EU - fighting against cigarette smuggling but a WHO solution may be in site..

February 16, 2010 - Austin Rowan, head of the task group cigarettes from the European Anti-Fraud Office (OLAF) told Agence France-Presse (AFP) that smuggling to the European Union (EU) is on the increase.

On the eastern border of the EU, the fight against cigarette smuggling from Ukraine, Russia or Moldova is intensifying as traffickers cash in on the lucrative trade.

"Why? Because the profits are so enormous," he added.

"There is a huge difference in the prices between Ukraine and the European Union for example", Rowan added. While a pack of cigarettes costs more than eight euros in Ireland and more than five in France, it can be bought for between 30 euro-cents and one euro in Ukraine, which sits on the eastern border of the EU.

Seizures of contraband cigarettes exploded in the European Union from 4.4 billion units in 2005 to 5.2 billion in 2008, according to the latest figures from OLAF. Most of those cigarettes, whether counterfeit or genuine -- but smuggled into the EU without taxes being paid -- come from China, Ukraine and Russia.

We are all counting on World Health Organization (WHO) to provide solution to control the booming worldwide cigarette smuggling problem. Fourth Session of the Intergovernmental Negotiating Body on Illicit Trade in Tobacco Products, March 14-21, 2010. The representatives of governments will meet to discussed and sign off on the draft protocol that expected to boost the war on illicit trade in tobacco products. If signed by governments attending the meeting, the protocol is expected to become an international convention to eliminate illicit trade in tobacco products across the globe.
(WHO FCTC Conference March 2010 - protocol on illicit trade in tobacco products.)

The loss of duties prevented by the seizures is a little over a billion euros, said Rowan. "At best 10 percent is seized, so you are talking about approximately nine billion euros' prejudice annually for the budget of Member states," he added.

After putting a liaison officer in China last year, the European Anti-Fraud office is hoping to appoint three more in other "tobacco hotspots": Moscow, Kiev and the Egyptian capital Cairo.

On the frontline of this struggle are the EU countries that border Ukraine: Hungary, Poland, Romania and Slovakia. Seizures of contraband cigarettes in the four countries increased by almost 50 million in one year: from 843 million in 2008 to 891.5 million in 2009, according to their own official figures.

"If you're going to bring cigarettes from Ukraine, then you will use the Eastern borders," said Rowan. "But if you are going to bring cigarettes from Dubai or from China, then the EU ports are interesting -- like Dublin, Antwerpen, Rotterdam."

Poland and Romania had also become "countries of destination" for smuggled cigarettes, having previously only been used by smugglers to get their goods to western Europe. A 2009 increase in excise duties in Romania helped bring that about.

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

Tobacco company Philip Morris in Romania told the financial daily Ziarul Financiar it was stopping production at its Bucharest factory for two weeks because of the flood of contraband that had hit its sales. (Romania - PMI suspends cigarette production for two-weeks starting February 19th..)

Romanian customs and border police have stepped up their efforts. "About 21 million illegal cigarettes have been confiscated since the beginning of 2010," Dorel Fronea, deputy director of Romania's border surveillance division for the Customs service, told AFP. "This is a record in Romania."

Reference: EU fights flow of contraband cigarettes from east, Agence France-Presse (AFP), 2/11/2010.