Globally, the tobacco trade is a billion dollar industry that includes the entire value chain, from tobacco growing to primary processing, manufacturing, suppliers, distribution networks, taxes and consumers. However, the tobacco industry suffers the negative effects of the illicit trade. According to British American Tobacco (BAT), it is estimated that more than 456 billion cigarettes are sold illegally on the global tobacco market each year.
The illicit tobacco trade is a complex issue that affects the economic and social fabric of our society, including areas such as national security, tax collection, brand rights, brand investments and quality. With respect to cigarettes, illicit trade includes both illicit manufacturing, i.e. cigarettes produced in legal or secret facilities (not reported to tax authorities), and illicit importation, which describes legitimately manufactured brands smuggled and sold in another country without payment of an appropriate royalty. functions. The World Health Organization (WHO) estimates that one in ten cigarettes smoked worldwide is illegal.
The Transnational Alliance to Combat Illicit Trade (TRACIT) estimates that governments lose approximately US$40.5 billion in tax revenue annually from the illicit trade in tobacco products. In Trinidad and Tobago, major national tobacco industry players report that illicit tobacco trade accounts for approximately 5% to 10% of the market share, and that tax evasion related to illicit tobacco trade is amounts to $4.5 million a year.
Illicit tobacco products and counterfeit cigarettes are generally more harmful than legal products because they are not manufactured to the same strict health and safety standards (i.e. mandatory labeling requirements and health warnings) of the country of destination. Counterfeit cigarettes contain higher levels of tar, nicotine and carbon monoxide, as well as high concentrations of toxic metals, which are harmful to health.
As the government of Trinidad and Tobago strives to combat illicit trade, the Illicit Trade Task Force, through its Tobacco Task Force, is working with several authorities to put implementing awareness and capacity building programs for border agencies to identify and reduce tobacco trade.
In addition, the Ministry of Trade and Industry is working to implement a strong Special Economic Zones (SEZ) regime which aims to bring the country in line with international practices and create an encouraging environment for businesses and consumers. The implementation of SEZ measures should contribute to the fight against illicit trade through improved monitoring and detection of products and enhanced compliance.
To help combat the illicit tobacco trade, consumers should pay attention to tobacco product labels and packaging, which must include the following:
- the country of sale provided on the packaging
- the name and address of the manufacturer
- the label must be in English
- a graphic health warning
More importantly, they must be aware of the price. Illegal tobacco is generally less expensive than the average pack of cigarettes. If these factors or elements are present, they may be in possession of a contraband product or an item not intended for domestic sale.
Join us next week as we continue to examine other key areas – alcohol, cleaning products and pharmaceuticals – impacted by illicit trade in Trinidad and Tobago.
If you suspect items are being traded illicitly, you can make an anonymous report by calling 800-TIPS (8477) or tipping online at www.crimestopperstt.com.
Editor’s note: This article is sponsored by the Ministry of Trade and Industry.