The area is a smuggler's paradise. As CBS News correspondent Trish Regan reports, it's home to the largest illicit economy in the Western Hemisphere, and trafficking in everything from drugs to arms to counterfeit goods is a 24/7 unchecked operation. Illegal trade in the area costs American companies hundreds of millions of dollars each year.
Almost all the activity takes place on the Paraguayan side of the border, in the wild west jungle town of Ciudad del Este. What's unusual is that most of the trade is run by members of a large and influential Middle Eastern population, many of whom immigrated to the area from Lebanon and Syria in the 1970s. Some are making hufe amounts of money off illicit trade, and Western authorities believe they're sending some of that money to terror groups in the Mideast.
Everything and anything is for sale. Pirated CDs go for $1. There are counterfeit Apple iPods and illegally copied computer software.
Using a hidden camera, CBS News recorded a man offering to sell 1,000 copies of Microsoft Windows XP for less than $15 — a fraction of the $100 sticker price in the United States.
Every day, millions of dollars worth of goods are smuggled out of Paraguay and into Brazil, Argentina and even the U.S. over a single bridge. A CBS crew crossed the bridge 12 times, and not once did immigration authorities check their passports or look to see what goods they may have been carrying ... or even stop the crew at all.
American diplomatic sources told CBS News that two-thirds of the population in Ciudad del Este, a city of nearly 300,000, is involved in illegal trade. Corruption is rampant throughout the government, and there's little incentive to stop a trade that generates up to $12 billion a year — dwarfing what the country makes legally.
Still, some Paraguayan prosecutors try to go after criminals.
Regan and a CBS crew went on a raid with the prosecutor and investigators, who felt there was some kind of piracy operation going on in the center of town. No one other than the investigators, knew the exact location of this place because they were concerned that people could be tipped off.
The raiders found machines that copy CDs, which were added to a growing pile of confiscated goods.
On the outskirts of town, dozens of warehouses are brimming with everything from marijuana to video games.
Celso Sanabria, Ciudad del Este's chief prosecutor, says the warehouses are now filled to capacity. "We probably have millions of dollars worth of stuff here," he told Regan.
But much more money flows, untraced, out of Ciudad del Este ... and it's where this money ends up that concerns counterterrorism officials.
Sources in the State Department tell CBS News that, at one point, there were seven terrorist training camps in the Tri-border region, and they have no doubt the area is still a safe haven for terrorists.