The ivory trade does not follow a neat economic model, and calls for a regulated legal market are naïve and misguided.
By Grace Ge Gabriel
I began working on ivory trade issues the year CITES approved the first so-called “one-off” ivory sale to Japan in 1997.
I have gone undercover to investigate ivory markets and spoken directly with wildlife traders without interpreters.
I have witnessed how the grey markets created by the legal ivory trade have confused consumers, stimulated rising demand, and produced opportunities for criminals banking on the extinction of elephants.
I have seen it all from a unique vantage point—inside China, where the ivory trade flourishes.
So I write in response to Daniel Stiles’s misleading opinion piece advocating for legal ivory trade—“Can elephants survive a continued ivory trade ban?”—on September 15 in National Geographic’s “A Voice for Elephants.”
I find the piece full of misconceptions and skewed logic, which at times ignores the realities on the ground in both Africa and Asia. I find his contention that ivory trading can happen in a vacuum without consideration of the social, cultural, political, and economic context in China particularly naïve.
His proposed scheme of regulated legal ivory trading as a solution to the elephant poaching crisis is flawed. He bases his assumptions on economic theories found in textbooks. Yet, anyone who understands the complexities of market dynamics and human behavior knows that a legalized ivory trade would be in reality a complete disaster.
Those dedicated to saving elephants have worked too long and too hard putting trade bans into place to undermine them now with action that distracts us from the work we must be doing to close loopholes and solidify enforcement. What’s more, in most cases these calls for a legal trade would invalidate or even erase our endeavors to decrease demand for wildlife products like ivory.
The CITES Ivory Trade Ban Worked Until It Was Undermined
Even Stiles admits that “after the CITES ban, demand fell in the West owing to all the negative publicity related to buying ivory that accompanied the run-up to the ban. East Asia’s largest ivory export market withered. East Asia was left with huge ivory stockpiles and falling demand. Prices fell, ivory market activity slumped.”
Reduced market activity and lower ivory prices weakened the incentive of poaching elephants for their ivory. The ivory trade ban allowed African elephant populations to start recovering from the devastating massacres in the 1970s and 80s that cut their size from 1.3 million to 600,000
Looking at the elephant population trends throughout the 1980s, it is not difficult to imagine that most elephant populations in West, central, and East Africa would have disappeared in the early 1990s had the 1989 ivory trade ban not gone into effect.
In China, the ivory trade ban coincided with economic reform that shifted state enterprises to a private economy. Realizing that there was no hope of more ivory imports in the foreseeable future, state-owned ivory carving factories downsized and shrank production. Old ivory carving masters stopped taking in apprentices, resigning to apply their skills to creating masterpieces using the available ivory stockpiles in the country.
If the trade ban had been supported with sustained demand-reduction efforts, poaching would have continued to decrease, allowing a long-term rebound of wild elephant populations. Instead, the ban was sabotaged by pro-trade efforts that revived and stimulated demand.
Only eight years after the trade ban, CITES member countries at the 1997 Conference of the Parties (CoP10) approved proposals to allow a “one-off” ivory stockpile sale. When that sale took place in 1999, Japan purchased 49.57 metric tonnes of ivory from Botswana, Namibia, and Zimbabwe.
Impact of Ivory Sale to Japan
China felt an immediate impact of the ivory sale to Japan. In a letter to the CITES Secretariat in 2002, China’s CITES Management Authority wrote:
“In recent years, the illegal international trade in ivory has become a major concern to China. Since 1996, a total of 200 ivory smuggling cases have been detected and about 35,967 kg of ivory seized. Both the seizure numbers and the volume of illegal ivory traded have increased dramatically since 1999. The decision made by CITES, which allowed the one-off sale of ivory to Japan is one of the main factors that has contributed to the increase of illicit trade of ivory products in China. Raw tusks have been confiscated in all of the major seizures since 1999. Many Chinese misunderstood the decision and believed that the international trade in ivory had been resumed.”
