International Resource Center

Illicit Trade/Smuggling: Overview

The illicit trade in tobacco products is a massive global problem that undermines efforts to reduce tobacco use and save lives, helps fund organized crime and terrorist organizations, and costs governments billions in revenue.

Illicit trade encompasses primarily the smuggling and counterfeiting of cigarettes, which are the world’s most widely smuggled but otherwise legal consumer product.

Experts have estimated that, in 2006, illicit trade accounted for 10.7 percent of global cigarette sales, or about 600 billion cigarettes. The global scope and multifaceted nature of the problem requires a coordinated international response.

There are several aspects to the problem:

• It is a public health problem that undermines nations’ efforts to reduce tobacco use and its growing burden of death, disease and health care costs. Illicit trade circumvents policies to reduce tobacco use, in particular higher tobacco taxes, and encourages consumption, especially among price-sensitive young people, by making cigarettes available cheaply.
• It is a law and order problem, and even a threat to international security. There is evidence that the illicit tobacco trade is carried out by transnational criminal groups and has been used to raise funds for terrorist organizations.
• It is a financial problem, especially for low and middle-income countries. The illicit tobacco trade is estimated to cost governments more than $40 billion (U.S.) annually in tax revenue.

The illicit trade treaty will be negotiated as a supplementary treaty, or protocol, to the existing World Health Organization international tobacco control treaty, the Framework Convention on Tobacco Control . By negotiating and implementing an effective illicit trade treaty, nations can strengthen efforts to reduce tobacco use around the world.