Transcript Smuggling and the Global Firm

Smuggling and the
Global Firm
• Smuggling is the illegal
importation of legal goods; e.g
cars, cigarettes, and
refrigerators.
The Mexican Paradigm
(1996)
• Smuggling decreases but
doesn’t disappear with trade
liberalization.
• Smugglers evolve from Robin
Hoods to organized crime.
• Global firms must understand
the ramifications of smuggling
and its potential problems.
New Questions:
• To what extent do global firms
appreciate smuggling and
cooperate with it?
• To what extent can governments
hold global firms culpable for
their participation in
smuggling?
This paper exams
• The role of global firms in the
Black Market Peso Exchange
(BMPE)
• The British American Tobacco
smuggling scandal
• Litigation by foreign
governments against U.S.
tobacco companies under RICO
Global Firms and
BMPE
• Synergies exist between Colombian
narcotic traffickers trying to launder
drug dollars and smugglers of
consumer goods into Latin America.
• June 2000, the U.S. Justice
Department begins talks with
Hewlett-Packard, Ford, Whirlpool,
General Motors, SONY,
Westinghouse and General Electric.
• Talks rumored as “bogging down in
legal murk.”
The BAT Scandal
• BAT archives were made public
as part of resolved health
lawsuits in the United States.
• BAT clearly assisted smugglers
of their brands.
Litigation Under RICO
• Suits are aimed primarily at
R.J.Reynolds and Philip Morris.
• Plaintiffs include Canada,
Colombia, Ecuador, and the
European Union.
• Plaintiff suits have been stymied
by the Revenue Rule.
• The USA Patriot Act became
the target of intense lobbying by
the U.S. tobacco industry.
Global Firms Face New
Realities
• Governments are watching.
• Cleaning up smuggling within
the firm can be costly.