To defend his proposal for more legal ivory trade to China, Stiles tried to find proof that the 1999 ivory sale to Japan had no effect on the market. All he came up with was to cite “ivory industry business personnel in China, Hong Kong and Taiwan [who] did not believe that the 1999 southern African ivory auctions had a significant effect on either internal or external ivory demand.”
This would be like asking the fox guarding the hen house how the hens are doing.
It was of course to the advantage of the Chinese ivory traders, business owners, and investors to intentionally downplay the effects of the ivory sale. They knew that admitting anything to the contrary could hurt their chance of bidding for ivory from future sales.
In fact these same businessmen were lobbying the government to apply at UNESCO for “ivory carving” to be considered as an “intangible cultural heritage.” By 2004, they had successfully persuaded China’s wildlife authorities to introduce an ivory product registration and certification system to meet the conditions required by CITES for ivory purchases.
Warning Signs Ignored
Instead of heeding the multiple warning signs from the first ivory sale, CITES approved the second ivory sale in 2007 and allowed China to join Japan as an ivory trading partner. At an auction the subsequent year, a total of 108 metric tonnes of ivory from South Africa, Zimbabwe, Namibia, and Botswana were sold to China and Japan.
Importing new legal ivory into China unfortunately created and sustained grey markets that have confused consumers, thwarted law enforcement, and opened opportunities for criminals to reap high profits. Any stigma created by the initial trade ban started to relax as a result of these grey markets, and demand started to escalate.
Information obtained from China’s Auction Association showed that 11,100 pieces of ivory carvings were auctioned in 2011 on the mainland alone (excluding Hong Kong) for a total sales volume of US$94 million, representing an increase of 170 percent from 2010.
The dramatic increase in the price of ivory reflects a strong demand for ivory in China. With other investment options diminishing, ivory and the parts and products of other endangered wildlife species are increasingly promoted by traders and investors for their so-called “inflation proof investment value.” Ivory is considered “white gold” by people seeking to demonstrate their wealth and status. The rarer the animal, the more it is coveted by wealthy consumers and investors, a growing cohort in China.
Ivory carving has always been seen as a status symbol in Chinese societies. But possessing ivory products was previously for the enjoyment of the privileged few. The dramatic increase in consumer power among the Chinese, combined with the cultural interest in defining status, drove the escalation in the consumption of many luxury products.
Since most Chinese consumers are law abiding, and law-abiding people assume illegal products are not easily obtained, they worry about the stigma attached to buying and using what is considered contraband on the international market. But when a grey market is created, where ivory is illegal in some cases and legal in others, consumers can easily become confused, mistaking availability for legality.
The market availability and accessibility of ivory has diminished the stigma attached to ivory consumption in many people’s minds and stimulated their desire to acquire ivory. The cultural and social qualities associated with ivory carvings at the same time made them a perfect fit as a luxury product for collecting, possessing, and gifting. Displaying, wearing, and presenting ivory as gifts is seen as elevating a person’s social status.
Compounding the removal of the stigma in Chinese consumers’ minds is a widely held misconception: A poll commissioned in 2007 by the International Fund for Animal Welfare (IFAW) found that 70 percent of the Chinese did not know that ivory comes from dead elephants. In Chinese, the word ivory literally is “elephant teeth.” So people generally believe that as with a person, an elephant’s teeth can fall off, and it doesn’t have to die.
Hindering Law Enforcement
The grey market created when legal and illegal markets exist in parallel is a wildlife criminal’s dream come true. There exist excellent opportunities for trading ivory from all sources—legal and illegal—by mixing contraband ivory with look-alike legal stock.
Customs and wildlife law enforcement agencies in China have made progress in breaking international ivory smuggling rings and seizing large amount of trafficked ivory across international borders.
However, officials from these agencies are constantly frustrated by the difficulty of distinguishing between ivory from poached elephants once it enters the market and is mixed with that from legal sources.
IFAW’s 2012 report, Making a Killing, found widespread abuse of the ivory trade control system and a flourishing market for illegal ivory.
