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EU Tobacco Agreement Hasn’t Significantly Slowed Smuggling

The landmark deal with Philip Morris International was supposed to greatly reduce the influx of illegal and counterfeit cigarettes.

BRUSSELS – Eleven years after the European Union inked a landmark deal with Philip Morris International (PMI) to curb cigarette smuggling, some are questioning its effectiveness, the EU Observer reports. “We have concluded an agreement with PMI, which is quite unique in its scope. and I am not afraid to use the term ‘landmark’ agreement here,” Michaele Schreyer, European Union (EU) commissioner for budgetary affairs, said in July 2004. “We have built an efficient system to fight against future cigarette smuggling and counterfeiting.”

Now, that arrangement is close to expiring and the EU has been conducting an assessment of the agreement. “The main objective of the PMI agreement to reduce the presence of smuggled PMI products on the EU black market has been achieved,” said Kristalina Georgieva, head of the European Union’s budget office. “Between 2006 and 2014, the volume of illegal PMI products seized by member states under the agreement has dropped by 85%. That substantially exceeds the overall downward trend in seizures. This drop applies equally to both genuine and counterfeit PMI products.”

EU members reported seizing 4.5 billion illegal cigarettes in 2005, which dropped to 3.1 billion contraband cigarettes in 2013. During the same time period, PMI brands also plummeted among the seized smokes.

However, some say that because some member states only started reporting smuggled cigarette numbers in 2005, there’s a lack of accuracy as to contraband numbers before the agreement. The amount of estimated lost taxes because of smuggling has stayed steady since 2010, at €10 billion.

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