Category: Illicit Trade

  • Tobacco, marijuana go head-to-head

    Tobacco, marijuana go head-to-head

    Canada’s federal Health Minister is said to have demonstrated a ‘disturbing degree of incoherence in her recent approach to regulating tobacco and marijuana’.

    Imperial Tobacco Canada yesterday called on the minister, Jane Philpott, to use the opportunity presented by World No Tobacco Day, to explain her approach.

    In a press note issued through PRNewswire, the company said that the minister had proposed ‘plain and standardized packaging’ for tobacco products, despite cigarette packages already having a 75 percent health warning and being hidden from public view at point of sale.

    At the same time, she had said that all that was required for marijuana was a restriction on packaging or labelling to ensure that product packaging was not appealing to young persons.

    “Public explanation is needed as both marijuana and tobacco are substances with known health risks,” said Eric Gagnon, Imperial’s head of corporate and external affairs. “This suggests that marijuana and tobacco should face a similar regulatory framework, but the minister appears to be headed in the opposite direction, giving far more leniency to the marijuana industry.”

    The press note said that the youth usage rate for marijuana was higher than that for tobacco. And the minister had acknowledged that Canadian youth had the highest rate of marijuana use in the world at a time when tobacco use and youth smoking were at an all-time low.

    “There is clear policy incoherence, which is even more apparent considering the minister claims the goal with both marijuana and tobacco legislation is to protect youth,” said Gagnon. “How can two legislative frameworks, for products that both carry known health risks, have the same stated goal yet vastly different approaches?”

    Imperial said that the federal government had gone to great lengths to claim its goal was to eliminate the black market for marijuana and had suggested that taxes on marijuana would be kept low to allow competition with the illegal market. Yet, governments across Canada had and continued to tax cigarettes to an extent that had contributed to the creation of an illegal trade that now accounted for more than 20 percent of the tobacco market.

    “If the Minister truly believes her policy approach to marijuana is effective, then surely it can be applied to tobacco,” said Gagnon. “Instead, parliament is about to have the spectacle of the minister arguing on one day that branding on tobacco packaging lures youth to smoking and should be banned, while on the next day suggesting that branding should be allowed for marijuana to help compete against black market [products].”

    Imperial said that today, World No Tobacco Day, provided an opportunity for the minister to demonstrate that she was serious about the health of Canadians.

    But focusing on excessive and ineffective measures that made it easier for illegal traffickers to counterfeit licit tobacco products was not the way to demonstrate that commitment.

    The minister and her department officials needed to acknowledge the importance of alternative products – such as heated tobacco or vaping products – by prioritizing the introduction of clear regulations on these products, and making them known and available to adult consumers, as soon as possible.

  • EU tobacco control poor

    EU tobacco control poor

    EU countries are not doing enough to implement tobacco control policies, according to the Irish MEP Nessa Childers.

    Writing in The Parliament magazine, Childers said the latest available results of the tobacco control scale for 2016, in which Luk Joossens and Martin Raw had ranked 35 European countries on the basis of tobacco-control-policy implementation, had shown that the majority had received a negative mark. This was also the case in respect of EU member states only, ‘albeit by a narrower margin’.

    In the face of ‘scandal-prone lobby onslaughts and court challenges to tobacco advertising legislation and the tobacco products directive’, policy and implementation of measures on the ground remained inadequate, as the tobacco control scale rankings indicated.

    ‘In general terms, inadequacies in implementation of the provisions that survived the tobacco industry’s lobby onslaught, at national and European level, stem from paltry budget allocations to tobacco control policy,’ Childers said. ‘These jar with the overall costs and burden of this epidemic to society.

    ‘EU countries spend less than one euro per capita annually on tobacco control, with some countries even making cuts.’

    Later in her piece, Childers said that the EU Commission deserved praise for its role in securing EU ratification of the protocol to eliminate the illegal trade in tobacco products.

    ‘Indeed, and in line with the tobacco products directive, the fight against smuggling and counterfeiting is a serious matter,’ she said. ‘It must remain in the hands of adequately resourced public bodies, in control of tracking and tracing. It should not subcontract poachers for game-keeping.

    ‘We need to devote greater resources to enforcing tobacco control, expanding the use of plain packaging, steeper taxation, display bans, and proper respect for article 5.3 of the framework convention on tobacco control to shut big tobacco out of public health policymaking.’