China’s ivory registration and certification system stipulates that only government-approved ivory processing and retail outlets are allowed to engage in ivory trading. But of the 158 ivory carving factories and retail outlets visited in our month-long survey in 2011, 101 were unlicensed and operating illegally.
What’s more, we found that illegal ivory trading activities were taking place in legal facilities. Among the licensed facilities, 59.6 percent were found to violate the system in some way to launder illegal ivory.
One ivory carving factory owner admitted to investigators: “The government-issued legal ivory can last me only one month of a year.” That means 91 percent of the ivory that goes through the factory comes from illegal sources.
To supply the illegal market with ivory from poached elephants was exactly what a convicted ivory smuggler named Chen Zhong did. Under the disguise of a government-approved license to carve legal ivory, Chen led a smuggling ring that trafficked 7.7 tonnes of ivory from Africa to China in 2011.
Higher Profit Margin for Trading Illegal Ivory
While removing the stigma attached to ivory consumption, the grey market also created an incentive for trading in illegal ivory from poached elephants.
The Environmental Investigation Agency (EIA) revealed in its Blood Ivory report (2012) that the ivory from the second “one-off” sale was bought at an average price of U.S. $157 per kilo.
Yet the licensed ivory carving factory owners paid as much as U.S. $1,500 per kilo to purchase ivory from the government-owned stockpile. The huge mark-up for the legal ivory forced many licensed ivory carving factory owners to source the much cheaper illegal ivory to increase their profit.
The IFAW investigation also found that in the Chinese market, the wholesale price of ivory, after adjustment for inflation, has increased nearly three times from 2006 to 2011.
During that period, the Chinese Yuan (RMB) strengthened against the U.S. Dollar (USD). This currency fluctuation provides a Chinese ivory buyer who converts RMB to USD in the markets outside China where illegal ivory could be sourced more purchasing power. When the trader smuggles this ivory back to China for sale, the profit margin is huge.
The story of the global ivory trade is not the simple economic tale that Stiles likes to spin from his ivory tower in Africa. It is naïve to think the “ivory shipped in a sealed container directly from African government storerooms to Asian government receiving points” would somehow be safe.
Corruption is embedded in the entire trade chain, from Africa to Asia. Six out of the eight countries identified by CITES as the worst offenders in the illegal ivory trade globally are in the bottom half of the world’s most corruption-affected countries (out of the 175 assessed), according to the Transparency International’s Corruption Index 2013.
From poaching to trafficking to consumption in endangered wildlife, every link in the trade chain is causing horrific suffering to individual animals and driving these endangered species tragically close to extinction. To save elephants in the wild, we have smash every link in the chain.
We need to reinvigorate demand reduction campaigns. Be it a small trinket or an elaborate work of art, every piece of ivory comes from a dead elephant. Demand reduction campaigns need to have very clear messages to stigmatize ivory consumption and ivory trading.
Recent public awareness campaigns have shown promise in the midst of an upward trend in ivory demand. IFAW’s “Mom, I have teeth” campaign enlightening Chinese consumers about the link between ivory trading and elephant poaching, had reduced the propensity of Chinese to purchase ivory from 54 percent to 26 percent. Among past ivory buyers, those reached by IFAW’s ad campaign who say they will not buy ivory in future doubled from 33 percent to 66 percent.
“When the buying stops, the killing can too,” says retired Chinese basketball star Yao Ming in a WildAid video aimed at discouraging consumer interest in elephant ivory.
But the buying won’t stop amid a confusion of murky policies, contradictory laws, inconsistent enforcement, demand-stimulation efforts, and grey markets that give criminals incentives and opportunities for mixing contraband with legal ivory.
Zero Tolerance for Online Wildlife Trading
We need clear and unambiguous laws to condemn the trade of endangered species. In the absence of a ban on ivory trading in China, IFAW persuaded government agencies and private industries to make certain marketplaces unavailable for ivory trading.
China’s online population has increased from 15 million in 1999 to 618 million by 2013. The zero tolerance policy against online wildlife trading taken by China’s leading Internet companies has shown that making online marketplaces unavailable for wildlife trading, combined with enforcement, not only reduces the trade but helps stigmatize wildlife consumption.
