Understanding the U.S. Illicit Tobacco Market Characteristics, Policy Context, and Lessons from International Experiences (2015) / Chapter Skim
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7 Interventions in the Illicit Tobacco Market: International Case Studies
7 Interventions in the Illicit Tobacco Market: International Case Studies
Pages 161-172
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From page 161... ...
The other is the challenge of controlling smuggling and illegal production beyond national borders. Despite these challenges, a brief examination of experiences in Spain, the United Kingdom, Canada, and the European Union provides clear examples of success in reducing the size of illicit tobacco markets.
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From page 162... ...
told the committee that what has been clearly important to the strategy's success to date has been the development of local and regional partnerships and the ability of the law enforcement community to alter its practices in response to changing market characteristics, as exhibited by the periodic renewal and revision of the tobacco action plan. The United Kingdom implemented an anti-smuggling action plan for enhanced enforcement in 2000 and coupled it with stamping and marking requirements2 and with nonbinding agreements with tobacco manu facturers.
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From page 163... ...
To address the new problem of counterfeits, HMRC reviewed its strategy and issued an updated action plan, "New Responses to New Challenges: Reinforcing the Tackling Tobacco Smuggling Strategy." The plan included supply-chain legislation that required manufacturers to ensure that their products were not smuggled or face a fine of up to £5 million, and in October 2007 an agreement was reached with the Tobacco Manufacturers' Association in which manufacturers voluntarily agreed to add covert anti-counterfeit markings on cigarette packs (Sweeting et al., 2009; All Party Parliamentary Group on Smoking and Health, 2013)
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From page 164... ...
If so, it is likely that the local and regional partnerships as well as the ability of the law enforcement community to alter its practices in response to changing characteristics will again be called on. CANADA The Canadian experience demonstrates the necessity and potential effectiveness of implementing a comprehensive intervention strategy to tackle the illicit tobacco market.
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From page 165... ...
For example, a number of Canadian provinces have implemented either quota or refund systems to limit taxexempt distribution of cigarettes on Native reserves to non-Natives. Under the quota systems, a predetermined number of tobacco products are allocated to Native reserve retailers, usually based on estimated consumption levels and the reserve population.3 The refund policies in Alberta, Quebec, and Saskatchewan require that tobacco products be sold to Native reserve retailers with all federal and provincial taxes paid.
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From page 166... ...
Regis Mohawk Reserve is a major source of contraband cigarettes because of its unique geography, its status as a contested border community, specific cultural and economic processes that have led to contested definitions of the cross-border trade, and the tolerance of U.S. and Canadian authorities for the unlicensed manufacture and sale of tobacco products in the territory (Jamieson, 1999; Daudelin et al., 2013)
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From page 167... ...
The 3-year strategy outlined 29 initiatives undertaken in eight priority areas aimed at reducing the supply and demand for contraband cigarettes by increasing the risks associated with participating in the illicit market. Those initiatives included dismantling illegal manufacturing facilities, disrupting supply lines, apprehending key figures, confiscating conveyances such as trucks and boats, and seizing proceeds of crime (Royal Canadian Mounted Police, 2013, p.
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From page 168... ...
However, it appears that the contraband tobacco enforcement strategy and other interventions in the illicit tobacco market in Canada, such as the Akwesasne Partnership Initiative, may have overcome some of these issues through effective cooperation among all of the law enforcement agencies involved in this area (Public Safety Canada, 2012)
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From page 169... ...
noted that though illegal manufacturing is on the rise within the EU -- from five known illegal manufacturers in 2010 to nine illegal production facilities in 2011 -- there are no specific provisions in the strategy aimed at addressing this source of the illicit market. In addition to these policies, the EC 2011 implemented an action plan to tackle smuggling at the EU's eastern land border, where the illicit market share is higher than the EU average -- upwards of 90 percent of consumption is illicit in some border regions.
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From page 170... ...
. In February 2014, the EU Parliament approved a revised Tobacco Products Directive in a continuing effort to prevent illicit whites from entering the market from its eastern border, and in acknowledgment of concerns about the levels of bootlegging within the EU from low-tax and low-price countries.
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From page 171... ...
Spain, for example, was able to reduce the share of its illicit market from 15 percent in 1995 to 2 percent in 2001 as the result of licensing and control measures, enforcement efforts, and legal agreements. The United Kingdom used stamping and marking requirements on cigarettes, agreements with tobacco manufacturers, enhanced enforcement efforts, and public education campaigns to reduce the share of its illicit market from 21 percent in 2000 to 9 percent in 2013.
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From page 172... ...
. tax harmonization, tribal tax revenue agreements, legal agreements with tobacco manufacturers, and public education campaigns.6 Although international efforts to combat the illicit tobacco trade have focused on forms of the trade that are currently a relatively small problem in the United States, illicit markets adapt and reemerge, and product regulations in the United States could, in principle, increase the demand for cigarettes with prohibited features in ways that begin to integrate the domestic illicit tobacco market into the global illegal trade (see Chapter 8)
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