Pirates Take the Game

A prominent Mexican business leader is stepping up his calls for authorities to take action against a burgeoning, illegal economy. Jorge Davila, president of the Concanaco-Servytur business association, a grouping which represents merchants and members of the tourism industry, said this week that money made from pirate goods far outstrips legitimate earnings from foreign tourism, migrant remittances and direct foreign investment.

In a Mexico City press conference, Davila claimed that piracy netted $18.75 billion in Mexico during the first three months of 2011. In the same time period, Davila said, international tourism brought in $3.3 billion, migrant remittances about $5.1 billion and direct foreign investment $5 billion.

If Davila’s numbers are on mark, commercial piracy even surpasses income derived from the sale of illegal drugs, which various sources estimate generates somewhere between
$9 and $39 billion annually for the Mexican economy.

Illegally imported or manufactured electronic appliances, DVDs, clothing and countless other goods are very common in Mexico. Since Mexico liberalized its trade policies beginning in the 1980s, the country’s markets have been swamped by products from the US, China and other nations.

The magnitude of the commerce was exhibited last Christmas season when the Mexican army seized seven semi-trailer loads of pirate goods and arrested 17 people in the embattled state of Nuevo Leon. The confiscated products included 60.5 tons of used clothing, 124,000 pieces of new clothing, 50,000 children’s toys, 10,000 sex toys and many more
popular sellers.

In testimony to the Mexican Senate last fall, Economy Minister Bruno Ferrari said piracy was costing the national music, toy, shoe-making and clothing industries billions of dollars in losses.

“We have a great worry. We’ve spoken with industry, with the (business) chambers and with the authorities, in order to see how we could carry out pertinent operations,” Ferrari said.

According to Davila, 13 million Mexicans are employed in the “illegal” economy, or nearly as many as the slightly more than 15 million people registered with the Mexican Social Security Institute (IMSS).

It should be noted that of the 15,090,360 people recently reported as enrolled in the IMSS, only 13,081,753 held permanent jobs, while the remainder had temporary or seasonal agricultural employment.

Davila’s comments came shortly after it was reported that Mexico’s official unemployment rate jumped to 5.74 percent in June, reaching the highest level since
September 2009. Women were most impacted by the spike in the jobless rate, witnessing
a categorical rise in unemployment from 4.74 percent in June 2010 to 5.69 percent in
June 2011.

At the same time, inflation is on the march, hovering at an annual rate of between three and four percent, with the staple tortilla seeing a 14.86 percent price increase from
June 2010 to June 2011. According to the Bank of Mexico, prices for white bread, eggs and milk were also up during the last year.

Davila concurred with government contentions that Mexico had achieved macro-economic stability, but said the overall economic situation had not improved in the “pocketbooks of the people.” Davila blamed “legislative lethargy” for not tackling structural problems like commercial piracy and delaying reforms to put people back to work in legitimate employment.

“The lack of agreement among the political parties, as well as the defense of individual interests, is affecting the advance of the country and its economy, and also not creating the necessary jobs,” he said.

It’s unclear where Davila got his latest figures on earnings from commercial piracy, but if the numbers are accurate they have huge implications for the social, political, economic and legal life of Mexico. Workers in the informal or illegal economy do not pay into the IMSS and financially build up the public health care and retirement systems.

In terms of crime and public corruption, vendors of pirate goods are prime targets of organized gangs that demand “protection” fees, while customs officials are frequently subjected to threats or tempted with bribes.

A lot is said about the strategic value of coastal ports and US border crossings to smugglers of illegal drugs and precursor chemicals, but if Davila is correct then there is even much more money to be made from securing such routes for the importation of pirate commodities, not to mention in the cities, or “plazas,” where they are sold for low prices to an increasingly financially-stressed public.

Sources: La Jornada, July 22 and 23, 2011. Articles by Israel Rodriguez and Susana Gonzalez. Proceso/Apro, September 27, 2010; December 22, 2010; July 27, 2011. Articles by Carlos Acosta Cordova, Juan Carlos Cruz Vargas and editorial staff.

Frontera NorteSur: on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico

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