The only protocol arising from the Framework Convention needs another 15 accessions from States Parties to be valid. National Day to Combat Smuggling, this Friday, March 3rd, reinforces the need to eliminate the problem in various sectors of the economy. In Brazil, cigarettes are the sector most affected by the illegal market.
Illicit trade accounts for almost 10% of the global cigarette market and this figure is significantly higher in low- and middle-income countries, with up to 50% of cigarettes coming from illicit sources. In Brazil, it is estimated that more than 30% of the cigarettes consumed are illegal. To curb the problem that has been increasing year after year, the Protocol to Eliminate Illicit Trade in Tobacco Products was negotiated by the Parties to the Framework Convention on Tobacco Control (FCTC), of the World Health Organization (WHO), during a period of four years and was adopted in November 2012. But it will only become legally valid when more than 40 countries sign it. To date, 25 countries party to the Framework Convention have joined, out of a total of 180. Brazil has not yet joined.
Based on article 15 of the FCTC, the Protocol makes it mandatory to adopt legal measures to combat the illicit trade in tobacco products. All countries that are Parties to the Convention can join, committing to adopt specific measures such as law enforcement and international cooperation, through a global monitoring and tracing system that must be established within five years after the entry into force of the protocol. In addition to eliminating illicit tobacco trade and ensuring the consumption of only regulated products, an annual tax increase of around US$ 31 billion is estimated for governments, including reducing crime.
According to the president of SindiTabaco, Iro Schünke, the sector supports Brazil's adherence to the Protocol to Eliminate Illicit Trade in Tobacco Products. “Smuggling harms not only the legal industry, which loses a good share of the market, but also the government and society as a whole, since there is less tax collection, fewer jobs and income, and a proven link with criminal activities , such as drug and weapons trafficking. As it is a complex problem, the illegal market must be faced with diverse and complementary initiatives, such as strengthening combat and repression authorities, greater border control and harsher penalties for offenders”, he comments.
Smuggling – Current estimates indicate that more than 30% of cigarette consumption in Brazil originates illegally, mainly from Paraguay. Cigarettes illegally smuggled from Paraguay were present in 55% of commercial outlets that sold tobacco in Brazil in 2016, according to data from the Brazilian Association to Combat Counterfeiting (ABCF). Currently, smuggling generates around R$ 6 billion per year, according to an assessment by the Institute for Economic and Social Development of Borders (Idesf). The body also reveals that the loss generated, between formal market losses and non-taxation, amounts to R$ 6.4 billion. With smuggling, everyone suffers losses: the government fails to collect R$ 4.5 billion in taxes, industries suffer unfair competition and consumers are exposed to products without any quality control. Read the study: The Cost of Smuggling (IDESF)
ABOUT THE PROTOCOL – According to article 33 of the Convention, the Conference of the Parties (COP) may adopt protocols to the Convention. Only Parties to the Convention can be Parties to a protocol. The protocol to eliminate illicit trade in tobacco products, the first and only protocol to the Convention, was adopted on November 12, 2012, during the 5th session of the Conference of the Parties, in Seoul, Korea, and is currently open for ratification , acceptance, approval or adhesion by the Parties.
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