Because the current legal framework is ineffective, Guatemalan entrepreneurs in the food sector are asking the government to draft a new law that would criminalize smuggling and also consider it a matter of national security.
Directives of the Guatemalan Chamber of Food and Beverages (CGAB) assure that the current Decree 58-90 "Law Against Fraud and Contraband" is obsolete and does not allow for direct and frontal combat against contraband.
Agricultural producers report that the smuggling of corn from Mexico has increased in recent years, and it is estimated that currently the consumption of grain entering illegally accounts for 25% of total demand.
According to farmers, smuggled corn competes unfairly with local production, since in Mexico producers enjoy tax exemptions and state subsidies.
Panamanian producers report that every week between 5 thousand and 7 thousand hundredweight of tomatoes enter the country illegally from Costa Rica, in addition to other agricultural products.
Producers in the province of Chiriquí claim that smuggling from the neighboring country is not limited to agricultural products, but also occurs with materials for production.
As expected after any government intervention in a market, the price consumers pay for the product has increased and a black market has been created, encouraging smuggling.
And the Costa Rican State itself risks having to pay millions in compensation for convictions for failing to comply with the procedures established by the WTO after blocking imports of avocados from Mexico.
As a measure to discourage smuggling, the taxable limit for withholding income tax on the export of live cattle has been reduced.
The Federation of Livestock Associations of Nicaragua (Faganic) welcomed the decision to reduce the limit for incurring income tax, believing that it will be an incentive to reduce smuggling of cattle and allowing more to be exported through the formal market.
Exporters warn that the proposal to retain $5 for every three or four pounds of exportable quintal will reduce competitiveness and encourage smuggling.
The bill introduced in Congress days ago cites the retention of $5 for every three or four pounds of exportable quintal in order to constitute a fund to support coffee growers affected by rust. Exporters believe that this measure will only encourage more smuggling and reduce the product's competitiveness internationally.
Products such as coffee, bananas, tomatoes and cucumbers are illegally entering Panama with authorities being unable to stop them.
It is farmers of these products who are complaining about the situation, claiming that there is unfair competition because the merchandise is being sold on the market at much lower prices than the local products.
Coming from Costa Rica is "everything we sow and cultivate both in Baru as well as Renacimiento, and it is sold without any controls on the Panamanian side," said producer Pedro Rodríguez.
Guatemala's Conacon estimates that the state loses no less than $1.6 billion a year in unpaid taxes due to contraband.
The information was released by Manuel Chocano, Executive Secretary of the National Commission for the Prevention and Combating of Customs Fraud and Smuggling (Conacon).
The official said that the problem is getting worse as in previous years the illegal trade amounted to about $1.25 billion.
Central American Business Chambers call for stopping unfair trade in both directions between the two countries.
"We must, as soon as possible, stop the illegal movement of goods from Guatemala to the southern border of Chiapas, in order to be able to aspire to making progress on all our objectives in this new era of trade between Mexico and Central America," said Jose Mejia, president of the Central American Binational Union of Chambers of Commerce, Industry and Investment.
As of July 9 full legislation comes into full effect which seeks to prevent the entry of weapons or contraband into the United States.
From an article by the Costa Rican Foreign Trade Promotion Office (PROCOMER):
On November 25, 2008, the Customs and Border Protection (CBP) published the regulations for Importer Security Filing (ISF 10 +2) which requires importers and carriers to submit additional cargo information to the CBP before the goods are shipped to the U.S.
Central American industry is calling for strengthening of customs controls in the region, in order to contain the constant border crossings made with smuggled goods.
According to Carlos Enrique Rivera, secretary general of the Federation of Chambers and Industrial Associations of Central America and the Dominican Republic (FECAICA), at the border located in Melchor de Mencos, Peten, which borders Belize, there is no control to prevent the entry of illegal goods, which apparently heads toward Mexico, but 15% remains in Guatemala, without having made tax declarations.
Anti smuggling operations are working, resulting in tax collections by Customs grow by 3%.
From a publication in Diario de Centro América:
Working together to reduce smuggling
The first quarterly report of the National Commission Against Contraband (CONACON) contains encouraging news: From June to September smuggling has been reduced and customs revenue increased 3%.
The companies engaged in importing and distributing fine liquors have indicate that the high tariffs on these products are encouraging smuggling.
An article in Siglo21.com.gt quotes the president of Distribuidora Alcazarén, Mariano Vadillo Portabella, who said: "the problem is so severe, that there are smugglers do not even need to use front companies to break the law, but go from person to person making individual visits to offer their products at very low costs, although with risks to consumer health, as the products do not meet the relevant standards and may have been tampered with".
Businesses in Guatemala have suggested creating an anti-smuggling unit made up of the Public Ministry and the National Civil Police Force.
The members of the Chamber of Industry of Guatemala (CIG) proposed to the Vice President Roxana Baldetti that a series of measures be taken to combat smuggling, which is affecting trade.
An important proposal is to create anti-smuggling unit made up of the Public Ministry and the National Civil Police.