Tobacco Smuggling in the Ukraine

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An Excess of 30 Billion Cigarettes

In 2009, The International Consortium of Investigative Journalists (ICIJ) undertook a special investigation into Ukraine’s “lost” cigarettes. Due to the spiralling black market, Ukraine is rivalled only by Russia as the top source of non-counterfeit brand cigarettes smuggled to Europe. According to the ICIJ:

Each year, the world’s four top multinational tobacco companies – Philip Morris International, Japan Tobacco International, Imperial Tobacco, and British American Tobacco – produce and import 30 billion cigarettes in Ukraine beyond what the country can consume, fuelling a $2 billion black market that reaches across the European Union. Today, Ukraine is rivalled only by Russia as the top source of non-counterfeit cigarettes smuggled to Europe.

The ICIJ argued that the numbers are revealing:

Each year, Ukraine’s cigarette consumption and legal exports top 100 billion, according to Ukraine’s Ministry of Health. Yet in 2008, tobacco companies manufactured and imported nearly 130 billion cigarettes – 30 percent in excess of what the local market can consume. These “extra” cigarettes disappear in the market, feeding an illicit trade that is worth, conservatively, $2.1 billion annually.

It's the Function of the Government to Stop Smuggling

Once again the companies argue that it is not their responsibility, beyond the first sale: “Objectively, we know that our brands produced in Ukraine are found in Europe,” Dmytro Redko, JTI’s director of corporate affairs in Ukraine told the ICIJ. “We do our best to prevent such shipments, although we can’t halt them completely. That is the function of the [Ukraine] government.” [1]

Notes

  1. ICIJ, Ukraine’s ‘lost’ cigarettes flood Europe - Big tobacco’s overproduction fuels $2 billion black market , 29 June, 2009