Last week’s Helsinki Commission hearing A Hazy Crisis: Illicit Cigarette Smuggling in the OSCE Region represented a golden opportunity to bolster global efforts to counter illicit trade in tobacco products and associated crime.
The Commission on Security and Cooperation in Europe, commonly known as the Helsinki Commission, is an independent agency of the U.S. Federal Government. For forty years it has monitored compliance with the Helsinki Accords, which were established to improve relations between the Communist bloc and the West.
Senator Roger Wicker, chairman of the Commission, opened the hearing by highlighting the significant transnational threat posed by illicit cigarette smuggling. He said: “In short, ongoing illicit trade helps fund terrorist activities, foster corruption, and undermine the rule of law.”
Senator Wicker said he wanted to use the hearing to draw attention to the problem of illicit tobacco trafficking, and stated why the United States should: “provide leadership in the fight against this form of illicit trade.” There were certainly many shocking insights, facts and figures shared during the session, which should act as a wake-up call to citizens and policy makers across the world.
“European Commission and KPMG studies estimate around $11.64 billion is lost every year to this criminal activity in the EU alone, where counterfeit cigarettes are particularly prevalent and account for nearly 30 percent of the articles detained by EU customs”, Senator Wicker said.
Speaking at the hearing, Professor Louise Shelley, an expert in counter-terrorism and transnational crime at George Mason University, reinforced the scale of the problem in the EU, in particular France, which she called “the contraband capital of Europe”. She pointed to a culture of impunity, and called for serious policy analysis to address the problem.
Also at the hearing, Professor David Sweanor, a public health advocate, raised a very interesting perspective on tackling the business viability of illicit cigarette trade. Disrupting the business model of those trading in illicit tobacco products through limiting the availability of manufacturing components, and providing greater access to viable alternatives to combustible cigarettes, were all cited by Professor Sweanor as potential ways to disincentivize criminals.
PMI’s Senior VP and General Counsel, Marc Firestone, was also invited to give a perspective on the issue. Underlining the significant problem, and major social issue presented by illicit trade, he spoke of PMI’s continued determination to innovate in order to protect the supply chain, and PMI’s customers, from criminal elements.
You can watch the hearing and read all the written testimonials from the witnesses here.
My hope is that the Helsinki Commission hearing accelerates policy and regulatory development to address both the supply and demand of illicit products. I also would like to see more opportunities for public and private sector cooperation in dealing with this issue.
In the meantime, we continue to monitor and address the problem. And if the evidence at the Helsinki Commission was not enough to grab your attention, a new KPMG study out today shows 1 in 5 cigarettes in the Maghreb region were consumed illegally in 2016, depriving governments of over $565m in lost tax revenues.
The study, commissioned by PMI, also found smuggling of cigarettes forms just one part of a broader illicit trade landscape, whereby commodities such as fuel and food are smuggled across borders to be sold at cheaper prices.
You can read the report here.
Written by Alvise Giustiniani