The Current - How much fentanyl in the U.S. comes from Canada?

Episode Date: December 16, 2024

Canada is working to address the flow of migrants and fentanyl into the U.S. in an effort to avoid hefty tariffs threatened by incoming President Donald Trump. But how much fentanyl actually comes from this country? An opioid expert says very little Canadian fentanyl makes its way south, while a border security expert says this country is still a hub for organized crime and money laundering.

In 2017, it felt like drugs were everywhere in the news, so I started a podcast called On Drugs. We covered a lot of ground over two seasons, but there are still so many more stories to tell. I'm Jeff Turner, and I'm back with Season 3 of On Drugs. And this time, it's going to get personal. I don't know who Sober Jeff is. I don't even know if I like that guy.

On Drugs is available now wherever you get your podcasts. This is a CBC Podcast. Hello, I'm Matt Galloway, and this is The Current Podcast. In the last two weeks, Canada has been trying to get a plan together to deal with the threat of tariffs from the United States. President-elect Donald Trump says he will impose a 25% tariff on Canada and Mexico if the two countries don't do more to curb illegal migrants and fentanyl trafficking. Canada, and in particular Mexico, we have millions of people pouring into our country. I spoke with Justin Trudeau. I said, you have to close up your borders because they're coming in the northern border too a lot. And drugs are pouring in, almost as importantly And drugs are pouring in.

Almost as importantly, drugs are pouring in. Maybe more importantly, we can't have open borders. And I said to the president of Mexico and to Justin Trudeau, if it doesn't stop, I'm going to put tariffs on your country. The federal and provincial governments have been announcing plans for changes to border security. Alberta, for example, will be investing $29 million to create an interdiction patrol team with uniformed officers, patrol dogs, surveillance drones, and narcotics analyzers.

The questions remain, though, around how much fentanyl is actually making its way across our border into the United States. Vanda Fulba-Brown is director of the Fentanyl Epidemic in North America and the Global Reach of Synthetic Opioids Project at the Brookings Institution. He's also a senior fellow in foreign policy there. Fonda, good morning to you. Good morning.

How much fentanyl is actually coming from Canada into the United States? Well, as of now, very little. At least that's the case if seizures are an indication of fentanyl flows. And there is a good reason to believe that seizures are a reasonable indication. The vast amount of fentanyl, 99% of fentanyl, comes to the United States from Mexico, from across the U.S. southern border, and it's smuggled by Mexican criminal groups. It's really very small amounts of fentanyl that have been interdicted at the U.S.-Canada border. And that is not surprising because both the production and the smuggling of fentanyl in the U.S. and in Canada are very

different. So if that's the case, I mean, U.S. Drug Enforcement Agency officials have said that the amount coming from Canada is small amounts, largely for personal use, mostly by post. If that's the case, why is Donald Trump saying this is a big issue? Well, for President-elect Trump, borders and closing down borders, or what he calls closing down borders, what he really means is closing down the flows of illegal contraband. What he really means is closing down the flows of illegal contraband across the borders is a core ideological and policy and political message. He stands on firmer ground with his calls about the numbers of undocumented migrants coming from Canada to the United States. It's still a small percentage of the numbers of migrants coming across the southern border. But there is, I think, more of a basis of highlighting that as an issue. There is very little basis other than politics talking about fentanyl. In fact,

Canada could be complaining that a lot of methamphetamine is coming to Canada from the United States, smuggled once again by Mexican cartels. Tell us more about this. I mean, it's not just Donald Trump. One of his close allies who led his fentanyl project in his first administration says that Canada is downplaying its role, but has also pointed the finger at Canada when it comes to money laundering. How does Canada fit into that global fentanyl market? And what role would money laundering, which has been the subject of great discussion in this country, what role would that play? Well, Canada is a place where there is a lot of organized crime, very powerful organized crime that needs to be tackled. There are certainly important Chinese and Asian criminal

