Our Troops are Coming! II “The counter-order”

There seems to be a bit of confusion in the efficient US Army.

At the beginning of 2001 some Third World countries and the European Union took legal action in the United States to try to get back billions of dollars in tax revenue they had lost on cigarettes smuggled in by Big Tobacco, a group made up mostly of American companies.

A federal judge ruled that, based on the “Revenue Rule,” a longstanding common law doctrine, a Court in America will not take legal action in contraband issues involving the activities of American companies in other countries.

April 26th 2005: for the first time, the Supreme Court said that a provision of the U.S. common law does not prevent the use of federal courts to litigate over foreign tax matters involving commerce, and breathed new life into the foreign lawsuits.

The “Revenue rule” seemed to be cracked? Great! But on Sept. 13th 2005, here came the “Counter-Order…”

The U.S. Anti-Smuggling “Task Force” doesn’t seem to be doing very well in the battle against U.S. tobacco companies. On September 13th 2005, an appeals court dismissed lawsuits that accused Reynolds American Inc. and British American Tobacco Plc of smuggling cigarettes to avoid paying taxes and customs duties. — The Revenue Rule must not be touched! — General Custer seems to have shouted during his charge.

The Court wrote: “When a foreign nation appears as a plaintiff in our courts seeking enforcement of its revenue laws, the judiciary risks being drawn into issues and disputes of foreign relations policy that are assigned to—and better handled by—the political branches of government.”

The ruling by the 2nd U.S. Court of Appeals in New York, on September 13th, rejected separate lawsuits by the European Union and by 25 departments of the nation of Colombia. The European Union had sued R.J. Reynolds, a unit of Reynolds American. The Colombian suit named British American, the world’s second-largest cigarette maker.

There are four other cases pending in the United States. These are lawsuits initiated by Canada, Ecuador, Honduras and Belize against Philip Morris, RJ Reynolds and B&W. Actually the number of cases of market penetration by smuggling in Latin America, Europe and Asia are many more. It seems that Big Tobacco smuggled almost everywhere.

Like in the 18th Century

In the 18th century, the India Company built up a flourishing contraband business and became the principal supplier of opium to the immense population of China. In a short time the state monopoly of the drug passed under the control of the famous East India Company and opium became a key product in its trade, an enormous business.

But those were other times; at that time in China, there was decapitation for smokers of tobacco, according to a law of 1638.

Today the cartel of tobacco giants, providing cigarettes to the whole world population, has done something very similar: contraband has enabled Big Tobacco brands to occupy the entire world market, thanks to the sale of untaxed, therefore cheaper, cigarettes.

The big cigarette makers have succeeded, competing against local brands with their “Duty-free” prices, in affirming themselves in the Third World markets. This has been clearly stated by the World Health Organization.

“Modern Limits”

In 2000, in relation to indictments against RJ Reynolds for contraband activities in Canada, U.S. Judge Thomas McAvoy wrote in his ruling: “The revenue rule may be outdated in this era of closely linked economies and tax treaties, but it remains a founding principle of American law.”

When in 2002, a federal judge dismissed lawsuits brought by Honduras, Belize and Ecuador against U.S. tobacco companies, William Ohlemeyer, Philip Morris vice president and associate general counsel said: “We are pleased that the court dismissed these lawsuits in accordance with longstanding principles followed in this country and throughout the world.”

After decades of smuggling, prevalently by American companies, it’s about time that US authorities finally try to define what the proper “modern limits” on the application of the “Revenue Rule” should be.

Is there a “Political branch of Government” able to handle this case?

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