Traffic inches along the road from Foz do Iguaçu, Brazil, with boxy vans and tattered sedans squeezing past clunky coach buses. Passengers read over their shopping lists as the Grande Estrada highway merges onto the Friendship Bridge, a long white arch stretching across the muddy Paraná River. The vehicles glide through Paraguay’s immigration checkpoint, depositing travelers at the mouth of Ciudad del Este.
This is Latin America’s informal market capital, a tax-free shopping zone carved into the jungle. Computers and prescription pills, children’s clothes and knock-off watches, Lego sets and premium liquor — whatever money can buy is likely sold in the City of the East. Millions of merchants and shoppers stream into the city each year from neighboring Brazil and Argentina, where taxes and fees can double the cost of consumer items. Visitors smuggle or legally carry their loot back out, saving themselves serious cash or reselling the goods at home.
Ever, a 28-year-old vendor, has sold sneakers in the Paraguayan city for the last 10 years. His wooden rack holds a colorful palette of shrinkwrapped Adidas, Nike, and Puma kicks.
The shoes he sells to Brazilians actually arrive from Brazil, Ever says. Thanks to sneaky tax workarounds and other off-the-books maneuvering, vendors find they can sell imports here for less than where the items originated. Counterfeit goods also arrive and depart via clandestine cruises across the Paraná. (Weapons and drugs enter this way, too, earning the city a reputation among the most lawless places in the world.) Yet many items sold in Ciudad del Este are flown legally from Asian markets into the city’s tiny airport, where importers pay only rock-bottom fees.
Most of Ever’s customers are tourists who swing by this dusty shopping mecca after visiting the jaw-dropping Iguaçu waterfalls. “It’s cheaper here,” he says of the market. “There’s not as many taxes.” Shoppers can buy a pair of his sneakers in one of four currencies: Brazilian reais, Paraguayan guaranies, Argentine pesos, or U.S. dollars.
His itinerant shoe store is tucked under a maze of orange tarps. A corridor of nearby metal stalls sits empty and unfinished, the making of a yet-to-launch government project to formalize the vendors. Men and women push paper fliers urging shoppers into electronics shops or advertising big bargains. The tented market is flanked on both sides by glossy department stores and dilapidated high-rises, both offering a seemingly limitless bounty of legal and counterfeit goods like GoPro cameras, Milka chocolate bars, smartphone accessories, and designer jeans.
Brazil has attempted to stem the flow of the low-to-no tax items across the Paraguayan border. The country adopted a law that allows each person returning from Paraguay to bring only USD 300 worth of purchases into Brazil duty-free, with another USD 200 allowed at a reduced tariff.
But the boundary of bureaucracy has proven little match for Ciudad del Este’s prime clientele: the sacoleiros.
Brazilian merchants hire these small-time smugglers — called sacoleiros for the sacks they carry — to shuttle dirt-cheap household items like Chinese-made trash cans, underwear, brooms, and cooking utensils, which the merchants resell at a markup in their shops in São Paulo and Rio de Janeiro.
Thousands of smugglers arrive via overnight buses to Foz do Iguaçu each week. For two days, they hike back and forth across Friendship Bridge, unloading their hauls in guarda-roupas, or checkrooms, that keep the goods safe until it’s time to bus home.
All the back-and-forth can be lucrative. Say 30 people on one bus each buy USD 500 in household items. That’s USD 15,000 in merchandise ferried from the Paraguay border to Brazil’s biggest cities, author Robert Neuwirth explains in Stealth of Nations (2011). A merchant coordinating a team of 12 buses each week could shuttle USD 180,000 in goods — making the smuggler’s channel between São Paulo and Ciudad del Este worth over USD 9 million each year.
Brazilian authorities have tried throwing wrenches into the cogs of this ever-churning commercial machine. Once, they tried forcing the motorcycle taxis that carry sacoleiros to obtain expensive multi-entry visas. Drivers brought traffic to a halt, and officials relented. When police started enforcing the helmet law to nab drivers, the moto-taxistas instantly procured hard yellow helmets for themselves and their passengers.
But right now, the biggest problems for moto-taxistas are the floundering Brazilian economy and the strong U.S. dollar, both of which have soured visitors on shopping sprees and diminished disposable incomes in the region. Teodoro, a Paraguayan driver, says he usually makes around 20 trips a day in a good season. Now it’s half that amount, the 35-year-old says, leaning against his bike and donning a black vest with green reflective strips.
At least the riding remains easy. A trip last winter on his bike through the market’s red-dirt streets and past the Paraguayan checkpoint gave little indication of a government crackdown. Riders need not flash their passports, sign a customs slip, or even greet the guards. They simply glide back into Brazil, haul in hand.