groups that are involved in money laundering, but beyond money laundering. Incidentally, we have growth of Chinese criminal groups and their money laundering operations growing in the United States. There is certainly smuggling through Canada. It's an important vector of precursor chemicals being brought into North America, but it's also an important vector of smuggling methamphetamine out to Australia and New Zealand. This is once again Mexican meth smuggled there by Mexican criminal groups. And of course, we have seen the growth of Mexican criminal groups in Canada, as well as a nexus between criminal organizations and hostile powers, or powers that the United States is seeking as

partners but are deploring their critics. I'm talking here, of course, about India and the Indian government, Indian espionage agencies recruiting criminal groups in Canada to assassinate their political critics. So there is a lot of crime happening in Canada. There's a lot of crime happening in the United States, and it needs to be tackled. And I think it's absolutely appropriate for Canada's own reason to focus on those issues and to seek collaborative relations with the act against these dangerous criminal groups. But fentanyl coming from Canada to the US is not the problem. Can I go back to something that you said earlier, which is around the precursor chemicals that are used to make fentanyl? Why are they coming into this country in such numbers?

Well, they are coming to Canada for the production of fentanyl that takes place in Canada. So Canada is, of course, reeling from a fentanyl crisis. So the fentanyl that would be created from those chemicals is staying here in some ways? Absolutely. Okay. Yeah. And the labs, people have called them fentanyl super labs in this country, those labs are being used to make fentanyl that would be sold and consumed here, not exported elsewhere? Yes. So we have had no indication that the

fentanyl produced there is being exported out. Now, over time, that could happen. And one way to think about President-elect Trump's comments is that if there were some declines in the movement of drugs across the southern border, where would they move? There is a possibility they could move to Canada. So preventively taking action is always good policy. But currently, the fentanyl that's produced in Canada is staying in Canada. There is no indication that in any systematic robust way it's coming to the US. It's a very small amount. Eventually, it could potentially be exported abroad, but we haven't seen that either. The drug markets, fentanyl and synthetic opioid markets that are emerging in Europe, whether in fentanyl-type drugs or nitrosines, are coming there from India and

China directly. And the fentanyl markets that are emerging in the Southern Cone come from fentanyl that's diverted from medical sector in the Southern Cone. So, so far, no indication of exports of fentanyl out of Canada anywhere. What does it tell you that Canada is being lumped in with Mexico, if what you're saying is true? Well, I think this is part and parcel, again, of President-elect Trump's view

of foreign policy and domestic policy that he sees very intertwined and that center on much more inward isolationist look of the country. of his foreign policy, perhaps along with China. And his answer to the many problems of U.S. policies, his answer to the various issues that the United States is struggling with is shut down migration, shut down the border. And I think this is also preparation for the review of USMCA that is coming during his administration. for the review of USMCA that is coming during his administration. I think some hoped that because USMCA was not under him, that he would embrace that as his policy accomplishment. But it's a substantial possibility that he will want to undo, revise USMCA.

And these fentanyl threats, apart from the politics they service, are also, I think, a preview of what will happen with USMCA. Just finally, before I let you go, under that umbrella, we've talked about this last week on our program, and there's a long conversation in this country about the relationship between Canada and the United States, the world's longest undefended border is the phrase that is often thrown around. Do you think that we should expect and prepare for that dynamic and that relationship to change in the near future? Well, certainly President-elect Trump wants the border no longer to be undefended.

His whole pitch is that there needs to be far tighter controls and much less flow of certainly people, where there is some justification, illegal flows of people, so flows of people who are crossing from Canada to the US without authorization. But yes,

the whole thrust is that the border should no longer be undefended. And I expect that the relationship will be complicated, as will be the relationship with Mexico and with other countries. It's here in North America where he wants to focus his policy and when he is gunning for radical changes to policies. Complicated is one word for it. Vanda, good to have you here. Thank you very much.

My pleasure. is one word for it. Vonda, good to have you here. Thank you very much. My pleasure. Vonda Fullbaugh-Brown is director of the Fentanyl Epidemic in North America and the Global Reach of Synthetic Opioids Project at the Brookings Institution.

