Smuggling

The Smuggling Business

Smuggling is an extraordinarily diverse business practice. Today, it includes trafficking in psychoactive substances (such as cocaine, heroin, and marijuana), weapons and weapons materials, stolen vehicles, hazardous waste and chlorofluorocarbons (CFCs), art and antiquities, precious stones and metals, money, pornography, animals and animal products, people, and even body parts (thanks to technologies that make it possible to preserve and transport organs such as kidneys and livers). While the economic importance of smuggling is enormous, it is obviously impossible to measure with any precision. “Guesstimates” of the total value of drug smuggling range from $180 billion to over $300 billion. If these numbers are even remotely accurate, illegal drugs are one of the world's leading industries. Other smuggling activities are more obscure but still substantial. Animal smuggling, for example, is roughly a $10 billion a year trade. Smuggling contributes to massive money laundering, which the International Monetary Fund estimates at $500 billion per year. The global significance of smuggling is that there is not just a formal, aboveground dimension of globalization but also an informal, underground dimension. This is the less celebrated side of the process of economic integration.

Laws and consumer demand determine what smugglers smuggle. High tariffs encourage illegal trade in [Page 1520]legal commodities to avoid import or export duties. Loss of revenue from evasion of duties has long been a core state concern. In the case of the United States, for example, taxes on imports were the single most important source of revenue for the federal government until early in the twentieth century. In today's world of relatively low tariffs, smuggling tends to shift from evading tariffs on legal commodities to evading prohibitions on commodities deemed undesirable (though variations in domestic taxes and prices on some products, such as tobacco, pharmaceuticals, and alcohol, continue to generate strong incentives for smuggling legal goods). Accompanying the general liberalization of trade has been the selective criminalization of trade. Some prohibitions, such as those against toxic waste dumping, trade in endangered species, and the laundering of money, were not even defined as crimes until relatively recently.

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