The illicit trade in tobacco products costs EU countries €10 billion a year in lost tax revenues, according to estimates by the European Commission. Experts and MEPs met on 22 January to discuss how to tackle the issue and the role played by major tobacco producers. “The idea that we are winning the battle against smuggling is perhaps not quite true,” said Green Belgian MEP Bart Staes, vice-chair of the budgetary control committee, which helped to organise the hearing.
Involvement of big tobacco?
In 2000, the European Commission filed lawsuits in New York against Philip Morris International (PMI) and other companies, accusing them of smuggling cigarettes.
The case against Phillip Morris was dropped in 2004, after the company agreed to pay to the EU and the member states €1 billion over 12 years and to make additional payments in case of future seizures of its genuine products.
Similar agreements were concluded with Japan Tobacco International in 2007 and with British American Tobacco and Imperial Tobacco in 2010.
Ingeborg Grässle, a German member of the EPP group, said: “These agreements have not led to an increase in transparency. We need to look more closely on what is happening with the money paid out by the industry. We need a cohesive and consistent strategy in dealing with smuggling.”
Anna Gilmore, professor of public health at the University of Bath, told MEPs there were indications that the four major tobacco companies may still be involved in similar activities. "An important element of the illicit trade in Europe appears to be attributable to big tobacco manufacturers (...) We have to conclude that the agreements did not deter the tobacco industry," she said.
Lack of reliable data
The size of the illicit tobacco trade in the EU is hard to gauge, as there is shortage of reliable data. The main sources are seizures of smuggled packages and a survey of empty cigarette packs collected across the EU. Both produce inaccurate estimates and show contradictory results about the trends in the volume of illicit trade, explained Belgian expert Luk Joossens, who presented a report on cigarette smuggling he co-wrote at the request of the European Parliament.
Protocol to eliminate illicit trade worldwide
Polish expert Leszek Bartłomiejczyk spoke of the illicit tobacco trade coming from eastern European countries such as Belarus, Ukraine and Russia and argued for a worldwide track-and-trace system that should put production and distribution under control and be able to securely identify all products - who has produced them, when and why. He urged the EU to ratify the 2012 WHO protocol to eliminate illicit trade in tobacco products. It foresees a global system of information collecting and sharing. It has been signed by the EU and 53 countries.