Methods of Strategic Trade Analysis: Data-Driven Approaches to Detect Illicit Dual-Use Trade

Description

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. Preface Keywords Contents About the Author Chapter 1: Introduction References Chapter 2: Introduction to Strategic Trade Analysis 2.1 The International Trade Analysis Landscape 2.2 What Is Strategic Trade? 2.3 Development of Strategic Trade Obligations and Initiatives 2.4 STA Stakeholders 2.5 The Need for Strategic Trade Analysis 2.5.1 Lower Priority Relative to Other Security Concerns 2.5.2 Volume of International Trade 2.5.3 Nature of Strategic Goods 2.5.4 Regulatory and Jurisdictional Issues 2.5.5 Wide Range of Parties Involved in Transactions 2.5.6 Data and Strategic Goods Detection 2.6 Conclusion References Chapter 3: Fundamental Systems of Strategic Trade Analysis 3.1 The Harmonized System 3.2 Strategic Trade Controls and ECCNs 3.3 Correlation Between the HS and STCs 3.3.1 Connecting the Dots Through Correlation Tables 3.4 Evolving Nomenclatures and HS2022 Amendments 3.5 Data Availability for STA References Chapter 4: Introduction to STA Methodologies 4.1 Script for Illicit Strategic Trade 4.2 Strategic Trade Risk Assessment 4.3 Mirror Statistics 4.4 Market Share Analysis 4.5 Transshipment and Re-export Analysis 4.6 Machine Learning 4.7 Network Analysis 4.8 Applications of Strategic Trade Analysis Chapter 5: Scripting an Illicit Strategic Trade Transaction 5.1 Scripting Process 5.2 Script for an Illicit Strategic Goods Transaction 5.2.1 Act I—Arranging the Acquisition 5.2.2 Act II—Purchase and Pre-shipment Arrangements 5.2.3 Act III—Transport 5.3 Using the Script References Chapter 6: Strategic Trade Risk Assessment 6.1 Transaction-Level Risk Indicators 6.2 Risk Indicators Based on Historical Data 6.3 Advanced Risk Assessment Indicators 6.4 Examples of Adding Layers to Risk Indicators 6.4.1 Keyword Searches and Commodity-Specific Monikers 6.4.2 Restricted Entity Lists 6.5 Application of Risk Indicators 6.5.1 Integration into Customs Risk Management Systems (CRMs) 6.5.2 Reviewing Past Transactions 6.6 Pros and Cons 6.6.1 Pros 6.6.2 Cons 6.7 Conclusion References Chapter 7: Mirror Statistics 7.1 Differences in Reported Trade Data 7.2 What Can Mirror Statistics Tell Us? 7.3 Process 7.3.1 Identify the Target Strategic Good(s) 7.3.2 Identify Trade Partner(s) and Flows of Interest 7.3.3 Gathering Trade Data 7.3.4 Analysis—What Are We Looking For? 7.3.5 Complementary Research 7.4 Example Cases 7.4.1 Canadian Exports of Heavy Water 7.4.2 Nuclear Cooperation Between South Korea and the United Arab Emirates 7.5 Mirror Statistics: Pros and Cons 7.5.1 Pros 7.5.2 Cons 7.6 Conclusion References Chapter 8: Market Share Analysis 8.1 Global Market Share 8.1.1 Identify the HS Codes for the Strategic Goods We Want to Measure 8.1.2 Select the Scope of the Market Share Assessment 8.1.3 Gather Harmonized Statistical Trade Data Within the Scope for the Selected HS Codes 8.1.4 Calculate Market Share 8.2 Example Cases for Global Market Share Analysis 8.2.1 Global Export Market Share for Detonating Fuses 8.2.2 The Strategic Trade Atlas 8.3 Refining Market Share Through HS-ECCN Correlations 8.4 Market Share Analysis: Pros and Cons 8.4.1 Pros 8.4.2 Cons 8.5 Conclusion References Chapter 9: Transshipment and Re-export Analysis 9.1 Examples of Transshipment/Re-export Leading to Diversion 9.2 STA Methods for Analyzing Transshipment and Re-exports 9.2.1 Transaction Flagging 9.2.2 Import–Export Matching 9.2.3 Transshipment/Re-export Estimation Methodology 9.3 Transshipment/Re-export Methodologies: Pros and Cons 9.3.1 Pros 9.3.2 Cons 9.4 Conclusion References Chapter 10: Machine Learning for Strategic Trade Analysis 10.1 Discussion of Machine Learning Terms 10.2 Examples of Machine Learning in Similar Domains 10.2.1 Case Study I—Using Decision Trees to Classify Customs Noncompliance 10.2.2 Case Study II—Clustering and Logistic Regression for Customs Targeting 10.2.3 Case Study III—DATE for Customs Fraud Detection 10.2.4 Summary of Case Studies 10.3 Before We Start—Training and Test Sets 10.4 Supervised Classification with Resampling 10.4.1 Data Collection and Preparation 10.4.2 SMOTE Resampling 10.4.3 Modeling with Random Forest 10.5 Unsupervised Learning Techniques 10.5.1 Isolation Forest for Outlier Detection 10.5.2 K-Means Clustering 10.6 Natural Language Processing 10.6.1 Text Preprocessing 10.6.2 Fuzzy Matching 10.6.3 Supervised Text Classification 10.7 Parameter Tuning and Feature Selection 10.8 Model Performance 10.9 Machine Learning: Pros and Cons 10.9.1 Pros 10.9.2 Cons 10.10 Conclusion References Chapter 11: Network Analysis 11.1 What Is Network Analysis Used For? 11.2 Network Concepts 11.2.1 Centrality Measures 11.2.2 Community Detection and Modularity 11.3 Constructing a Network 11.3.1 Data Sources for Network Analysis 11.3.2 Steps to Create a Network Diagram 11.4 Using Network Analysis for STA 11.4.1 Connecting the Dots 11.4.2 Facilitators 11.4.3 Industrial Capability Analysis 11.4.4 Temporal Analysis 11.4.5 Finding Disruption Points 11.5 Case Study: The Asher Karni Network 11.5.1 Facts of the Case 11.5.2 Preparing the Data 11.5.3 Karni Network Diagram 11.5.3.1 Focus on Order 4: Triggered Spark Gaps 11.6 Network Analysis: Pros and Cons 11.6.1 Pros 11.6.2 Cons 11.7 Conclusion References Chapter 12: Applying Strategic Trade Analysis 12.1 STA Application Areas 12.1.1 Strategic Trade Investigations 12.1.2 Understanding Strategic Trade Flows 12.1.3 Boost Correlation Efforts Between the HS and STC Lists 12.1.4 Strategic Capabilities Database 12.1.5 Unlicensed Trade in Strategic Goods: Pattern Recognition and Remediation 12.1.6 Post-clearance Audits, Future Targeting, and Additional Scrutiny 12.1.7 Enhanced Outreach Efforts 12.1.7.1 Supporting Domestic Outreach 12.1.7.2 Supporting International Outreach 12.1.7.3 Creating a Cycle of Improvement 12.2 Gaps in Strategic Trade Analysis 12.3 Areas of Future Research 12.4 Conclusion References