She's also a senior fellow in foreign policy there. In 2017, it felt like drugs were everywhere in the news. So I started a podcast called On Drugs. We covered a lot of ground over two seasons, but there are still so many more stories to tell. I'm Jeff Turner, and I'm back with season three of On Drugs. And this time, it's going to get personal. I don't know who Sober Jeff is. I don't even know if I like that guy. On Drugs is available now wherever you get your podcasts.

like that guy. On Drugs is available now wherever you get your podcasts. The federal government says it's been working with premiers to come up with a plan to increase security at the border. Those premiers are meeting today just outside of Toronto. Christian Lipprecht is a professor at Royal Military College of Canada and Queen's University and co-editor of the book Dirty Money, Financial Crime in Canada. Christian, good morning to you. Good morning. Vanda says that fentanyl trafficking is not much of a concern coming out of this country, as Donald Trump might believe. Those sentiments are backed up by statements from Canadian border officials

who testified on Friday saying that Canada is not a significant source of fentanyl into the United States. What is your assessment of that? Yeah, so look, it goes back to the late 19th century. That sort of, there's a perception in the United States that all bad things that happened in the United States come from outside. And so if you shut the US off from sort of the rest of the world,

then you can keep the United States pure, in quotation marks. But certainly there is a significant production problem, as Wanda pointed out, within Canada. And there is in part an overproduction problem by both Chinese triads as well as the Sinaloa cartel. And some of that overproduction is finding its way to the United States. Some of it is finding its way to Australia and some of it to Europe. We know this from the evidence of seizures.

It is probably not as big as President Trump's makes it out to be but is a systemic and systematic problem and one of the questions we need to ask ourselves is why is it that in this country we have not been able to stop it our deal going back with the united states going back to 1938 and the kingston dispensation is that neither country would become a strategic liability or threat to the other country and certainly there is a perception on a number of fronts, whether it's fentanyl, whether it's migration, or whether it's organized crime or financial crime, that this country is not holding up its part of that bargain.

That's the perception. But the facts from Wanda and others suggest that that's not the case. So what do you make of how Canada's premiers, as I mentioned, they're meeting today to try to figure out what to do in the face of this tariff threat. What do you make of how they're responding to this? So clearly, this is negotiation, right? So both sides have to have something on offer. But I think there is a balance to be struck in terms of, yes, that this is ultimately a trade issue. But we cannot detract from this problem from the fact that this country has a significant challenge

with financial crime, with organized crime, with the importation of precursor chemicals for the production of fentanyl and for other drugs, with the implantation of Mexican cartels in Canada, both before the pandemic, in part due to the change in visa policy by the federal government, and subsequently in part due to the pandemic when it was easier to produce fentanyl and other drugs in Canada and bring them to the rest of the world than to bring them in from Mexico. And that we have not been able to pay sufficient attention, we have not been able to devote the intelligence or the enforcement resources,

either to the actual production or to disincentivizing the laundering of money, both in and through this country by organized crime, both in and around the world. Tell me more about that. I mean, this has been the subject, as I said earlier, of great discussion and hand-wringing why it is that so much money is laundered in this country. You looked at this in this book, Dirty Money, the Financial Crime in Canada. Why is Canada a hub, if I can put it that

way, for laundering drug money? Well, so let me provide an analogy for you. So if you're living in a town wherever in Canada, and you have a problem with particular types of crime, you might have police patrols that you step up in those neighborhoods, you respond to calls when calls come from that neighborhood. And you might also put in place some proactive and preventative measures. We have none of those when it comes to financial crime in this country. A significant portion of our legislation has not been able to keep up either with the globalization of global trade environment or with virtual assets and virtual currencies. Since the integrated process

of crime team in the late 1990s, the RCMP has not had an integrated capacity to enforce. CBSA finally got some powers in the last budget when it came to trade-based money laundering. The federal government itself has acknowledged that in budget 2019, it made a significant announcement that it will significantly overhaul the infrastructure when it comes to financial and economic global crime in this country. We're still waiting for that overhaul. In budget 2021, the government announced the financial crime coordination capacity. We're still waiting for the federal government to ultimately make an announcement what that looks like. So there's lots of evidence going back to the column commission

