The inflow of illicit tobacco from the EU’s eastern border continues to flourish. Despite considerable efforts coming from the EU and national authorities, the bulk of the clandestine problem seems to be connected with Ukraine and Belarus.
According to the EU’s anti-fraud office (OLAF), the contraband tobacco trade deprives the EU and its member states of roughly €10 billion of public revenue every year.
Ukraine, in particular, has recently grown to become the main source country, with a member of the cabinet of recently elected Ukrainian president, Volodymyr Zelensky, noting that Ukraine has turned into the 'world’s hub' in past years for smuggling cigarettes to Europe.
Belarus, on the other hand, has been linked with illegal tobacco for years. It is the main source country of non-domestic cigarettes for many EU countries.
Recognised as a top priority by former Commissioner for Budget and Human Resources, Günther H. Oettinger, the European Commission reaffirmed the leading role it has been playing in the fight against cigarette smuggling with its ambitious 2018 action plan.
Yet, despite the many actions undertaken, including increased customs cooperation with third countries, the problem is still as large as it ever was.
As for Ukraine, the European Union has a unique window of opportunity to stem the flow of contraband cigarettes now that the Ukrainian administration under President Zelensky appears committed to tackling the issue. Zelensky has signed a decree to counter smuggling and corruption at customs points, which is a great step forward.
The administration also has cracked down severely on corruption. Illicit trade should be the next target, with a first step being a stronger deterrent for perpetrators by making smuggling a criminal offence, rather than the current regime which is based on mere administrative sanctions.
When it comes to Belarus, the strong desire of the authorities to regularise its trade and join the World Trade Organisation (WTO), can - and should - be leveraged to tackle this ongoing issue.
However, the local authorities’ commitment to deal with cigarette smuggling and cooperate with the EU is far less clear. Back in 2017, President Lukashenko showed support to Energo-Oil’s expansion plans with the Grodno Tobacco Factory, referring to the “big demand in the EU,” thus making Energo-Oil the sole distributor of the infamous Grodno Tobacco Factory products like Minsk, Fest and NZ. Given the stable local cigarette consumption, there is a high likelihood most of these cigarettes will end up in Europe, only increasing the existing problem of Belarus so-called “cheap whites.” This is not good news, as it does not instil much confidence that Belarus will help the EU member states fight this issue.
In both countries, the coming period will be crucial. The EU should make the most of the current situation and encourage both countries to further commit to tackling a problem that has been going on for too many years now.
- Tomislav Sokol, a Croatian Democratic Union party MEP, is a Member of the European Parliament’s Committee on the Internal Market and Consumer Protection
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