From: Calgary Herald
By Brain Lee Crowley
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 straddling the Canada-U.S. border around Cornwall, Ont., have become a conduit for a thriving contraband trade.
Contraband cigarettes originating in U.S. Mohawk communities pass through the “pipeline” to the Canadian reserves where they sell for a fraction of the price 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 drives the smuggling, in which criminal entrepreneurs simply pocket a piece of the difference by risking being caught and punished.
But cigarettes have been trafficked illegally across the border for years. And the cigarettes are being smuggled into Canada. Why would Washington care?
Two reasons. According to research for my 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 the money flow. They don’t appreciate breaches in the border anywhere that accommodate this.
What’s more disquieting, 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.
With the infrastructure in place, and a culture of impunity before the law established, very little stops the criminals in charge from putting in other things.
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, 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.
The face of smuggling is changing. Organized crime is starting to see that some of the greatest returns aren’t from trafficking in drugs or humans but from smuggling counterfeit 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 which are cheap and dangerous knock-offs.
Unfortunately, too often the penalties are relatively minor. The 401 corridor is a cross-border accident waiting to happen. High tobacco profits sustain a smuggling infrastructure that can move anything if the price is right.
Progress will only come when U.S and Canadian authorities take tobacco smuggling seriously enough to extinguish it, and the pipeline it supports. If we could bring the Mohawk into mainstream economic life and provide 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 is the managing director of the Macdonald-Laurier Institute, an independent public policy think-tank in Ottawa.