that this is a significant problem and that the government has, for a number of reasons, not acted on it. Do we just not take it seriously? I mean, what are those reasons? If it's that big of a deal and everybody's paying attention to it,

people know this is happening, why isn't the government acting? Well, for one thing, there's no votes in it, right? So for another thing, it's very complicated and it's complex. So trying to explain this to politicians and to canadians it's much easier to have a conversation about fentanyl for instance on our streets uh and about cost of living than to explain to canadian

uh that a significant portion of that fentanyl crisis and for instance a portion of their cost of living in particular their housing costs is driven by organized crime in this country. And look, there hasn't been, and if the government would act on the Financial Action Task Force recommendations that are going to come with the country evaluation 2025, the last evaluation did not go particularly well for Canada. The tighter the rules are, the less competitive the Canadian economy. We already know the Canadian economy is struggling somewhat, so the federal government is reticent to impose further restrictions that might further impede the performance of the Canadian economy. You know, what's not complicated is that story that came out of the United States not so long ago about TD Bank, which had to plead guilty to money laundering. U.S. officials say that drug traffickers would arrive in cars with bags full of cash,

bribing employees to launder, what, up to $670 million proceeds made from selling fentanyl. How much are Canadian banks being exploited by those criminal networks that you and Wanda talked about that are connected to the fentanyl world? I mean, it sounds very similar to the way BC casinos were being exploited and the issue that ultimately launched the Commission on Money Laundering in British Columbia. Anybody in the audience who wants to read up on money laundering in this country just needs to go to the Commission's 1800-page excellent report. Now, when it comes to TD Bank, of course, look, if you're a Mexican cartel and

you're operating in both Canada and the United States, you're going to pick a bank where you can conveniently move your money between both countries. TD Bank's slogan was, of course, America's most convenient bank. And the attorney general, anybody, any of the listeners can look up his statement on C-SPAN, basically raked TD Bank over the calls for being an aggressive enabler of various organized criminal activities in the United States. And you can also see that there might be some frustration by U.S. authorities as to why is it that they have to enforce against the Canadian bank and why in Canada we've taken the rather extraordinary measure of putting regulatory capacities,

the intelligence and compliance capacities and the enforcement capacities into three separate agencies. In Australia, they've put them into one single agency and that's clearly getting them much better results. You can see this in the value of the fines that have been imposed. And certainly, criminal TD Bank becoming only the second bank in American history to be charged for criminal conspiracy, as well as having an asset cap imposed, which is a significant impediment to TD Bank's growth. The number 24 bank in the world, the number two bank in Canada in terms of market capitalization is not just a problem for TD Bank and for the United States. It's a big problem for Canada because we need global banks to be globally competitive. So just before I let you go, we're just about out of time.

What do you want to see from the government in addressing the financial side of the fentanyl trade? The evidence shows that huge amounts of fentanyl are not crossing from this country into the United States. But to your point, something is going on here in this country. So what do we do about it? We need effective intelligence capacity. We need effective capacity to coordinate between the public sector and private sector on intelligence sharing. And we need an integrated enforcement capacity. We know that this can be done. The RCMP did do it in the late 1990s. There's willingness across all the agencies. We see that we're getting piecemeal changes, for instance, when it comes to CBSA. But ultimately, it requires, like everything else in this country, political top cover and a clear message from

government that this is where we need to concentrate our efforts and our resources. In a roundabout way, do you think Donald Trump, even if the facts don't stack up, will he get leaders here to pay more attention to this issue because he's threatening these tariffs? Well, certainly Donald Trump is doing what Canadians have always fretted, which is to tie trade to national security, to the border, and to defense spending. And certainly the government will need to respond to those expectations, I think, if it wants Donald Trump to step back. But we have an opportunity to negotiate our way out of this. We did it with NAFTA and USMCA during the first Trump administration. If we do the right thing, I think we can negotiate our way out of it again. Christian, thank you. My pleasure. Thank you.

Christian Leprecht is a professor at Royal Military College of Canada and Queen's University and co-editor of Dirty Money, Financial Crime in Canada.