In the face of criticism that the French government has not done enough to stem the flow of illicit tobacco into the country, French MPs and Senators have been redoubling their efforts to address the problem. In the most recent attempt, Senator Xavier Iacovelli brought together all of the debate’s various stakeholders, for the very first time in France, to discuss the issue at a conference in late November.
The conference was urgently needed: despite a significant fall in the number of smokers, France remains the number one country in Europe for the illicit trade of cigarettes. The conference’s communiqué provides some arresting figures which underline the gravity of the black market for tobacco. In France, black market tobacco counts for 25% of total consumption, with illicit trade translating into a loss of €3 billion in fiscal revenues nationally, compared to €20 billion for the European Union (EU) as a whole.
None of the diverse stakeholders present at the Senate conference were willing to contest these figures. Disagreements surfaced however when it came to discussing solutions to the problem, notably how best to implement a scheme to “track and trace” cigarettes sold.
The overwhelming prevalence of contraband cigarettes
Illicit trade includes both contraband (legitimate products upon which taxes due are not paid) and counterfeit (fraudulent imitations of legitimate products) products. All parties at the conference—even the tobacco industry representatives— agreed that 98-99% of illicit tobacco in France is contraband rather than counterfeit, meaning cigarettes manufactured by the tobacco companies themselves that have subsequently evaded the appropriate taxation.
To explain how this many licit smokes slip through the cracks, Iacovelli cited the arresting example of the parallel tobacco trade in Andorra. The tiny principality consumes 120 tonnes of tobacco per year, yet buys 850 tonnes from tobacco companies. The surplus supply, which retails for €1.20 a packet in Andorra, is carried by 8 million tourists across the border into Spain and, principally, into France, where a packet costs €8. While supplying Andorra’s duty-free shops in reasonable quantities is not in and of itself illegal, in practice it means that tobacco companies are able to get their product on the French and Spanish market without it being subject to the taxes which pad government coffers and underpin public health initiatives.
Being able to pinpoint exactly when a tobacco product leaves legal channels is key to stopping this illegal flow. One of the most robust tools for doing so, the World Health Organisation (WHO)’s Protocol to Eliminate Illicit Trade in Tobacco Products, officially entered into force on 25 September this year. Under the pact, signatory countries are required to establish “tracking and tracing” systems by 2023, enabling authorities to follow the movement of legal tobacco products from factory floor to the final consumer.
Perhaps unsurprisingly Big Tobacco — having repeatedly been shown to be involved in cigarette smuggling itself — has pushed back against the WHO Protocol and other attempts to crack down on illicit trade. The tobacco manufacturers typically argue, as one industry representative did at Iacovelli’s conference, that the root of the problem is that the average consumer perceives the price of cigarettes as too high. According to Big Tobacco, this high price, intended as an incentive to encourage people to stop smoking, naturally leads consumers to attempt to outmanoeuvre governments’ fiscal strategies. Research has generally dismissed this argument, finding that raising tobacco taxes does not necessarily impact the amount of tax evasion.
Big Tobacco muscles its way into track & trace
Despite arguing that high tobacco taxes, rather than the lack of an effective track and trace scheme, is the root of the illicit tobacco trade, the industry has simultaneously been aiming to position itself as central to the debate surrounding how best to trace tobacco products.
Having developed Codentify – its own bespoke trace and track system – Philip Morris International (PMI) has sold parts of the intellectual property behind the scheme for peanuts to a French company, Inexto. Subsequently, PMI has also led its direct tobacco industry competitors in a coordinated lobbying campaign worldwide to encourage national governments to adopt its system.
Given the industry’s record of direct and indirect involvement in the illicit trade of tobacco, it is concerning that a certain number of governments in Africa and South America have indeed purchased Codentify, the independence of which is highly contested by anti-tobacco activists and health professionals. Perhaps more surprising, however, in 2017 the European Commission itself proposed that the industry be in large part responsible for the tracking and tracing of its own products in the EU.
