CASE NUMBER: 347

CASE MNEMONIC: MOHAWK

CASE NAME: Mohawk Trade

• IDENTIFICATION
• LEGAL CLUSTERS
• GEOGRAPHIC CLUSTERS
• TRADE CLUSTERS
• ENVIRONMENT CLUSTERS
• OTHER FACTORS

I. Identification

1. The Issue

Canada is being inundated with black market items, especially what the government considers to be illegally imported cigarettes. While there are numerous parties and individuals involved in the smuggling of cigarettes, the main focus of the government of Canada (GOC) is on the importers of the Mohawk Nation. Mohawks are able to buy cigarettes at one-quarter the cost in Canada, sell those cigarettes to non-natives who come to the Reserve, and make a considerable profit. The Akewesane Reserve "bridge" the U.S.-Canadian border, a border that the Mohawks do not acknowledge. As the governments of Canada and the United States do recognize that border, however, it can be argued that Mohawk traders are legally buying cigarettes in the U.S. and legally selling them in Canada within the boundaries of the Reserve. The GOC sees the actions as smuggling contraband across borders and is ready to take strong measures to curtail the activity.

2. Description

Smoking is an expensive activity in Canada. Beginning in 1987, the federal and local governments imposed "sin taxes" on cigarettes which amount to a 400 percent tax. The tax has a two-fold mission: to curb smoking and to raise tax revenue. The taxes also make it cheaper for Canadian tobacco manufacturers to export cigarettes than to sell them domestically. The illegal cigarette trade not only counteracts the purpose of the sin tax, it makes the tobacco manufacturers substantial profits, (giving rise to accusations by some anti-smoking groups that the manufacturers are encouraging the smuggling), and it focuses attention upon the issue of native people's rights and sovereignty.

Government officials estimate that billions of sin tax dollars have been and will continue to be lost because of the illegal cigarette imports. Most of the cigarettes are allegedly being transported through the Akwesasne Reserve by Mohawks. It is not illegal for Mohawks to purchase cigarettes in the U.S. for personal consumption. Cigarette purchases become an issue when sold to non-natives who come to buy them on the reserve, or when those cigarettes are transported (smuggled) and distributed across the country. Police officials also allege that organized crime will form and grow out of the smuggling.

The tobacco manufacturers have urged the GOC to lower the sin tax to the level of U.S. taxes as one way to discourage illegal trade. Anti-smoking watch dog groups have raised the fact that the tobacco companies benefit from the situation no matter what actions are taken. Manufacturers pay tobacco farmers less for tobacco that is exported. And between 1990 and 1991, cigarettes sold by manufacturers on the export duty free market rose from 3.2 billion to 9 billion cigarettes. Of those cigarettes exported, an estimated 6 billion were smuggled back into the country. As it is cheaper to export cigarettes than to sell them domestically, the manufacturers are making substantial profits.

The issue, to Mohawk traders, is one of trade and not of smuggling. The Mohawks view themselves as a nation within two nations, and Natives engaged in the cigarette trade view it as a matter of international trade. To many Mohawks, the cigarette issue is really another manifestation of the GOC's challenge to their national sovereignty. The Mohawks are also insisting that the GOC recognize the 1794 Jay Treaty that allows Mohawks to transport any goods the want across the U.S.-Canadian border without paying taxes. The Canadians maintain that they do not have to honor the treaty as it was signed by the Americans and the British. Fresh in the mind of many Mohawks is the 1990 Oka Crisis, in which Mohawk holy territory was taken by the GOC and used to build a golf course. The Crisis escalated into physical violence, in which several people were killed. Tensions are rising on Reserves throughout Canada, especially on those that are solely on Canadian soil. In October, 1992, a police raid and confiscation of cigarettes was responded to by a protest by 400 Manitoba Natives who blocked a U.S. border crossing in response to the "illegal" police raid. The cigarette trade issue has become an issue of self-determination.

Another important aspect of this dispute is the increasing violence accompanying the trade. Over the past five years, 75 members of the Mohawk nation have been killed in connection to the trade, an astounding number for a population of 7,000 people.

3. Related Cases

CIGAR Case

LUMMI Case

OTOMI Case

ARTIFACT Case

JAMES Case

HUDSON Case

ECUADOR Case

ESKIMO Case

Keyword Clusters

(1): Forum = USA

(2): Bio-geography = TEMPerate

(3): Trade Product = CIGARettes

4. Draft Author:

II. Legal Clusters

5. Discourse and Status:

The Mohawks assert that they are not smuggling as the cigarettes are legally purchased legally and transported across Mohawk territories. The GOC insists that the Mohawks are smuggling an illegal commodity.

6. Forum and Scope:

The case has an international dimension if one views the Mohawk reserve as a nation within a nation, thus making this case an issue of international trade. Again this designation will vary according to how one chooses to view the nation-hood status of the Mohawk nation.

7. Decision Breadth:

8. Legal Standing:

Some resolution to the case may come the case reaches the courts. The case will into validity the 1794 Jay Treaty as well as laws governing Native self-determination on reservations, which was usually established through treaties. The case bregins with Akwesasne Chief Mike Mitchell who drove a truckload of merchandise across the U.S. -- Canadian border and refused to pay taxes on the merchandise as is required by Canadian law. His lawyer will argue that the Jay Treaty holds because the 1982 Canadian constitution "entrenched natives' treaty rights." How successful Mitchell and his lawyer will be is unknown but there was a decision handed down in 1992 by the Ontario Supreme Court that ruled that the Jay Treaty was not included in the 1982 Constitution.

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: North America [NAMER]

b. Geographic Site: Eastern North America [ENAMER]

c. Geographic Impact: MOHAWK

10. Sub-National Factors:

11. Type of Habitat:

IV. Trade Clusters

12. Type of Measure:

An issue at stake will be whether or not the GOC's ban on cigarette imports will also apply to Native Reserves. Government domestic taxes on cigarettes will also be an important issue, as some researchers for the tobacco manufacturers argue that the demand for illegal cigarettes will diminish if the domestic cost of cigarettes was not astronomical.

13. Direct v. Indirect Impacts:

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES, CIGARettes

b. Indirectly Related to Product: NO

c. Not Related to Product: NO

d. Related to Process: YES, Health

15. Trade Product Identification:

16. Economic Data

17. Impact of Trade Restriction:

18. Industry Sector:

19. Exporters and Importers:

V. Environment Clusters

20. Environmental Problem Type:

21. Name, Type, and Diversity of Species

Name: Birds

Type: Animal/Birds

Diversity: 170 birds per 10,000 km/sq (Brazil)

22. Resource Impact and Effect:

23. Urgency of Problem:

24. Substitutes:

VI. Other Factors