title: Assessment of the European Union's illicit trade agreements with the four major Transnational Tobacco Companies.
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.
authors.affiliation: Association of the European Cancer Leagues & Tobacco Control Expert, Foundation Against Cancer, Brussels, Belgium.
authors.forename: Luk
authors.initials: L
authors.lastname: Joossens
authors.affiliation: Department for Health, University of Bath and UK Centre for Tobacco and Alcohol Studies, Bath, UK.
authors.forename: Anna B
authors.initials: AB
authors.lastname: Gilmore
authors.affiliation: Economic and Health Policy Research, American Cancer Society, Atlanta, USA.
authors.forename: Michal
authors.initials: M
authors.lastname: Stoklosa
authors.affiliation: University of Cape Town, Cape Town, South Africa.
authors.forename: Hana
authors.initials: H
authors.lastname: Ross
mesh_terms: D003132:Commerce / Q000191:economics / Q000331:legislation & jurisprudence*; D016265:Conflict of Interest / Q000191:economics / Q000331:legislation & jurisprudence*; D003299:Cooperative Behavior; D003415:Crime / Q000191:economics / Q000331:legislation & jurisprudence*; D000066479:Criminal Behavior; D005062:European Union / Q000191:economics; D006801:Humans; D007391:International Cooperation / Q000331:legislation & jurisprudence*; D035846:Law Enforcement; D011050:Policy Making; D019460:Tobacco Industry / Q000191:economics / Q000331:legislation & jurisprudence*; D062789:Tobacco Products / Q000191:economics / Q000331:legislation & jurisprudence*
keywords: Advocacy; Illegal tobacco products; Tobacco industry