    Childers’ piece is at: https://www.theparliamentmagazine.eu/articles/opinion/tobacco-epidemic-weighing-heavily-europe?utm_medium=email&utm_campaign=Daily%20Parliament%20Magazine%20Round-Up&utm_content=Daily%20Parliament%20Magazine%20Round-Up+CID_41fa2833e488946457e60f5ec3d5bb77&utm_source=Email%20newsletters&utm_term=Tobacco%20epidemic%20weighing%20heavily%20on%20Europe

  • Illegal trade targeted

    Illegal trade targeted

    The Taiwan government’s efforts to crack down on tobacco smuggling have borne fruit, resulting in the seizure of more than six million packs of contraband cigarettes during the past six months, according to a story in The Taipei Times quoting the Minister of Finance, Sheu Yu-jer.

    Since October 20, the Ministry of Finance, in co-operation with other government agencies, had adopted tougher measures to combat cigarette and tobacco smuggling, Sheu said.

    These measures had been put in place ahead of the implementation of legislation raising the health surcharge on cigarettes from NT$10 (US$0.33) per pack to NT$20 per pack as of June 12, a move that Sheu conceded might spur smuggling.

    About 6.22 million packs of smuggled cigarettes had been confiscated during the six-month period, he said.

    And during the first half of this month, about one million packs had been seized.

    The government has cracked down on suspicious practices, such as local fishermen having their boats registered as foreign vessels, a National Treasury Administration official said.

    In addition, it had drafted an amendment that would expand the range of smuggling inspections from within 12 nautical miles to 24 nautical miles (22.2km to 44.4km) of the coast of Taiwan, the official said.

    The proposal is still to be submitted to the cabinet for approval.

    The ministry urged the public to report counterfeit tobacco and alcohol products, adding that informants would be given a cash reward of up to NT$4.8 million.

  • Huge illegal trade in Russia

    Huge illegal trade in Russia

    About 35-40 percent of tobacco products sold on the Russian market are illegally produced, the Russian business ombudsman Boris Titov said in an annual report to the Russian president.

    The report was the subject of a story in Russia Beyond The Headlines quoting TASS.

    According to the most cautious estimates, the share of illicit products had already reached 35-40 percent, which had dealt a serious blow to the budget of the Russian Federation, the report said.

    The report expressed concern also about the ‘quality’ of the illicit products.

    The business ombudsman suggested creating a unified state mechanism to control the tobacco market, similar to the Unified State Automatic Information System (EGAIS) for alcohol products, developed by the Department for the State Regulation of the Economy and the Ministry of Economic Development and Trade.

    This computerized system gathers information about the use of raw materials, such as ethyl alcohol and other related products, as well as production volumes and left-over raw materials.

    Under the Russian law, all manufacturers, wholesalers and importers must register with EGAIS.

    The Russian Finance Ministry said earlier that legislation enabling a similar control mechanism on the tobacco market was to be passed during the parliament’s spring session.

    The government is said to be discussing various projects aimed at enhancing state control of the tobacco industry at all stages of its manufacturing and trade.

  • Smokers work around TPD

    Smokers work around TPD

    According to the UK’s Tobacco Manufacturers’ Association (TMA), new research has shown that even before major changes to the UK tobacco market were due to come into full effect on May 20, people were increasing their purchases of cheap, black market tobacco products.

    ‘In a series of questions put to consumers over the last five months as the new measures were being phased in, the … TMA has tracked the impact of these regulations on smoker behaviour and found a growth in people buying from non-UK duty paid sources,’ the TMA said.

    The key findings of the TMA’s research were:

    • A 14.5 percent increase in smokers buying packs of 20 cigarettes from illicit sources and abroad during the past five months;
    • A 91.7 percent increase in smokers buying larger packs of hand-rolling tobacco from illicit sources and abroad;
    • A 31.6 percent increase in smokers buying online from social media and websites advertising cheap illicit tobacco;
    • A 22.1 percent increase in smokers buying any tobacco product from abroad, thereby avoiding UK duty.

    The survey found, too, that the average price paid for a pack of 20 cigarettes from an illicit supplier was £5.96 – £1.39 less than the £7.35 that the government has used to set the minimum excise tax on a pack of 20 cigarettes.

    “It is clear from this research that plain packaging and the small packs ban, measures imposed by Europe and adopted by the UK government, are already having an impact on smokers’ behaviour as they seek out cheaper alternatives from the black market and abroad,” said Giles Roca, director general of the TMA, commenting on the findings. “It’s no surprise that our research points to a rise in the illicit market – this is exactly what happened in Australia when plain packaging was introduced in 2012.

    “On banning small packs, which are particularly popular in the UK, independent research confirmed that such a move will cost the treasury £2.1 billion in the first year, costing 11,190 jobs whilst even those in public health agree that it will lead to people smoking more, not less, tobacco.