Many health advocates have warned that Codentify is the industry’s “Trojan horse”, and argue that the Commission’s decision has the effect of putting the fox in charge of the chicken coop. Moreover, the WHO Protocol, to which the EU is a party, takes a clear position in this regard: the tobacco industry is part of the problem of illicit trade in cigarettes, not part of the solution, and must therefore have no influence on regulation – a real thorn in the side of one of the most influential lobbies in Brussels.
An unreliable partner
It is for this reason that PMI used the French Senate conference to contest jurists’ argument that the WHO Protocol, by way of its adoption across EU Member States, supersedes existing EU law on the issue, and therein the directives of the European Commission. At the same time, the Commission has attempted to hit back at criticism of its track and trace proposals, claiming that they are fully in line with the WHO Protocol.
As these debates continue to rage, what seems clear is that the tobacco industry has shown again and again—including at Iacovelli’s conference—that it will go to extensive lengths to look after its own interests, making it a problematic partner in initiatives to collect taxes and safeguard public health.
Prompted by the example set by Senators like Xavier Iacovelli, the French government could and surely will do more to stem the illicit trade of tobacco in France. Those hoping for swifter progress, however, should also be looking to mitigate the influence Big Tobacco continues to wield over tobacco policy.
Organised crime police in Australia seize 1.5 tonnes of smuggled tobacco worth A$1.5 million
Police in Australia discovered a 1.5-tonne consignment of illicit tobacco estimated to be worth A$1.5 million ($1.01 million) in Sydney’s south west earlier this week, according to a statement from New South Wales Police.
Officers from the force’s Strike Force Raptor, which is dedicated to targeting organised criminal activity connected with the country’s motorcycle gangs, found the huge haul after conducting a raid on an industrial unit in the Fairfield district of the city on Tuesday.
Detectives searching the premises after executing a warrant came across 73 boxes that were found to contain loose tobacco weighing almost 1.5 tonnes.
Police said the tobacco was impounded and taken away for further analysis, adding that no arrests had been made in connection with the shipment.
In May of last year, authorities in Australia launched a crackdown on the sale of illicit tobacco that the country’s government said it hoped would raise some A$3.6 billion over a four-year period.
Finance Minister Mathias Cormann said at the time that the initiative would see the government take action to prevent the sale of the 864 tonnes of illicit tobacco that was estimated to make it past the country’s customs agencies every year.
Kelly O’Dwyer, who was the nation’s Minister for Revenue and Financial Services at the time, said: “These measures will shut down the avenues that organised crime syndicates have to access illicit tobacco to fund criminal activity.”
Just months later, officers from Australian Border Force announced that they had arrested a man in connection with the discovery of a record haul of 9.5 million smuggled cigarettes, which were found concealed inside a container in a port city of Fremantle in Western Australia.
The illicit cigarettes, which were thought to have been made in Southeast Asia, would have cost the Australian treasury A$7.66 million in evaded duty had they made it onto the country’s black market.
Earlier this month, the Australian Criminal Intelligence Commission (ACIC) released a report that revealed law enforcement agencies across the country confiscated 30.6 tonnes of illicit drugs last year, noting that methamphetamine remained one of the most consumed and seized illicit drugs in the nation.
Michael Phelan, ACIC CEO, commented: “The estimated street value of the weight of amphetamines, MDMA, cocaine and heroin seized nationally in 2017–18 is nearly $5 billion, underlining the size of the black economy that relates to illicit drugs alone.”
The seventh National Wastewater Drug Monitoring Programme report, which was released in June by the ACIC, found that Australians are now using twice as much methamphetamine as any other illegal drug.
Users can no longer trade alcohol and tobacco-related products on Facebook and Instagram
Facebook has banned the trading of alcohol and tobacco-related products between users.
A new policy introduced by the company bans all private sales, trades, transfers and gifting of alcohol and tobacco on Facebook and Instagram.
The company said the new policy will be policed by a combination of artificial intelligence, manual checks carried out by humans and reports submitted by users.
In addition, Facebook said that brands which post content related to the sale or trading of alcohol or tobacco-related products, including electronic cigarettes, will now need to make sure that this type of content can only be seen by users aged 18 and over.
