The complete GAO Report, TOBACCO TRADE Duty-Free Cigarettes Sold in Unlimited Quantities on the U.S.-Mexico Border Pose Customs Challenges (GAO-18-21) available is here. Below are excerpts.
From: US GAO
U.S. agency officials said that some smuggling of duty-free cigarettes across the southwest border has links to organized crime, supplies the illicit tobacco market in Mexico, and poses oversight challenges. ICE officials told us that transnational criminal organizations use smuggled, duty-free cigarettes to launder money and generate revenue. Furthermore, a Mexican customs official noted that relatively inexpensive cigarettes manufactured in the United States, which cannot legally be sold in the United States or in Mexico, are routinely sold for export from duty-free stores on the southwest border; such cigarettes are then smuggled across to supply Mexico’s illicit tobacco market. One brand of such cigarettes has been cited in recent studies as a significant part of the illicit tobacco trade in Mexico. U.S. officials reported that their efforts to counter the illicit movement of duty-free cigarettes face challenges related to the purchaser’s ability to buy duty-free cigarettes in unlimited quantities and to use passenger, not commercial, crossings from the United States into Mexico.33 According to U.S. officials, while U.S. agencies do not have the authority to seize exports that violate Mexico’s laws related to these cigarettes, U.S. officials reported working with Mexican officials on activities to enforce the customs laws and regulations of both countries
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Relatively inexpensive cigarettes manufactured in the United States, which, according to a Mexican customs official, do not meet requirements for sale in Mexico are routinely sold at duty-free stores on the southwest border. According to this Mexican customs official, one particular brand of cigarettes, which is sold exclusively at U.S. duty-free stores, is prohibited for commercial distribution in Mexico because the cigarettes do not comply with packaging and labeling regulations, including those related to health messages. This brand of U.S.-made cigarettes has been among the illicitly trafficked cigarettes that the Mexican government confiscated at various locations in the country from 2012 through 2015.
