Jul. 14 2004
Washington, DC — We support legislation introduced by U.S. Representatives Lloyd Doggett (D-TX) and Todd Platts (R-PA) and Senator Ron Wyden (D-OR) to address the problem of cigarette smuggling, which undermines efforts to reduce smoking, especially among children and reduces federal and state revenues by as much as $1.0 billion or more each year through evaded cigarette taxes and duties. This legislation makes good sense as a matter of law enforcement, public health policy and international leadership by the United States. It would also protect badly needed state revenue.
Cigarettes are the world’s most widely smuggled legal consumer product. In fact, according to legal documents filed in a lawsuit by the European Union (EU) in U.S. courts, one in three of the world’s exported cigarettes - about 400 billion cigarettes each year - turns up as illegal contraband. Despite the tobacco companies repeated denials of involvement in cigarette smuggling, news reports and lawsuits indicate that the companies have facilitated smuggling to penetrate closed markets, increase the sale of their brands by making them available at reduced prices, and undermine government efforts to increase cigarette taxes and import duties in order to reduce tobacco use.
The EU recently announced that, in order to avoid a lawsuit over cigarette smuggling, Philip Morris International has agreed to implement a series of anti-smuggling measures and pay up to $1.25 billion over the course of 12 years. The anti-smuggling measures include improved tracking, tracing, labeling and record-keeping requirements to help law enforcement determine the source and track the path of contraband cigarettes; better monitoring of sales and distribution practices and vendors to ensure they are in compliance with legal requirements; and establishment of additional monetary penalties Philip Morris must pay if its cigarettes continue to be smuggled in large quantities.
The EU's efforts to combat cigarette smuggling and hold the tobacco companies accountable for their involvement stands in stark contrast to the United States. The Bureau of Alcohol, Tobacco, Firearms and Explosives has taken steps recently to investigate and crack down on cigarette smuggling, but weak laws have hampered these efforts. The Doggett/Platts/Wyden legislation would significantly strengthen U.S. laws against cigarette smuggling. This legislation includes common-sense measures to address both domestic and international cigarette smuggling, including increasing civil and criminal penalties; establishing labeling, tracking and record-keeping requirements so law enforcement officials can determine the source and track the paths of smuggled cigarettes; and tightening regulations governing block sales of cigarettes. We appreciate the commitment of Representatives Doggett and Platts and Senator Wyden to ensure that their legislation is at least as strong as the EU/Philip Morris agreement and that all tobacco companies are held to the same standards.