According to a report from CNN, Facebook said that while it is working to inform group administrators of the new rules, content or pages that breach them could be taken down.
The new policy will not apply to general content that feature alcohol or tobacco-related products that are not posted in order to sell them to other users.
This will mean that “influencers” who are paid by companies to include products in social media posts will still be able to be pictured posing with alcoholic drinks and tobacco-related products, and will not be forced to age restrict such content.
Many businesses are able to get around strict advertising bans on alcohol and tobacco-related products in some countries by paying influencers to be pictured with the items they sell.
“We are updating our regulated goods policy to prohibit the sale of alcohol and tobacco products between private individuals on Facebook and Instagram,” the social media giant said in a statement.
“Our commerce policies already prohibit the sale of tobacco or alcohol in places like Marketplace but we’re now extending this to organic content.”
Facebook is regularly the subject of criticism over how its platforms can be used for the trading of illicit products and the facilitation of other illegal activity.
Earlier this year, a report from the Athar Project revealed that Islamist terrorist organisations are using Facebook Groups to trade looted antiquities stolen from war zones such as Syria, Libya and Yemen.
In October of last year, a woman from Texas claimed she was raped, beaten and sold into the sex trade at the age of 15 after meeting a trafficker online who posed as a Facebook “friend”.
Counterfeit and smuggled cigarettes cost EU member states €10 billion in lost tax revenue last year
The EU illicit trade in black market cigarettes cost member state governments a total of €10 billion ($11.23 billion) in lost tax revenues in 2018, according to a new report from professional services firm KPMG.
That figure was up €369 million on 2017, despite the total number of counterfeit and smuggled cigarettes consumed in EU nations falling 1.1 billion to 43.6 billion.
Commissioned by US tobacco giant Philip Morris International, the independent study revealed that the EU market for smuggled and counterfeit traditional smoking products was equivalent in size to total legal cigarette sales in the United Kingdom, Austria and Denmark combined last year.
In total, counterfeit and smuggled cigarettes in the EU were estimated to account for 8.6% of all consumption across the 28-nation bloc in 2018.
KPMG found that while the circulation of smuggled, illicit whites and other illicit tobacco product volumes declined in 2018, counterfeit was the only category to show year-on-year volume growth.
The number of fake cigarettes in circulation across the EU rocketed by 33% to 5.5 billion in 2018, which was the highest level recorded since KPMG first conducted the study back in 2006.
Half of the nations included in the study witnessed an increase in the consumption of fake cigarettes last year, with the largest volumes being reported in Greece (1.5 billion) and the UK (0.9 billion).
Commenting on KPMG’s findings, Alvise Giustiniani, PMI Vice President of Illicit Trade Prevention, said: “Beyond damaging government revenues, harming legitimate businesses—including our own—and fuelling crime in local communities, the availability of cheap, unregulated cigarettes on the black market undermines efforts to reduce smoking prevalence and prevent youth from smoking.
“For PMI to have impact in our drive to unsmoke the world, we must sustain our combined efforts to eliminate illicit cigarette trade, while ensuring responsible access to better alternatives for the men and women who would otherwise continue to smoke.”
Last month, Europol announced that it had coordinated an operation involving law enforcement agencies from a number of EU members states that resulted in the break-up of a gang that is thought to have made some €680 million from cigarette trafficking and a range of other illegal activities.
The organised criminal network behind the conspiracy is said to have made the majority of its profits through the smuggling of cigarettes and drugs to the UK, before shipping cash to Poland, where it was laundered in currency exchange offices and invested in property in Spain and other countries.
- Police in Ohio arrest 104 people in major crackdown on sex trafficking
- Coalition of law enforcement agencies in the Philippines nab wildlife trader who evaded capture for years
- Farmer jailed for smuggling illicit garlic shipments into Australia
- LAX customs officers seize bogus NBA rings that would have been worth $560,000 if genuine
- California man jailed for soliciting murder of stepmother on dark web
9 February 2018
9 February 2018
8 February 2018
28 November 2017
28 November 2017
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