Illicit trade thrives in Central America, from cigarettes to agrochemicals: Tracit

Central America faces a significant challenge with the pervasive illicit trade of a wide array of products, including tobacco, agrochemicals, counterfeit goods, and pharmaceuticals. The Transnational Alliance to Combat Illicit Trade (Tracit) attributes this widespread issue to factors such as inadequate customs control, particularly in free trade zones, and weaknesses within supply chain intermediaries.

A recent "Assessment of Central America's Performance in the Illicit Trade Index" by Tracit highlights the region's struggles. While Costa Rica and Panama rank highest among Central American nations in the 2025 index, positioned at 68th and 81st globally respectively, their scores indicate room for improvement. The global average score suggests that most governments are ill-equipped to prevent or mitigate illicit trade effectively.

The report details systemic issues fueling illicit commerce across Central America. These include significant gaps in supply chain monitoring, the extensive misuse of free trade zones like Panama's Colón Free Zone and Belize's Corozal, high levels of informal economic activity, entrenched corruption, and uneven government oversight capabilities.

Specifically, the report points to the high volume of re-exports handled by major free trade zones, often with limited transparency regarding beneficial ownership and minimal physical inspection of high-risk goods like cigarettes and spirits. Tracit proposes that customs authorities be formally granted unrestricted jurisdiction over these zones to enforce laws effectively.

Overall, the evidence suggests a deeply interconnected regional network of illicit trade in tobacco, alcohol, counterfeit items, and other consumer goods, alongside illegal logging and mining. Addressing these complex challenges requires comprehensive regulatory reforms and enhanced governmental control over logistical chains.