    “On plain packaging, a recent major independent review of 51 studies found no evidence that it acted to prevent youth-uptake – the chief justification why the measure was introduced in the UK. Whilst figures from France, that introduced plain packaging in January 2017, show cigarette consumption actually increased compared to last year when branding was allowed. In March alone the French bought four million packets of cigarettes, over four percent more than during the same period last year.

    “These measures were introduced [in the UK] not based on evidence or hard fact but on the dogma of various health lobby groups. Given these measures originated in Brussels, the government should commit to review each and every one of them following Brexit.”

  • Iran names illicit brands

    Iran names illicit brands

    Iran’s Center for Tobacco Planning and Supervision has listed the names of contraband cigarette brands on the Iranian market, The Financial Tribune reported citing the Islamic Republic News Agency.

    The chairman of the center, Asghar Ramzi, said Marlboro, Royal Five, Royal, Mikado, KINGDOM, Sir, Walden, MIAMI, SX, Bon, Faros, Affair, Senator, Lamborghini, MURAD, D&G, Emerald and MAC did not have import or production permits in Iran.

    However, according to the official, the number of cigarettes smuggled into Iran decreased by 30 percent from 8.6 billion cigarettes two years ago to 6.0 billion during the most recent Iranian year, which ended on March 20, 2017.

    The Health Ministry says that Iranians smoke about 55 billion cigarettes annually.

    The government aims to halt cigarette imports and meet domestic demand through local production.

  • Time for EU to reflect

    Time for EU to reflect

    Forest EU, which campaigns for smokers’ rights in Europe, has called for a hold to be put on tobacco legislation until it has been established whether the regulations introduced as part of the revised Tobacco Products Directive (TPD2) have worked.

    The organization has issued its call ahead of the May 20 deadline for EU countries to no longer allow on their markets tobacco products that aren’t compliant with the provisions of TPD2.

    The call follows and to some extent echoes a statement by Forest UK that the TPD2 regulations coming into force ‘infantilise’ consumers and will make no difference to public health (see New rules seen as infantile, May 17). But it also widens the debate.

    Guillaume Périgois, director of Forest EU, said in a press note that the TPD2 was introducing new measures intended to combat the illegal trade in tobacco products, including an EU-wide tracking and tracing system for the legal supply chain and a security feature composed of holograms.

    “The measures designed to restrict trade in illegal tobacco are an implicit recognition that over-regulation encourages counterfeiting and smuggling of tobacco, with all the harmful side effects this causes, including boosting organised crime and the availability of low quality products,” said Périgois.

    The press note said that in December 2012, the European Commission adopted its proposal to revise the previous EU Tobacco Products Directive, or TPD1, following a public consultation that had generated 85,000 responses, the majority of which opposed the key measures featured in the proposal.

    ‘The accompanying Impact Assessment asserted that the proposal will create a two percent drop in consumption (representing around 2.4 million smokers, compared to the 100 million adult smokers in the EU) within five years after the transposition (i.e. 2021), but the Commission acknowledges that this figure is just “a best effort estimation”,’ the note said.

    “The new regulations are a disgraceful attempt to denormalize both the product and legitimate consumers,” said Périgois.

    “The European smokers opposed TPD1 then and they oppose TPD2 now.

    “There’s no evidence they will have the slightest impact on public health.”

    Forest EU said it was calling for a ‘neutral’ review of the impact of TPD2.

    “The EU should attempt no further legislation on tobacco before we know how this directive has worked,” said Périgois.

    “This will give the EU a chance to review the impact of these policies and, where necessary, amend or repeal regulations that deliberately discriminate against 100 million adult consumers.”

  • Tax key to illegal trade

    Tax key to illegal trade

    Despite measures taken since 2013, the challenge posed by the illegal tobacco trade remained as ‘preoccupying’ today as it had been in the past, according to a report last week by the EU Commission to the Council and Parliament.

    ‘The EU and its member states have no choice but to continue to address the threat from illicit tobacco and its changing patterns with determination, since this illicit activity is detrimental to public health, finances and security,’ the report’s conclusion said.

    ‘With its combination of strong legislative responses, robust law enforcement and enhanced co-operation at national, European and international levels, the 2013 Strategy remains relevant. It is too early to pass final judgment on its effectiveness, since its key components – such as tracking and tracing – are not yet applicable.

