ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, March 29, 1996 TAG: 9603290070
SECTION: NATIONAL/INTERNATIONAL PAGE: A-10 EDITION: METRO
DATELINE: NEW DELHI, INDIA
SOURCE: CHARLES J. HANLEY ASSOCIATED PRESS
ILLEGAL IMPORTS of banned ozone-depleting gas are giving the U.S. Customs Service headaches.
Smuggled CFC gas from India has been seeping into the United States by the ton, allowing American motorists to stay cool for less this summer but prolonging the threat to Earth's ozone shield.
The U.S. Customs Service says the contraband chlorofluorocarbon-12, the air-conditioning gas commonly called Freon, has suddenly become its No.2 problem, behind illegal drugs.
``It's like Prohibition all over again,'' Thomas Watts-Fitzgerald, a federal prosecutor in Miami, said of the gas-smuggling centered in south Florida.
Here in India, where CFC-12 production is still legal, a company identified as a source of black-market gas denied any knowledge of it.
Whoever is shipping it, plenty is available: India's manufacturers are being squeezed out of other remaining legal CFC markets by big Western companies.
Stakes are high on all sides.
One scheme broken up in Florida - with an Indian connection - involved CFC-12 worth $52 million. The U.S. government, meanwhile, has lost possibly hundreds of millions in tax revenues because of coolant smuggling. And big business has an investment of billions riding on weaning the world from CFCs and getting it hooked on new chemicals.
A 1987 treaty, the Montreal Protocol, phases out CFCs because of evidence that the compounds damage the upper atmosphere's ozone layer, which shields Earth from most of the sun's ultraviolet radiation and prevents skin cancer and other illnesses.
Since Jan. 1, CFC imports and production for domestic use have been banned in the United States. They were banned in Western Europe a year earlier.
In recent years, to encourage conversion to equipment using the new chemicals, the U.S. government imposed huge taxes and import duties on CFCs, more than tripling the price of a 30-pound cylinder to about $250. Domestic production, meanwhile, was sharply reduced.
The gas, long the most widely used coolant, is still in demand, particularly for air conditioners in more than 100 million older U.S. automobiles. Motorists now must spend up to $100 to replenish leaky air conditioners with a few pounds of legally taxed CFCs, or $200 or more to re-equip for the new coolants.
Unscrupulous traders saw an opportunity in a major exemption in the Montreal Protocol, by which India and other poorer countries can continue producing CFC-12 until 2010, to give them time to finance equipment conversion.
Traders began buying the gas internationally - Russia and China are apparently other sources - at about $70 a cylinder, and smuggling it into the United States disguised as another gas or falsely manifested as CFCs being transshipped to a third country.
The smugglers avoided the taxes, and now the ban, delivered the gas to unscrupulous distributors, auto chains or others, and made fat profits even while underselling the standard ``legal'' price.
The contraband has at times pulled down the taxed product's price and at others driven it from the market. Consumers seldom know whether they're getting legal or illegal coolant, but experts say one-third or more of CFC-12 in U.S. commerce may be smuggled.
Much of that comes from India. Indians have been among those indicted in the dozen CFC smuggling cases prosecuted in the United States. In one of the biggest, at least some of the 3,750 tons of gas involved came from India. None of that gas was recovered.
Watts-Fitzgerald, an assistant U.S. attorney, said some CFC-12 confiscated from smugglers was labeled as having been produced by the Indian chemical company Mafatlal.
At Navin Fluorine Industries in New Delhi, a Mafatlal subsidiary that produces CFC-12, spokesman Sunil Jandon said the company knew nothing of such smuggling.
``Our products may have landed up someplace, but we were not aware of it,'' Jandon said. ``Had we known about such transactions, we could have stopped it.''
Anil Agarwal of the Indian Environment Ministry said the New Delhi government has no information on smuggling. He said India offered more than a year ago to help chase down leads, but ``we are yet to receive any request from U.S. authorities seeking our assistance on this.''
The Americans may prefer to go it alone. For one thing, say government sources in Washington, the CIA has begun playing a key role in tracing the smugglers.
But the low-profile approach may also reflect international sensitivity toward the CFC phaseout.
Western governments last year sought to limit to Western manufacturers - they include U.S. giants DuPont and Allied Signal - the right to export CFC-12 to developing countries exempt under the treaty, so Third World manufacturers would not expand production.
India denounced this as a blatant attempt to grab the market. The West retreated, but the Indians still seem outmaneuvered.
Their business in the Third World ``hasn't been up to our expectations,'' said Mafatlal's Jandon. He said Western producers are pushing their CFCs in the developing countries ``at prices we can't match.''
If the Indians feel squeezed by the multinationals, the multinationals are being pressured by the smugglers. European producers say the market in new substitute chemicals has grown only half as fast as projected, apparently because availability of smuggled gas is delaying conversions.
Environmentalists say the Earth's ozone layer, at best, won't recover its previous density until the mid-21st century, and the smuggling and Third World sales threaten to set even that goal back. They want a global ban on all CFC production and trade.
LENGTH: Long : 112 lines ILLUSTRATION: PHOTO: AP. A worker prepares gas canisters of CFC-12 forby CNBshipment at Navin Fluorine Industries in New Delhi, India, a
subsidiary of the Indian chemical company Mafatlal. Some CFC-12
confiscated from smugglers in Florida was labeled as having been
produced by Mafatlal.