EU - mobilizing for a crackdown on cigarette smuggling with emphasis on Poland..

January 26, 2010 - Cigarettes are the world's most widely smuggled legal consumer product. One cigarette in every ten sold in the European Union has been illegally imported. To combat the booming business in smuggled tobacco from Eastern Europe and Asia, Brussels (capital of the European Union (EU)) has decided to tighten security on the EU's external borders. Poland is in the front line of the war on the cigarette smugglers.

Brussels is mobilising for a crackdown on cigarette smugglers. The barrier against illegal tobacco will be erected on the Polish border, because the amount of smuggled goods traversing the country has reached a record high. Last year, police and customs agents intercepted almost 750 million contraband cigarettes, close to 100 million more than the previous year. Despite these huge numbers, they only succeed in seizing a fraction of the smuggled merchandise routed via Poland, which has become a distribution hub for contraband from the East destined for the countries of the European Union.

Cigarette smuggling is particularly lucrative, because the successful transfer of a container of 100,000 packets of cigarettes from Poland to the United Kingdom can yield a 500,000-euro return on investment, and similar gains can be obtained on other EU markets. Tobacco has now become the most smuggled product in Europe. For the international gangs that organize the traffic, it is even more profitable than drug smuggling. Both of these illicit trades offer a similar potential for profit, but sanctions for tobacco smuggling are much more lenient than they are for drugs, and in many countries, tobacco smugglers also benefit from a large degree of tolerance from the general public, explains Piotr Dziedzic, department chief of the Polish Ministry of Finance's anti-crime bureau.

A packet of cigarettes that can be bought for as little as 50 euro cents in Ukraine is worth four times as much when it crosses the Polish border. Once it reaches Germany, it can be sold for as much as five euros, and smuggled into the UK or Norway, it can even obtain a price of eight or nine euros. (1 EUR = 1.40753 USD) European Union - agrees to raise the minimum tax on tobacco products sold in the region.., November 2009)

Differentials like these have enabled the smugglers to pay off huge numbers of people — warehouse owners, truckers, train drivers and government officials — who turn a blind eye to the movement of illegal merchandise. Currently, 10% of cigarettes sold in the EU are sourced from contraband, which represents an annual seven billion-euros loss in tax revenue.

The only way to prevent the smuggling is to halt the flow of illegal goods into the EU, and an appreciation of this fact has now prompted significant investment to seal Poland's eastern border. In 2010, the Polish government will spend 133 millions zlotys (more than 33 million euros) on vehicles, borescopes and other specialist equipment, and a new electronic communications and control centre.

The first of two powerful X-ray scanners, worth millions of zlotys, will shortly be installed at the railway customs checkpoint in Medyka on the Ukranian border in the south of the country, where it will be used to find merchandise hidden trains and containers from areas identified as potential supply points for illicit trade, like China and other Asian countries. A further stationary scanner will be set up at the Grzechotki road crossing on the border with the Russian exclave of Kaliningrad. In the area around Budzisko, in the border region between Poland and Lithuania, customs officers will be equipped with with mobile X-ray and license plate reading systems, and in eastern Poland, work has already begun on the construction of a chain of control centres, which can be brought into service to cope with expected increases in cross-border traffic. The new Biała Podlaska customs centre will soon completed at a cost of 9.2 million euros, and similar facilities have been planned for Przemyśl, Tomaszów Lubelski and Zamośc. Programmes to recruit more customs staff and to train more sniffer dogs are also being considered.

Within the EU, only Britain's customs service has a better record of intercepting contraband tobacco than we do, says Piotr Dziedzic. The campaign to seal Poland's eastern border has already resulted in southward shift in contraband routing, with more merchandise being channeled through Hungary and the Balkans. The spectacular disparities between levels of cigarette taxes remain the main incentive for smugglers, and this also applies within the borders of the EU. Poland now charges the Europe's lowest rate of 64 euros on every thousand cigarettes, but the tax mark-up is much higher on the other side of the Oder in Germany, and four-times as high in countries like Ireland, where every thousand cigarettes is subject to a tax of 249 euros.

Fourth Session of the Intergovernmental Negotiating Body on Illicit Trade in Tobacco Products, March 14-21, 2010 in Geneva.

Reference: The war on cigarette smuggling, Zbigniew Lentowicz, Rzeczpospolita (one of Poland's large nationwide daily newspapers), 1/21/2010.

Some related news briefs:
WHO FCTC Conference March 2010 - protocol on illicit trade in tobacco products..;
Australia - Smuggling of illegal cigarettes has hit an all-time high..;
Quebec - push to stop trade in illicit cigarettes..;
Tobacco smuggling fuels organized crime, robs governments of tax money and spurs addiction..;
Counterfeit products continue to flood EU, U.S. markets..;
Paraquay - top producer of contraband tobacco..;

illicit, illegal, black market, smuggling