers of illicit transfers and enhancing global interest and capabilities at stopping them. This book concludes with a vital discussion of existing gaps to fill in strategic trade analysis and areas for future research.
Christopher Nelson
Metadata
Title
Methods of Strategic Trade Analysis
Author
Christopher Nelson
Copyright Year
2023
Electronic ISBN
978-3-031-20036-6
Print ISBN
978-3-031-20035-9
DOI
https://doi.org/10.1007/978-3-031-20036-6