Spotlight on tobacco smuggling at European Parliament

Spotlight on tobacco smuggling at European Parliament

The thorny question of how to stamp out the parallel tobacco trade in Europe will be debated next week at the European Parliament in a seminar led by Romanian MEP—and former physician—Cristian-Silviu Busoi. It’s the latest salvo in European lawmakers’ long-running campaign, which has made some legislative headway, but which still faces opposition from a powerful industry lobby.

Ahead of the European elections this spring which will install a new legislature, European policymakers are contemplating their priorities for the 2019-2024 session. The parallel trade in tobacco—which not only encourages young people to take up deadly smoking habits but accounts for losses to the public purse of between €10 and €20 billion each year— is likely to remain a pressing issue for Brussels.

Illicit trade fuelling organised crime and creating budget holes

Busoi has a vested interest in tackling the parallel tobacco trade: his home country’s economy has been badly hit by the prevalence of illicit tobacco products, which continue to short-change the government budget, while at the same time undermining public health programmes and providing a financial boost for organised crime syndicates. In fact, tobacco smuggling in the country deprived the state budget of an estimated 3 billion Romanian lei (roughly €630 million) last year, as the black market for cigarettes rose to more than 16 percent of total sales, despite Romanian authorities confiscating more than 100 million cigarettes during 2018.

Romania, which currently holds the rotating EU presidency, has the highest level of cigarette smuggling in Eastern Europe – the fifth highest in Europe. This is largely due to the proximity of non-EU neighbours whose tobacco prices can be many times lower than those available domestically. The situation may worsen further when Belarus, the source of many of Europe’s contraband smokes, introduces visa-free entry for EU citizens. Every time the black market rises by a single percentage point, Romania’s government loses €40 million from its state budget. Globally, it’s estimated the parallel tobacco trade cheats governments out of $31 billion (€27.2 billion) in tax revenues from legal tobacco sales each and every year.

Battling the tobacco industry through legislation

As Busoi emphasised in his communique ahead of the seminar, cutting smoking rates and addressing the parallel tobacco trade has been one of the current European Parliament’s highest priorities. Over the last five-year term, the EU has taken a number of notable actions to try and impact these issues, including adopting the Tobacco Products Directive in 2014 and ratifying the WHO’s Framework Convention on Tobacco Control (FCTC) Protocol on Illicit Trade—despite heavy interference from the tobacco industry.

The FCTC Protocol requires the licensing of all agents, suppliers and manufacturers, in addition to the implementation of anti-money-laundering checks designed to ensure customers are genuine and have no associations with criminal organisations. It also stipulates the creation of product traceability systems which are entirely independent from cigarette manufacturers, featuring unique codes affixed to each tobacco product. Yet, although a bloc-wide track-and-trace (T&T) system is set to be implemented by the EU this spring, early indications are that the EU’s preferred solution has close links with the tobacco producers – an industry which has been previously implicated in smuggling and has a vested interest in making sure its products are distributed to as many people as possible.

Tracing T&T systems to the source

Critics of the EU’s proposed scheme have argued that by employing a ‘mixed solution’ in which some responsibilities are delegated to the tobacco industry, the suggested system violates the terms of the FCTC directive, which asserts no track-and-trace tasks can be ‘performed by or delegated to the tobacco industry’.

Fears over leaving any door open to the industry are particularly acute given that key players, such as Philip Morris International (PMI) and British American Tobacco (BAT), have been extensively implicated in manipulating the illegal market at the highest levels. A report by the Bath University Tobacco Control Research Group showed that roughly two-thirds of all illegal cigarettes are the direct result of industry attempts to expand markets and circumvent punitive taxes.

This should come as no surprise. The tobacco companies have revealed their duplicitous nature time and time again—from their long history of minimizing—or outright denying—the devastating health impacts of its products, to their aggressive bullying of governments trying to enact tobacco control measures, to the networks of allied groups they have set up or funded to promote their cause. Allowing tobacco manufacturers to influence the European track and trace system would give the industry yet another foothold in the legislative process.

As policymakers in Brussels get ready to start a fresh legislative period after the European elections this spring, it’s clear tobacco control needs to remain a parliamentary priority. Busoi’s seminar won’t provide all the answers, but it will ensure those advocating for the 700,000 EU citizens who die every year of tobacco-related illnesses have a platform to speak out against both smuggling and the industry players who benefit from it.

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