Illicit trade in the EU31 Jul 2019 · 3 min read
Preventing illegal tobacco sales
A problem without borders
The illegal cigarette trade doesn’t begin or stop at EU borders. In fact, much of the illicit tobacco enters from outside Europe. That’s why concerted action within the EU can have a global impact. We're committed to encouraging open dialogue about the most effective ways to combat illicit trade in tobacco products by involving manufacturers, suppliers of key components, technology providers, customs authorities, and other law enforcement agencies.
We continue with our considerable efforts to combat the illicit tobacco trade in the EU wherever we run our business. PMI welcomes the entry into force of the first ever EU-wide tracking and tracing system for tobacco products under the Tobacco Products Directive. We firmly believe that this presents a unique opportunity for the EU and the industry to put in place an effective and lasting solution to this growing and complex issue
We fully support ratification of the World Health Organization’s FCTC Protocol to Eliminate Illicit Trade in Tobacco Products, an important advance in combatting illegal and
unregulated tobacco trade. We are convinced that ratifying the FCTC Protocol will help the EU gain the upper hand in fighting the black market in tobacco products and will pave the way for controls in tracking and tracing, licensing, and due diligence
Learn more about our approach by reading our position paper ‘Fighting the Illicit Trade in Tobacco in the EU.’
Fighting the Illicit Trade in Tobacco in the EU
Cooperating with the EU and its member states
In 2004, Philip Morris International, the European Union, and 10 of its member states signed a 12-year cooperation agreement, which by 2009 was ratified by all 28 member states. The purpose of the agreement was to coordinate efforts in combatting illicit trade in PMI brands within the EU.As part of the agreement, we introduced stringent record-keeping, screening standards for potential business partners, and strict control of cash payments. We also provided USD 1.25 billion in funding to the Commission and member states to underpin these efforts over the course of the agreement.
This agreement has served its purpose, reducing PMI contraband on the illicit tobacco market and providing public revenues of around USD 1 billion to member states and the EU budget. In a changing legal and market environment, we will redeploy our resources and continue to fight illegal tobacco trade by focusing on cheap whites, strict law enforcement, and strengthened international cooperation.
Results from the 2016 EU Commission report
The anti-contraband and anti-counterfeit cooperation between PMI and the EU has been highly successful.
Volume drop of genuine pmi cigarette contraband between 2006 and 2014
illegal EU cigarette factories shuttered
of PMI products tracked and traced and carton level
- 85-percent drop in the volume of genuine PMI cigarettes seized by member states between 2006 and 2014 – The 2016 EU Commission report states that the PMI agreement has effectively met its objective of reducing the prevalence of PMI contraband on the illicit EU tobacco market as demonstrated by an 85-percent drop in the volume of genuine PMI cigarettes seized by member states between 2006 and 2014.
- 87 illegal cigarette factories were raided, inspected, and shuttered – Thanks to PMI’s support of investigative work and analysis of counterfeit cigarette seizures in the EU, investigators could establish links between different smuggling routes. The result of these efforts is the closure of a substantial number of illegal cigarette factories in the EU.
- Close to 50 percent of total PMI volume is covered by carton-level tracking & tracing – PMI has been progressively moving from master-level to carton-level tracking and tracing. Our products are tracked at the master-case level in over 120 countries. Now, close to 50 percent of our total volume, including duty free, is covered at the carton level. We have also informed authorities that we expect to increase pack-level tracing, prior to it becoming mandatory in the EU under the Tobacco Products Directive.
EU Commission Report 2016
Effective supply-chain controls are key to how we run our business in the EU and beyond
These measures include:
EU Illegal Tobacco Market 2016
EU Illegal Tobacco Trade 2010-2016
Key Facts on Illicit Trade EU 2016
RUSI Press Release on SUN Report 2016
RUSI Press Release on SUN Report 2017
Sun Report 2016
SUN Report 2017 Executive Summary
SUN Report Fact Sheet 2016