Smuggling

Cigarettes are the worlds most widely smuggled legal consumer product. Constantly changing routes means that tobacco is smuggled across almost every national border.

Impact on global public health

The smuggling of tobacco products has a negative impact on global public health by undermining tobacco tax policies, reducing the average cost of cigarettes as well as increasing availability to young people by making them cheaper. Cigarette smuggling has also been linked the financing of criminal and terrorist groups, as well as reducing government income from tobacco tax, which is an important source of funding for tobacco control and public health programmes. Furthermore, illegally traded tobacco products carry the same health regulations therefore further increasing the detrimental health effects from smoking.

The winners

Tobacco products are smuggled by the organised diversion of tobacco consignments whilst in transit. If cigarettes can be diverted whilst in the distribution chain (where they are carried untaxed) smuggling on a large scale avoids all taxes. The main losers as a result of tobacco smuggling tend to be national finance ministries due to the loss of tax. In contrast, those who gain from smuggling include tobacco manufacturers and wholesalers. They gain initially by making a profit when the product is first sold. Then, smuggling generates a cheap supply of cigarettes and lowers the average price, which in turn increases demand. As a result, tobacco companies and their supporters campaign for a reduction in tax on cigarettes in the legal market, again with the aim of increasing consumption.

It is estimated that the profits from illegal trafficking of tobacco products are much higher compared to profits from illegal drug trafficking. However, in contrast, the penalties for smuggling tobacco are far less.

http://www.fctc.org/factsheets/index.php fact sheet no.8

Controlling smuggling

Some governments are now suing tobacco companies for the revenue lost due to tobacco smuggling. Suggested measures to control smuggling include:

• -sophisticated tracing/tracking system allowing movements to be monitored therefore avoiding their diversion to illegal markets
• -compulsory markings to allow detection of illegal trade in tobacco products
• -record-keeping linked to the tracing/tracking system including machine scannable code
• -Licensing codes for the export and/or import again allowing customs to keep track of trade
• - payment system that would put the responsibility on manufacturers to prove that their products arrive at their intended destination/intended market
• - criminalisation of contraband and counterfeit tobacco products

Useful links for further information:

http://www.ash.org.uk/

www.hm-treasury.gov.uk/media/6A1/17/433.pdf

http://bmj.bmjjournals.com/cgi/content/full/321/7266/947

http://www.ashscotland.org.uk

http://www.pubmedcentral.gov/articlerender.fcgi?artid=1118741

http://www.andyrowell.com/articles/no_smoke.html