Smuggling of Argentinean products: a way out of unemployment in Bolivia

RIO DE JANEIRO, BRAZIL – A month ago, Bolivian customs summoned the press to witness the destruction of 54 tons of alcoholic beverages seized from smugglers entering products illegally from Argentina. It happened in Tarija, a city located in the southern part of the country and neighboring Argentina.

Wines, liquors, beers, vodkas, and all kinds of beverages were poured into blue barrels to be discarded. Beer brands such as Quilmes, Schneider, and Stella Artois were part of the merchandise. Other brands such as Toro wine were also seen. According to the Customs official, the cost that this merchandise had was BOB 450,000 (US$65,000). “Customs with the intention of helping the country to reactivate the economy is giving a strong fight against smuggling with more patrolling and a complaints line,” explained Lourdes Aldana in a video published by the same government institution.

For Rocio, a Bolivian citizen who sells Argentine wines and foodstuffs without any permit, this is “just a show by the customs officers and only a small part of what actually passes through the borders”. Rocio prefers not to give her full name for fear of reprisals, she knows that her activity is illegal, but she wants to tell her story.

“I worked in a large company for ten years, but they fired me from my job two years ago, and I was left to my own devices. I have two children to support, and I was desperate. A year ago, a cousin from Tucumán, Argentina, told me I should bring food and household products, something many people do because they are cheaper in Argentina,” says Rocío.

After visiting her cousin, Rocio found contacts and returned to Bolivia through the Pocitos border with her first food shipment. “I brought dulce de leche, jams, chocolates, everything. I did well with that; I sold among my neighbors. I made my catalog and sent it in PDF via WhatsApp to several groups, and people buy from me because grocery shopping is much more expensive. I was encouraged to bring drinks for New Year’s, and now I am doing very well with wines; I only sell the box wholesale,” she says.

A wine that usually costs about US$100 in the legal market, Rocío sells for US$30. Her main buyers “are upper class, fine, and well-known people who know about good wines,” she says.

Rocío is not alone. Bloomberg Línea verified that at least five neighborhood groups in different city areas circulate this type of “catalog” of wines and foodstuffs brought from Argentina. Comparatively, the prices are 15% to 50% lower than the Bolivian market. Another seller we contacted offered a case of six bottles of Argentine Rutini Malbec wine for BOB 800, about US$19 per bottle. We compared prices at Tienda Ya, a beverage retailer, and the cost of this wine is US$34 per bottle.

According to data from the Chamber of Industry and Commerce (CAINCO), “at the global level, studies quantify smuggling at around US$2.3 billion, a figure that represents approximately 8% of GDP. Several studies quantify smuggling at between 5% and 10% of GDP”.

For these “entrepreneurs”, contraband products have been a way out of the lack of formal employment, and digital communication through social networks such as Facebook’s MarketPlace or WhatsApp groups are their business platform. According to the National Institute of Statistics (INE), the unemployment rate as of the first quarter of 2022 closed at 5.9%, down from 8.7% in the same period in 2021. However, for Gary Rodriguez, manager of the Bolivian Institute of Foreign Trade (IBCE), smuggling has to do with the lack of quality employment. “This is a serious problem that makes vulnerable people and border populations co-opted by smuggling see this crime as a desperate alternative because they have lost their sources of income in the formal sector,” he explains.

In September 2021, the national customs denounced the looting and burning of a checkpoint ten minutes from Villazón, a border town with Argentina. According to government officials, those responsible were a clan of smugglers operating in the area known as the Tolay family. The smugglers stole what they found in the offices supposedly in retaliation for goods seized from them and then set fire to part of the offices and a vehicle owned by the National Customs. And this is not the only case.

Rodriguez assures that “there are entire populations co-opted by smuggling, and it is no secret that this often has to do with money laundering; therefore, the sale price is of no interest, only that these resources enter the economy”.

“The Argentines are screwed, so they are happy when we bring them dollars, but do not think it is an easy business; there it is with contacts and with care because the smugglers control everything on the border and are heavy people who not only negotiate wines and food but also drug trafficking,” says a seller from the anonymity.

For the IBCE manager, this evil is atavistic. “However, in the last ten years, it has been exacerbated by the weakness of the dollar in our country and a Bolivian currency that has had a fixed exchange rate since 2011, when the current exchange rate was frozen. With internal inflation, it becomes easier and easier to import, legally or illegally, than to produce. That added to the devaluations and depreciations around us”.

Rodriguez, who has been studying the issue for years, considers that the competitive gain is being taken away by Bolivia’s trading partners, reflected in deficit balances in the trade balance between 2015 and 2020. Only in 2021, Bolivia achieved a surplus in trade with the world. And he explains that in the case of smuggling with Argentina, “products such as wines come to have a third of the cost of what it costs to produce the product in Bolivia, so it is impossible to compete. That is why there is a literal invasion of beverages, food, canned food, and even basic products such as grains, sausages, bakery, and others. It affects producers, traders, and all those who are legally established”.

With information from Bloomberg Línea