Tobacco industry fuels beliefs about cigarette smuggling in Europe

In an attempt to influence the upcoming European Tobacco Products Directive (TPD) and try to stop tax increases, manufacturers are denouncing the European tobacco product traceability system, while Philip Morris is publishing a European survey on the subject of contraband.

In an article in Euractiv subsidized by Philip Morris International (PMI), Peter Van Der Mark, the secretary general of the European Smoking Tobacco Association (ESTA), expresses his opposition to the European system for combating illicit trade.[1]. He questions a response by Stella Kyriakides, the European Commissioner for Health, to a parliamentary question on the system for tracing tobacco products, in which she said that "The system collects information relating only to the legal supply chain of tobacco products including cigarettes and rolling tobacco, which are the only two categories of tobacco products covered by the system. The system does not provide any information on illicit trade in these products."

Controversy over the European traceability system

According to Peter Van Der Mark, the European traceability system, operational since May 2019, would therefore not make it possible to combat illicit trade, which is said to be growing rapidly. His main argument to justify this growth is based on a report by the KPMG firm on illicit trade, the methodology of which is nevertheless questionable, KPMG indicating not "having sought to establish the reliability of the sources of information"This report is based on collections of packets picked up on the ground and then given to tobacco manufacturers for identification, which offers no guarantee of independence.

A European official reaffirmed that this traceability system does indeed allow indirect observation of clandestine activity, by identifying irregularities in the movement of tobacco products and determining when they leave the legal circuit.

Tobacco industry targets tax hike

As a representative of the tobacco industry, Peter Van Der Mark claims that the increase in illicit trade is correlated with the increase in excise duties, particularly in France and Ireland. He suggests taking the example of countries that are favourable to the tobacco industry, such as Germany or Italy, where taxes on tobacco products remain low. The protocol to combat illicit trade in tobacco products developed in connection with the WHO treaty, the FCTC, has shown that illicit trade is due to multiple factors, such as the lack of control of the supply chain of tobacco products from manufacturing to distribution, taking into account the factors of production. The example of the United Kingdom, where prices are very high but border controls are strict and smuggling is low, is thus a perfect counter-example to the assertions of the tobacco industry. Conversely, countries where smuggling is high have relatively low levels of taxes, such as Bulgaria.

PMI's biased survey on smuggling

The Euractiv article also refers to the results of an online survey conducted by Povaddo for Philip Morris International (PMI) in 13 European countries among 13,000 people. This survey, conducted in France among 1,065 people, not only contains the biases of online studies in terms of representativeness, but also formulations that are not to the advantage of the European institutions. (Q5a: “The European Union often makes decisions without considering the potential unexpected consequences”).

Presented on April 4 in Paris at the Hub Institute, a think tank funded by PMI, this survey reports that 83% of respondents in France believe that the increase in taxes is responsible for smuggling.[2], a figure significantly higher than that observed in other European countries. This can be seen as the result of intense propaganda by the tobacco industry, always based on the KPMG annual report and peddled without question by most media outlets.[3]In November 2022, Philip Morris France orchestrated a poster campaign on this theme, associating contraband and tax increases.

Keywords: Euractiv, ESTA, PMI, Hub Institute, KPMG, illicit trade.

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[1] Michalopoulos S, Industry criticizes EU stance on illicit tobacco trade, Euractiv, published 5 April 2023, accessed 6 April 2023. This article is accompanied by the following disclaimer: "This Euractiv report is supported by Philip Morris International. This support allows Euractiv to devote additional editorial resources to cover the story more widely and in-depth. Euractiv's editorial content is independent of its supporters."

[2] Povaddo/PMI, Survey of public attitudes throughout the EU, France topline, 27 p.

[3] Tobacco: 83% of French people think that an increase in taxes encourages the development of contraband, CNews, published April 4, 2023, accessed April 6, 2023.