    ‘Looking at the growing threat from cheap whites in particular, the FCTC [World Health Organization’s Framework Convention on Tobacco Control] Protocol – once fully applied by a critical mass of countries, including key source and transit countries – will be a key tool in combating the global illicit tobacco trade. However, while tracking and tracing in particular will help to secure the legal supply chain, additional tools will be needed to address domestic or foreign clandestine cigarette production effectively.’

    One of those tools is seen as the reduction of price differentials between countries – that is, the reduction of tax differentials.

    ‘Despite the actions taken so far, the size of illicit trade remains by and large stable,’ the report said in a section headed Further reflections. ‘In particular, the phenomenon of cheap whites and counterfeits, while not entirely new, has become increasingly troublesome over the last years. Therefore, now seems to be the right moment for considering additional measures to effectively complement the 2013 Strategy in the future.’

    One of those measures would involve reducing the ‘incentives’ for smugglers.

    ‘Currently, the main incentive for the illicit tobacco trade is the possibility to exploit price differentials between EU member states and neighboring countries, but also between markets in EU member states,’ the report said. ‘One standard 40ft container holding some 20 million cigarettes smuggled into the EU can yield up to €2 million in illegal revenue depending on the tax burden. The level of taxation is a major factor in the price of tobacco products, which in turn influences consumers’ smoking habits, following the rules of price elasticity. A certain degree of upward convergence between the tax levels applied in the member states would help to reduce fraud and smuggling. Neighboring countries such as Belarus with an excessively low tax rate on tobacco products should be urged to approximate their excise duty rates with the minimum rates in the EU, not least in the shared interests of health policy and raising public revenue.’

    The report goes on to describe how the effect of reduced incentives could be enhanced if in parallel smugglers’ production and distribution costs were driven up and if sanctions had a sufficiently dissuasive effect.

    The Commission said that based on its present analysis and further dialogue with stakeholders, it would complete its evaluation of the present strategy and decide on the appropriate follow-up in 2018.

  • Local grievances in Zambia

    Local grievances in Zambia

    A local cigarette manufacturer in Zambia says the government needs to stop the smuggling of cigarettes into the country so as to promote local industry, according to a story in the Zambia Daily Mail.

    Roland Imperial Tobacco Company’s (RITCO) general manager Aliport Ngoma said the prevalence of smuggled cigarettes on the Zambian market was very high, which meant that local producers were robbed of market share and the government was robbed of revenue.

    Ngoma said that about 15 percent of cigarettes on the Zambian market were smuggled into the country.

    “There is need for all stakeholders, including the Zambia Revenue Authority and Zambia Police, to tackle this matter seriously,” he said.

    “As RITCO, we are ready to co-operate with all stakeholders in curtailing this matter, which poses a great danger to industrial growth and economic growth,” he said.

    Ngoma urged the government also to come up with policies to support Zambian-owned companies “that have to play catch-up with multinationals”.

    RITCO, which is said to have invested more than US$20 million at its facility in Makeni, now plans to invest up to US$80 million and create 2,000 jobs in the Lusaka South Multi-Facility Zone.

    “It is our hope that government will provide incentives for local processing of tobacco and discourage export of Zambian tobacco without value addition, once these facilities become available in Zambia,” he said.

    Meanwhile, Ngoma complained that some chain stores were biased against locally-produced cigarettes. “It is very difficult to get shelf space in these stores, let alone have locally produced cigarettes accepted for sale in these chain stores, for whatever reason,” he said.

  • Auctioning illicit tobacco

    Auctioning illicit tobacco

    Vietnam is to pilot a scheme that will auction tobacco products seized while being smuggled into the country, according to a Vietnam Net story citing a new order given by the Prime Minister Nguyễn Xuân Phúc.

    The Vietnam Net story said that only good quality products would be auctioned for later sale in Vietnam or re-export.

    Fake or substandard products would be destroyed.

    The pilot program will be run for a year by the ministries of finance and industry and trade.

    According to the Ministry of Industry and Trade, the fight against illicit tobacco imports has seen significant results since the government started financing the destruction of the seized products.

    Statistics provided by the ministry showed that the number of seized cigarette packs fell from 1,055 million in 2012 to 990 million in 2014 (about 20 percent of the total cigarette consumption in Vietnam) and to 700 million in 2015.

    Tobacco smuggling is common in the southern border provinces of Dong Thap, Kien Giang, Long An and Tay Ninh.

    Vo Thien Ngo, vice director of the Long An Market Management Branch, said the transportation, storage and trading of smuggled cigarettes in the province of Long An continued unabated.

    Smugglers were using motorcycles, motorboats and high-speed cars to transport large shipments of smuggled tobacco products, he said.