Article Text

Assessment of the European Union's illicit trade agreements with the four major Transnational Tobacco Companies
  1. Luk Joossens1,
  2. Anna B Gilmore2,
  3. Michal Stoklosa3,
  4. Hana Ross4
  1. 1Association of the European Cancer Leagues & Tobacco Control Expert, Foundation Against Cancer, Brussels, Belgium
  2. 2Department for Health, University of Bath and UK Centre for Tobacco and Alcohol Studies, Bath, UK
  3. 3Economic and Health Policy Research, American Cancer Society, Atlanta, USA
  4. 4University of Cape Town, Cape Town, South Africa
  1. Correspondence to Dr Luk Joossens, Association of European Cancer Leagues, Chaussée de Louvain 479, Brussels B-1030, Belgium; luk{at}europeancancerleagues.org

Abstract

To address the illicit cigarette trade, the European Union (EU) has signed agreements with the four major Transnational Tobacco Companies (TTCs) that involve establishing extensive systems of cooperation. All agreements foresee two types of payments: annual payments (totalling US$ 1.9 billion over 20 years) and supplementary seizure payments, equivalent to 100% of the evaded taxes in the event of seizures of their products. While limited by the fundamental lack of transparency in this area, our analysis suggests that these agreements have served largely to secure the TTCs’ interests and are threatening progress in tobacco control. The seizure payments are paltry and a wholly inadequate deterrent to TTC involvement in illicit trade. Despite the agreements, growing evidence indicates the TTCs remain involved in the illicit trade or are at best failing to secure their supply chains as required by the agreements. The intention of the seizure-based payments to deter the tobacco industry from further involvement in the illicit cigarette trade has failed because the agreements contain too many loopholes that provide TTCs with both the incentive and opportunity to classify seized cigarettes as counterfeit. In addition, the shifting nature of cigarette smuggling from larger to smaller consignments often results in seizures that are too small to qualify for the payments. Consequently, the seizure payments represent a tiny fraction of the revenue lost from cigarette smuggling, between 2004 and 2012, 0.08% of the estimated losses due to illicit cigarette trade in the EU. Our evidence suggests the EU should end these agreements.

  • Illegal tobacco products
  • Tobacco industry
  • Advocacy

This is an Open Access article distributed in accordance with the terms of the Creative Commons Attribution (CC BY 4.0) license, which permits others to distribute, remix, adapt and build upon this work, for commercial use, provided the original work is properly cited. See: http://creativecommons.org/licenses/by/4.0/

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