The Great Leveler

TRADE & COMMERCE

"This evil thing," said a harassed Argentine official, "is like a huge centipede, a giant having 100 heads and thousands of feet, favored by the vast extent of our frontiers, by haphazard legislation piled up over the years, by a lack of definite means of combatting it." Communism? Not this time. The official was bemoaning a corrupting force that antedates even Marx--the legion of Latin American smugglers who, to the policeman's dismay and consumer's delight, control some 20% of Latin America's import trade.

In Buenos Aires last week, customs officials were auctioning off a $100 million hoard of contraband--1,500 cars, mountains of nylons, radios and TV sets --confiscated over the last few years. It was only the merest drop in a very deep bucket. By conservative estimate, Argentine smugglers will do a $300 million business this year, while their counterparts in Brazil will gross an even handsomer $400 million. Total sales for all Latin America are well over $1 billion annually.

Camels with the Corvina. Latin Americans may differ on politics, on soccer stars, on blondes v. brunettes. But smuggling is the great leveler and common denominator. Domestic indus tries cannot supply the varied needs of the developing countries, and protective governments aggravate the shortages by slapping prohibitive tariffs on imports. The official purpose seems noble: to help fight inflation, make domestic goods more competitive, and generally steer economies along tried and proven channels. In the Dominican Republic duties average 70% of value; in Colombia they run up to 150% on some items, while Argentina charges 200% on such treasured goods as steak sauce, toys and perfume.

So almost everybody smuggles, from big-time professionals to the lowly fisherman who returns with a case or two of cigarettes along with his corvina. Last month customs men in Buenos Aires decided to have a look at are turning Argentine courier's suspiciously bulky duffel bag, all duly marked and sealed as a "diplomatic pouch." It contained 124 blue mink pelts. And then there is the army of "ant smugglers," the ordinary travelers who sneak everything from gems to Japanese cameras across the porous borders in their bulging luggage.

In Brazil, where smugglers bring in an estimated 250,000 transistor radios each year, one Japanese model that retails legally for $46 costs $7.50 at your friendly smuggler's outlet. Guatemalans smuggle almost anything made in Mexico; Costa Rica's national lottery is pretty unexciting, so Costa Ricans slip in big wads of tickets from Panama, where the payoff is bigger. In Chile Camay soap rates high, since local brands are sudsless--and expensive. Scotch whisky is a durable favorite everywhere. (Enterprising Argentine distillers now produce under license a domestic brand labeled "Old Smuggler," but it cannot quite pass the hangover test, and customers still prefer the imported stuff.) U.S. autos bring a 300% markup on the legal market in Argentina, and there is a thriving undercover import business in crates marked "agricultural equipment." An even more sophisticated wrinkle is smuggling airplanes: near the seaside resort of Mar del Plata, Argentine police are currently investigating a shipment of planes--53 contraband Cessnas and Pipers--smuggled in piece by piece. At a rough estimate, the haul would have been worth $1,000,000 to the smugglers.

Diamonds in Chocolate Bars. By ground, sea and air--they come. The Chilean navy recently fought a noisy battle with the crew of a freighter loaded with a contraband cargo of cigarettes, whisky and, of course, soap. In Venezuela police found themselves confiscating the same launch three times--the smugglers simply kept buying it back at auction. In Argentina one crafty operator kept police baffled by using two planes with the same markings and registration--one for smuggling and one for legitimate freight. Other pros ship Scotch in gasoline tankers, diamonds in chunky chocolate bars, cigarettes under false truck floor boards.

To cope with the smugglers, Peru, Colombia and Ecuador are strengthening their border patrols. Practically every nation is tightening customs regulations. Argentina has gone so far as to bar all imports of furs, Scotch, cigarettes, toys, nylons and sporting equipment. But since no one took the trouble to check the stocks at the time of prohibition, storekeepers have inexhaustible inventories left over--naturally--from before.

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