New Investigative Reports Detail Vast Scope of Global Cigarette Smuggling, Underscore Need for Strong Treaty to Combat Problem

Statement of Matthew L. Myers, President, Campaign for Tobacco-Free Kids

Oct. 20 2008

GENEVA, SWITZERLAND — As nations convene today in Geneva to negotiate an international treaty to combat cigarette smuggling and other illicit tobacco trade, a new series of investigative journalism reports underscore the vast scope of the problem, which harms global health, funds organized crime and terrorist organizations and costs governments billions in revenue.

These reports demonstrate why combating the illicit tobacco trade must become a more urgent international priority and why nations must make significant progress this week toward agreement on a strong and effective treaty to address this problem. Far from being an arcane issue, the illicit trafficking of cigarettes has serious public health, national security and economic consequences for the world’s nations.

Cigarettes are the world’s most widely smuggled — but otherwise legal — consumer product. Experts estimate that contraband cigarettes account for about 11 percent of global cigarette sales, or about 600 billion cigarettes annually, and cost governments more than $40 billion (U.S.) annually in tax revenue.

Coinciding with the treaty negotiations, the International Consortium of Investigative Journalists, a project of the Center for Public Integrity, today issued a series of investigative reports that describe the illicit tobacco trade as a "booming business" that "stretches from counterfeiters in China and renegade factories in Russia to Indian reservations in New York and warlords in Pakistan and North Africa." Based on investigative reporting from 15 countries, the reports shed new light on the players involved — including organized crime syndicates and terrorist groups — as well as the smuggling routes and techniques they use:

• One report details how a network of Russian and East European factories is behind at least $1 billion worth of contraband cigarettes pouring into Europe with a brand name, Jin Ling, that has no legal market share, does no advertising and appears to be produced exclusively for the black market. According to the report, Jin Ling is "the world’s first ever cigarette brand designed and manufactured only for smuggling."
• Another report details how Chinese counterfeiters obtained technology to reproduce the protective holograms on packs of top Western cigarette brands and have become by far the world’s largest suppliers of counterfeit cigarettes, including fakes of brands such as Marlboro and Newport. These counterfeiters produce roughly 200 billion cigarettes annually, which are disguised as chinaware, toys and furniture and shipped into ports worldwide. One massive smuggling network described in the report moved a billion counterfeit cigarettes from China into the United States.
• A third report finds that Gallaher, the United Kingdom cigarette manufacturer, worked through distributors to funnel large quantities of cigarettes to developing countries with no real market share.
• Another report details how an El Paso, Texas, smuggler masterminded the trafficking of up to half a billion cigarettes across the United States, sold largely by smoke shop vendors on Indian reservations.

Delegates from 160 nations will meet in Geneva this week for the second round of negotiations on an international treaty to combat the illicit tobacco trade. The illicit trade treaty will be a supplementary treaty, or protocol, to the existing international tobacco control treaty, the Framework Convention on Tobacco Control (FCTC), which became international law in February 2005 and has been ratified by 160 countries. The FCTC obligates ratifying nations to implement scientifically proven measures to reduce tobacco use, including: higher tobacco taxes; bans on tobacco advertising, promotions and sponsorships; smoke-free workplaces and public places; and stronger health warnings.

The illicit tobacco trade circumvents policies to reduce tobacco use, in particular higher tobacco taxes, and encourages consumption, especially among price-sensitive young people, by making cigarettes available cheaply.

Unfortunately, despite being significantly impacted by the illicit tobacco trade, the United States will not have a seat at the table in these negotiations because it has yet to ratify the FCTC. This failure to ratify represents an abdication of leadership in the global fight against tobacco use, the leading cause of preventable death in the United States and around the world.

Tobacco use killed one hundred million people in the 20th century, and if current trends continue, it will claim one billion lives in the 21st century, according to the World Health Organization. Tobacco use already kills 5.4 million people a year and the epidemic is worsening, especially in the developing world where more than 80 percent of tobacco-caused deaths will occur in the coming decades. By effectively implementing the proven tobacco control measures called for by the FCTC, and negotiating and implementing a strong illicit trade treaty to prevent the undermining of these measures, nations can reverse the tobacco epidemic and save countless lives.