Data on Smuggling in Central America

"If the calculations made for Guatemala in 2013 and 2014 are taken as a reference for other Central American countries, the volume of illegal trade in the region, could be between 3.4% and 4% of GDP".

Thursday, April 16, 2015

"If the calculations made for Guatemala in 2013 and 2014 are taken as a reference for other Central American countries, the volume of illegal trade in the region, could be between 3.4% and 4% of GDP".

From the executive summary of the report "Illegal trade and customs fraud in Central America" ​​, prepared by the Association for Research and Social Studies (Asies):

Illicit trade is an activity that encompasses various crimes such as smuggling, customs fraud, piracy, corruption, passive bribery, and many others, which are having a growing negative impact on societies and countries.

Central America is not immune to the harmful effects of these highly lucrative illicit activities, and which are a source of other criminal activities such as drug trafficking, illegal arms trading and the illegal trade in people. The evidence shows how this has ceased to be a local phenomenon, becoming one which is regional and transboundary in nature.

Earnings for individuals and groups engaged in illicit trade are so high, that the accumulated power has been an incentive to accumulate wealth, and increasingly territorial control political power. This reality is fed from a sociological phenomenon of equal concern, acceptance and tolerance of society, particularly in border areas, to many of the activities arising from the illegal trade, such as accepting as normal purchase and sale of contraband products or promote the livelihoods of those engaged
to these activities.

Notwithstanding the foregoing, the scientific and systematic study of illegal trade in the region is almost nonexistent, because there is no international consensus on methodologies capable of giving accurate analytical instruments. Moreover, little information and data generated by public authorities and economic sectors affected, do not provide enough raw material for
independent investigations. Without these data, it is very difficult to formulate public policies that aim to reduce or eradicate the illicit trade flows.

This study sought to establish baseline data to quantify the value of the illegal trade in the countries of the region, taking as references several papers published on the subject in Guatemala, but the absence or inconsistency of data, little cooperation from the authorities with little investigated and methodological development, they failed to achieve all
expected results.

However, investigations, stresses that the problem of illegal trade has deep roots in Central American history, particularly during the colonial era. It is more than anecdotal note how early nineteenth century decisions public, the same or similar policy to which even today are presented to counter smuggling and customs fraud were taken.
If the calculations made to Guatemala in 2013 and 2014 are taken as reference for other Central American countries, the volume of illegal trade in the region, could be between 3.4 and 4.0% of its GDP (US $ 5.880 billion ).

Having an analysis of illegal trade in Central America is valuable because there is a similar study, and therefore isa starting point for public policies aimed at reducing and preventing illegal activities of smuggling and customs fraud.

The region must aim for integration as an economic bloc, in order to be more competitive in commercial terms, but also to make decisions together, to strengthen its institutions, in this case the customs and border points. The use of uniform procedures throughout Central facilitates the movement of goods and therefore can make efficient use of resources and combating illegal practices.

The cooperation agreements between the countries of Central America are essential to strengthen procedures applied in the customs valuation of goods issues, taxation, verification of goods, among others. In this regard, it must recover all the potential in the prevention and combating of illicit trade is already in agreements, treaties and regional conventions. The regulatory framework and sanctions derived from the integration process must also be aligned along the region to strongly discourage this type of illegal practices. The strengthening of controls and verification at customs is important, but using modern equipment to facilitate trade rather than delayed.

The regional competition policy, which is in the process of formulation derived Association Agreement with the European Union, can be an important stimulus to reduce the incentives that cause illegal trade.

Similarly, as the level of advancement deepening regional integration will have to address the issue of pricing and subsidy sensitive products as part of a process of trade freedom, because the sharp disparities between countries have an incentive to illicit trade.

It is important to make this type of research and estimates, especially the effects that illegal practices have on the economy and society to create awareness inthe citizens how damaging it is to accept this type of activity in society. This is to prevent the consumption of these items is encouraged.

Updating the methodologies for calculating national accounts of each country, including the calculation of unobserved economy should be promoted.

See here the full report Asies Guatemala: " Contraband and customs fraud in Central America "

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