Smoking Out the Smugglers
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Much is at stake. Some 11 percent of worldwide cigarette sales, or about 600 billion cigarettes a year, are contraband. An estimated $50 billion in tax revenues is lost every year as packs and cartons pass under governments' tax radar. That money goes to fund criminal enterprises and, in some cases, terrorism.
Big tobacco can't participate in the talks, but it has put a congenial face on the stringent measures. While industry revenues are up because of higher prices and lower operating costs, fewer cigarettes are being shipped.
Tobacco companies worry that consumers' crimped buying power will mean cutting back on extras like cigarettes, and that states could raise taxes to regain revenues being lost during tough economic times.
British American Tobacco, which is the second largest global company, said it would not oppose proposals to trace the manufacturing and delivery chain. One reason the company offered is that it had learned this month that one of its subsidiaries in Brazil had used an intermediary to supply dried tobacco to a Russian factory in Kaliningrad.
A B.A.T. spokeswoman, Catherine Armstrong, said the company had taken measures to prevent further sales to any illegitimate customers. But companies are not the only offenders.
According to the U.S. Center for Public Integrity, a foundation-funded investigative group, Russia shipped more than $1 billion worth of cigarettes to Europe last year, and only a fraction were seized by customs officials.
Most every country worldwide is affected, and some recognizable names have popped up. Last year, for example, Slobodan Milosevic's widow was charged with smuggling tobacco products. Earlier this month, Switzerland charged 10 people with laundering some $1 billion in cigarette-smuggling profits. Even some monks in Italy were once accused of taking part in the profitable underground trade.
Despite its status as one the globe's top smuggling destinations, the United States won't have a definitive say in the international antismuggling efforts because it has not signed onto the 2005 global treaty.
Some members of Congress are trying to tackle the lucrative smuggling trade, arguing that illicit sales help fund suspect groups, including the militant Shiite group Hezbollah, and deprive the government of revenues.
Between $2 billion and $4 billion in lost taxes could be recouped by requiring cigarettes to carry high-tech tags to identify where the tobacco was grown and equipment-registration requirements, argued Lloyd Doggett, Democrat of Texas, who introduced one of the bills. Last month, the House of Representatives overwhelmingly passed a bill to crack down on such contraband, making it a felony to sell tobacco in violation of any state tax law.
Still, antitobacco campaigners charge that U.S. customs fail to stop much of the illicit tobacco trade, and that a globally coordinated effort would bolster American efforts. But Deborah Arnott, director for the nonprofit group in Britain, Action on Smoking and Health, who attended the negotiations, warned that "a lot more work needs to be done," as countries continue to hash out some often-technical details of setting up a new tracking structure and parry tobacco giants' efforts to fend off changes in their industry.
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