A cross-border accident waiting to happen

From: Ottawa Citizen

By Brian Lee Crowley

Canada should be uneasy about large-scale smuggling across the border.

Because keeping the border open and goods flowing with our U.S. neighbours is  practically the definition of Canada’s economic self-interest, anything that  attracts the unfavourable attention of Washington to our border is to be avoided  at all costs. Just ask the Mexicans.

That’s why we should all be uneasy about large-scale smuggling across the  border, especially where it involves, as it almost always does, organized  crime.

Consider the so-called 401 Corridor, in which Mohawk communities that  straddle the Canada-U.S. border around Cornwall, Ont. have become a conduit for  a thriving contraband trade.

Contraband cigarettes originating in Mohawk communities on the U.S. side then  pass through the “pipeline” to the Canadian reserves, where they sell for a tiny  fraction of the value of legal cigarettes. Organized crime groups from outside  the territory provide an extensive distribution network throughout Quebec and  Ontario.

Tobacco taxes are generally lower in the U.S., and that differential drives  the smuggling, in which criminal entrepreneurs simply pocket a piece of the  price difference by braving the risk of being caught and punished.

But cigarettes have been trafficked illegally across the border for years.  And in any case, the cigarettes are being smuggled into Canada. Why would  Washington care?

Two reasons. According to research for the Macdonald-Laurier Institute, the  illegal tobacco trade is clearing about $75 million a year in the 401 corridor  alone. That attracts organized crime in a big way and generates ancillary  activities such as bulk cash smuggling and money laundering. The U.S. invests  major resources in trying to disrupt these money flows. They don’t appreciate  breaches in the border anywhere that accommodate these activities.

More disquietingly, although the pipeline may have been created with tobacco  in mind, once the infrastructure exists, you can put almost anything in it. And  some of those things are truly frightening.

I am not even talking about illicit drugs, although there is lots of evidence  that the pipeline has been used to shift marijuana, ecstasy, cocaine and other  drugs in both directions. Better policing has helped to squeeze, but not  eliminate, those activities.

More worrisome are things like weapons, people and counterfeit  merchandise.

Once the infrastructure is in place, and a culture of impunity before the law  established, very little restrains the criminals in charge from putting in other  things.

At the moment a kind of modus vivendi appears to prevail along the 401  corridor. Enforcement efforts focus on drugs and weapons, with tobacco getting a  bit of a free ride, so long as the smugglers stay out of the worse stuff and  keep violence minimal.

Drugs and other dangerous contraband are thus kept under relative control  because while there is money to be made, the chances of being caught and not  enjoying the profits is much greater than with tobacco. In a world where the  police don’t have enough people and equipment to enforce the law, and  politicians don’t have the stomach for a fight with First Nations, this is  probably a rational outcome, although for a society supposedly based on the rule  of law, it is ultimately corrosive of some of our most important  values.

But the face of smuggling is changing. Organized crime is starting to see  that some of the greatest returns from smuggling don’t come from heavily  criminalized activities like drug trafficking and human smuggling. It comes from  smuggling counterfeit products like pharmaceuticals and expensive parts and  equipment.

Roger Bate of the American Enterprise Institute in Washington has spent years  documenting the extent to which phoney drugs are now circulating around the  world, counterfeits that look and feel just like the real thing, but which have  none of their therapeutic properties. And organized crime is now starting to  manufacture what look like high-quality replacement parts for aircraft, for  example, but are in fact cheap and dangerous knock-offs.

Unfortunately, as Bate documents, too often the penalties for such activities  are relatively minor in far too many places, making them highly attractive for  smuggling pipelines always on the lookout for high value contraband that brings  low risk of serious sanctions.

The 401 corridor is, therefore, a cross-border accident waiting to  happen.

High tobacco profits sustain a smuggling infrastructure that can move  anything as long as the price is right, and new products with high profit  margins but low risk are increasingly grabbing the attention of the organized  criminals in charge.

Progress will only come when authorities on both sides of the border take  tobacco smuggling seriously and take the steps to put it, and the pipeline it  supports, out of business. If we could also bring the Mohawks into the  mainstream of economic life and provide attractive economic alternatives for  First Nations youth, we’d close off a major point of vulnerability in our  relationship with the U.S., while clearing up a festering problem at home.

Brian Lee Crowley (twitter.com/brianleecrowley) is managing director of the  Macdonald-Laurier Institute, an independent non-partisan public policy think  tank in Ottawa: macdonaldlaurier.ca


Leave a Reply

Your email address will not be published.

Please Answer: *