Taobao, a subsidiary of e-commerce giant Alibaba and China’s leading online C2C website, banned ivory trading as early as 2008. Led by Taobao, many other online trading companies, including art and antique collection websites, have since put ivory on the prohibited products list, contributing to a sustained reduction of online ivory trading.
The reduction in the trading of ivory art for investment in 2012, which Stiles erroneously took for falling demand, was the direct result of a government trade ban of endangered species in auctions.
Following a tip-off from IFAW in December 2011, Chinese wildlife enforcement authorities halted the sale of more than 400 bottles of tiger bone wine and of rhino horn carvings at a high-profile auction in a hotel in Beijing. China’s State Forestry Administration followed the blocked auction with an emergency notice banning the auction of tiger bone, rhino horn, and elephant ivory.
The ban had an immediate impact. We saw at the beginning of 2012 that many auctions of endangered species were canceled across the country.
According to the China Association of Auctioneers, an industry trade group, the auction trade ban caused a 30-40 percent reduction in mainland China’s overall auction turnover in 2012, representing US $322 million in sales value. “The total turnover of China’s antique and art auctions in 2012 halved year-on-year to 27.9 billion yuan (US $4.5 billion), the first fall since the global financial crisis in 2008,” said the association’s spokesperson.
In China, government actions can have an immediate impact on the market and on demand. We’ve seen that in the recent government austerity campaigns. By banning shark fin consumption in official banquets, the campaign stigmatized shark fin consumption resulting in the sharp reduction of shark fin trading in the region almost overnight.
Shifting Public Attitude
Targeting wildlife consumption and trade in the government anti-corruption campaigns is overwhelmingly popular in China. Recognizing the links between wildlife trading and corruption and decadence, a more enlightened Chinese public supports government actions to ban ivory trading, expressed in surveys by IFAW, WildAid, and National Geographic.
An IFAW survey shows that 60 percent of respondents say the most compelling reason for them to stop buying ivory would be if ivory buying was made illegal in all circumstances. This would be even more compelling if backed up by a strong recommendation from a government leader.
In a WildAid survey in China, 94 percent of all residents agreed that the Chinese government should impose a ban on the ivory trade to help stop poaching of elephants in Africa.
China Holds the Key
It’s not an exaggeration to say that China holds the key to saving the world’s elephants. A new peer-reviewed study documented that 100,000 elephants were killed in Africa for their ivory from 2010-2012. The grey market in China is to blame for feeding the high and unsustainable rates of killing.
China bears the world’s condemnation for the poaching of elephants. The reputational risk is something of which the Chinese government is highly aware. A study released in June, titled Leonardo’s Sailors: A Review of the Economic Analysis of Wildlife Trade, by Alejandro Nadal and Francisco Aguayo of the University of Manchester, has come out clearly against arguments for a legal trade.
To counter a rash of reports that support the measure, the authors argue that wildlife trading does not “behave as self-regulating mechanisms that smoothly lead to equilibrium allocations and therefore to economic efficiency” and any economic analysis of it “appears to have been trapped in the backwaters of textbook economics,” thus ripping apart the assumptions of the canonical pro-trade argument.
They conclude that “little or no attention has been given to the analysis of economic policies that are relevant to conservation and wildlife protection, including the fiscal resources needed for effective institutional capacity,” for which IFAW has been pleading for more than a decade.
I also agree with the famous quote sometimes attributed to Albert Einstein: “Insanity is doing the same thing over and over again and expecting different results.”
What’s more insane is insisting that more legal ivory trading somehow will miraculously stop poaching and ease demand, when history has shown the devastating effects repeated legal ivory sales have on markets, consumers, and more importantly on elephants.
Let’s stop the calls for a regulated legal trade of ivory and focus on the work that needs to be done to protect elephants, from stopping poaching to stopping trafficking to stopping demand.
Time is running out for elephants.
Grace Gabriel is Asia Regional Director of the International Fund for Animal Welfare.