Smuggling does not respect borders and affects up to 2% of LA's GDP


Edson Vismona (*)

Illicit trade directly affects tax collection, public policy development, consumer health and job creation. However, the situation is even more serious, since we are also dealing with national security, since organized crime, which feeds on smuggling, is dominating the border regions of Brazil and other countries in Latin America.

As such, smuggling is no longer just a local concern and has taken on a regional-continental dimension. It is estimated that each year Latin America loses between 0,9% and 2% of its GDP due to illegal trade. In order to try to find alternatives in the fight against these illicit acts, the Latin American Anti-Smuggling Alliance, which is composed of 15 countries: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela.

The first meeting of the Alliance was held in early October in Bogotá, the capital of Colombia. Representatives of governments, civil associations, companies and unions in the member countries met to discuss and establish shared actions that allow greater control over the illegal trade in cigarettes, textiles, beverages, food, plastics and metals.

Based on the discussions, an action plan against illicit trade - contemplating several proposals evaluated at the meeting - will be formalized and presented during the 25th Iberoamerican Summit of Heads of State and Government, to be held in Cartagena, Colombia, on the 28th and October 29.

 Today, cigarette smuggling is one of the most serious issues, and Brazil is one of the most affected by this illicit market. To get an idea of ​​the extent of the problem, in Brazil, 30% of the cigarette market is dominated by brands from Paraguay that enter the country without paying taxes, without generating jobs and without respecting the rules of health surveillance. In 2015 alone, this volume represented a tax evasion of R $ 4,9 billion to public coffers, an amount that could have been invested in areas such as health, safety, housing or even other public policies.

It is worth remembering that one of the main causes for the increase in smuggling is the amazing difference that exists between the prices of products - the result of absolutely unequal tax policies between countries. While in Paraguay cigarettes pay taxes that do not exceed 16%, in Brazil this percentage can reach more than 80%. In other words, the greater the tax burden on national products, the more competitive they become, which are illegal, and the more the population suffers from the increase in crime and the trafficking of drugs and weapons.

To try to reverse this scenario, one of the measures proposed during the Alliance's workshop was to establish cooperation between countries for a joint tax calibration. This movement is essential for combating the illicit trade of various products and can have significant effects in reducing the enormous competitive advantage that smugglers have over legally established industries.

Another cause that must be tackled is the massive supply of illegal products. In the case of Brazil and other Latin American countries, there is a shortage of agents - in addition to inadequate infrastructure in all squares and stations - to inhibit the entry and distribution of these products that move freely across border regions. Intelligent articulation between countries is needed, with an exchange of information online and also with structured actions to control free trade zones and customs regimes.

By participating in the initiative of the Latin American Anti-Counterfeiting Alliance, we identified an opportunity for the countries involved, including Brazil, to find common ways to combat illegal activities, which do not respect borders, governments and police authorities. Without coordinated work, with intelligence and mutual cooperation, we will hardly be able to overcome this great transnational challenge.

(*) Article published on UOL on 17/10