BRUSSELS—U.S. corporate giants are being hit so hard by a European smuggling wave that even the White House has weighed in.
The problem was evident on Romania’s border in March, when authorities acting on a tip stopped a truck from Turkey carrying nine tons of dangerous contraband. Months earlier, Spanish police and customs officials raided a secret warehouse near the city of Granada, impounded 19 tons of illicit substances and arrested three people. In August, authorities in the Italian port of Livorno captured an illegal 3.7-ton shipment from China.
What the officials sought wasn’t drugs or weapons, but industrial refrigerants.
The climate-harming chemicals, hydrofluorocarbons, are severely restricted by the European Union, which wants to replace them with newer, more-ecological compounds as part of its effort to cut greenhouse gas emissions. U.S. companies have invested heavily in cleaner formulas to win a greater share of Europe’s new market.
However, the old versions, known as HFCs, are still legally used across much of the globe, in cooling systems from car air-conditioners to store freezers, which means large volumes of trade word-wide. The price difference between sophisticated new EU-approved refrigerants and cheaper, abundant and generally interchangeable older formulas has sparked a black market and drawn smugglers, many from international crime syndicates. Illicit offerings can sell for around 25% less than regulated gas, distributors say.