Cracking down on the black market in tobacco trade is a global issue, and requires a global solution. The strength of that solution is only as strong as the weakest link. That is why we must tackle head on areas of particular weakness – the hot spots!
Last year I travelled to Latin America, where I had a chance to visit two ‘hot spot’ countries when it comes to the illicit tobacco trade: Argentina and Panama.
In Argentina, especially in the north east, the key problem is caused by illegal cigarettes coming from neighboring countries. In Panama, the problem is the abuse of low controls in the free trade zones, which has made this country a logistic hub and hot spot for illegal cigarettes. Illicit goods are coming from countries such as India, China and Vietnam, to name a few, and are then smuggled to Central America and other countries including Colombia, Venezuela, Mexico and the Caribbean Islands.
The illicit tobacco trade problem escalated in Argentina after a steep tax increase on cigarettes introduced last May. The total tax burden on cigarettes went up to 80%, causing legal cigarette prices to increase more than 70% in 2016. As a result, it seems many consumers shifted to the black market looking for cheaper cigarettes.
This was the main topic of the panel discussion I participated in at 29th National Forum on Illicit Trade, Piracy and Contraband, organized by the local Anti-Piracy Association and the Argentine Confederation of Medium Businesses (CAME) on the 22nd November last year. Together with representatives from the Business Action to Stop Counterfeiting and Piracy (BASCAP), we shared our experience with government and law enforcement officials, and called the local administration to recognize the illegal tobacco trade as a burning problem impacting the society, the local economy as well as the competitiveness of the country.
While the authorities in Argentina have made significant inroads into this issue, including seizures of over 64 million illicit cigarettes to-date and the dismantling of illicit networks through the closure of clandestine factories, the efforts of the government need to persist – and we will continue to support the authorities in this endeavor.
Illicit tobacco trade is not a petty crime. It is jeopardizing legal businesses, their supply chains and their employment base, depriving governments of significant tax revenue. For instance, in Central America alone, over 214 million illegal cigarettes have been seized during 2016, most of them having entered the region through the Panamanian-based Free Trade Zones, as underlined in the “Illicit Cigarette Trade in Central America” report presented by the Costa Rican – American Chamber of Commerce (AmCham).
The Forum organized by CAME has allowed us to talk about all of these issues in detail and voice our concerns. It has also enhanced the dialogue between the public institutions, experts and the private sector.
I left Latin America concerned, but optimistic that governments, law enforcement, business community and consumers can work together to combat this scourge. Because only through joint efforts we will be able to put an end to the transnational illegal tobacco trade in Latin America.
Check out the Stop Illegal Cigarettes website for more information on the scale of the problem and efforts to combat it.
Written by Alvise Giustiniani