Saturday

23rd Mar 2019

Opinion

Illegal cigarette trade still dogs Europe's fringes

  • There are concerns over the independence of a new 'track and trace' monitoring system for cigarettes in EU being smuggled (Photo: Tom Sinon)

A battle is being fought on the EU's borders: a struggle to intercept illegal tobacco products, and the stakes keep rising.

In 2015 alone, the illicit tobacco trade deprived EU governments of more than €11bn in tax revenue, a figure projected to have risen even further since then.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

This is not to mention the estimated 700,000 in deaths each year from smoking-related illnesses, a number inflated by illegal trafficking.

As the costs to member states increase, so too do the number of creative ways by which smugglers seek to sneak their products, known as 'cheap whites', past border controls.

Earlier this month, Lithuanian border police intercepted thousands of packets destined for a country where one in every six cigarettes smoked in 2016 was illegally imported.

Belarus is origin

The smugglers had attached the packets to blocks of ice and floated them along the river Neris. It's no coincidence that upriver leads to Belarus.

As much as 85 percent of all illegal tobacco in Lithuania comes from Belarus, with the majority caught in transit to other EU countries.

Over the past few years, such stories have served as the backdrop to the European Commission's tortuous efforts to stamp out the illicit tobacco trade.

Unfortunately, so far, their campaign remains hampered by the persistent influence of the tobacco industry, as well as their failure to ratify a critical global protocol meant to put an end to the illegal tobacco trade once and for all.

Over the past few years, the EC's efforts have been driven by the EU Tobacco Products Directive of 2014, which, among other things, requires tobacco companies to comply with a new track and trace (T&T) system by May 2019.

The system, whose delegated and implementing acts were released in December, is meant to control the flow of tobacco at all stages of the supply chain. According to the document, each member state will have to appoint an 'ID issuer' charged with creating and assigning ID codes for unit packs, while ensuring the issuer's independence from industry.

This system replaces a previous anti-smuggling agreement between the commission and Philip Morris International (PMI), which expired in 2016 and had been criticized for allowing too much industry involvement.

Tobacco companies have instead pushed for the tracking and tracing of its own products through a system originally called 'Codentify'.

Developed by PMI itself, then licensed for free to three other major companies, it is under the remit of a supposedly independent third-party organisation called Inexto – that is staffed by former tobacco industry representatives.

The continued existence of Codentify as an alternate T&T system, and one that could potentially be nominated by individual member states as an ID issuer, is cause for concern.

After all, there is a long history of links between cigarette manufacturers and smugglers: in 2004 for instance, PMI reached a 12 year long, $1.25bn (€1.01bn settlement) with regulators to conclude a legal dispute over its role smuggling cigarettes into the EU.

Separately, British American Tobacco was fined £650,000 in the UK for oversupplying cigarettes to Belgium, in a move to duck higher taxes in the country.

How 'independent'?

The new T&T proposal needs to strengthen restrictions for nominating ID issuers, and make clear that no industry influence whatsoever is allowed – a position the current version does not take, potentially rendering the new "independent' system null.

This means that, despite the commission's protests to the contrary, the proposal fails to meet best practice under the World Health Organization's Protocol to Eliminate Illicit Trade in Tobacco Products under the Framework Convention on Tobacco Control (FCTC), which aims to eliminate the influence of corporations on efforts to regulate the industry.

Not only are they uncompliant with WHO rules, they go against the best practices identified in the organisation's publications on tobacco control.

Perhaps that isn't surprising, given that five years after the FCTC protocol was adopted, a number of EU member states have adopted but not yet ratified the convention.

Critically, the WHO needs 40 parties to the protocol before it can become an international treaty this year. It's fair to say that even if a viable T&T system is adopted at the EU level, unless the FCTC Protocol becomes a global treaty, its impact will remain limited.

In addition to concerns about the T&T draft proposal's adherence to the FCTC, there is another issue that the new system doesn't address – one brought to light by the Lithuanian authorities' discovery earlier this month.

That is, the close ties between Big Tobacco and government authorities on Europe's fringes, where tobacco manufacturers continue to hold major stakes in state-owned enterprises (SEOs) in countries like Belarus and are directly implicated in trafficking illicit cigarettes.

Indeed, many illicit cigarettes come from Belarus, where they are produced by two SEOs, Grodno Tobacco Factory Neman (GTFN) and Tabak Invest.

Last year, GTFN reportedly supplied 5.53 billion illegal cigarettes to the European market. Not surprisingly, while these firms manufacture their own brands, they also produce under contract with some of the major international tobacco companies – including BAT, which has described itself as the biggest foreign investor in Belarus' tobacco industry.

Given Big Tobacco's continued efforts to take a slice of the illegal trafficking industry, it's clear the commission needs to go much further.

Firstly, it needs to make a more concerted effort to wipe off the industry's fingerprints from its new T&T system before they have a chance to sideline it.

Secondly, EU member states need to set an example to their neighbours and ratify the FCTC Protocol if they are serious about bringing their anti-trafficking mechanisms in line with best practice.

This wouldn't only help return billions in lost revenues, especially in the Baltic and East European states that are disproportionately impacted by the illicit tobacco market.

It would also help reduce the number of lives lost to 'cheap whites'. The successful ratification of the protocol alongside the implementation of a new T&T system could turn into a valuable victory for the EC, and by extension for the European Project, in both public health and solidarity.

Felipe Cruvinel is a researcher at St Andrews university, Scotland

Interview

Cigarette-smuggling expert asks MEPs not to veto new bill

Anti-smuggling expert Luk Joossens says draft bill in European Parliament on a 'track-and-trace' system - due by May 2019 - will bring improvements, and that a veto 'would be the nuclear solution'.

Focus

Study: EU test undervalued toxicity of cigarettes

The Dutch National Institute for Public Health and the Environment says that levels of carbon monoxide can be twenty times as high when using a different measurement system.

Macron is confusing rigidity with strength

Jan Zahradil, EU Commission president Spitzenkandidat for the European Conservatives and Reformists Group, responds to Emmaneul Macron's European vision ahead of the May elections.

A compromise proposal for the Article 50 extension

At this week's summit, EU leaders should extend Article 50 until the May European elections. But they should postpone the effective date of the UK's withdrawal from EU rights, rules, and regulations for another year - to May 2020.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Italy should capitalise on Brexit

Now that the UK is leaving, Italy can, and should, step up. It is the third largest country and economy in the EU. Spain and Poland follow, but they are significantly smaller economically and population-wise.

The Magnitsky Act - and its name

It is disappointing that so many MEPs in the Socialist and Green group caved in to Russian interests, in fear of challenging a plutocratic regime, by saying 'no' to naming the Magnitsky legislation by its rightful name: Magnitsky.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  4. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. Nordic Council of MinistersThe Nordic gender effect goes international
  6. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Join EUobserver

Support quality EU news

Join us