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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.

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Smuggling and the Global Firm

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  1. Smuggling and the Global Firm • Smuggling is the illegal importation of legal goods; e.g cars, cigarettes, and refrigerators.

  2. 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.

  3. 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?

  4. 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

  5. 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.”

  6. 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.

  7. 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.

  8. Global Firms Face New Realities • Governments are watching. • Cleaning up smuggling within the firm can be costly.

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