By Desmond Hinton-Beales - 15th July 2010
The European commission has signed a legally binding cooperation agreement with British American Tobacco (BAT) to help prevent illicit tobacco trading.
Under the agreement, signed in Brussels on Thursday, BAT will work with the commission, the anti fraud office Olaf, and member state law authorities.
The agreement includes payments from BAT to the commission, and 24 member states, totalling €134m over 20 years. BAT will also make payments if any future seizures of their official products, above certain quantities, are made in the EU.
BAT western Europe director, Jack Bowles, said that 75 billion cigarettes are smuggled each year; roughly equal to the annual consumption of a large member state.
This makes up 13 per cent of the entire EU market, he added, describing the agreement as "a significant step forward in the fight against counterfeit and smuggled tobacco."
Bowles went on to say that tobacco smuggling is "not a victimless crime".
EU taxation commissioner Algirdas Šemeta highlighted figures showing that illegal tobacco trafficking costs the EU €10 bn in lost tax revenue each year, and that it presents unfair competition for tobacco products sold through official chains.
Previous agreements of a similar nature with Philip Morris and Japan Tobacco International caused smuggling of those brands to decrease "very significantly", the commissioner added, speaking of the value of cooperation between authorities and businesses.
He said, "The illicit trade in cigarettes results in billions of euros of lost tax and customs revenue every year. Particularly at this time of economic difficulty, we must take every measure we can to stop this costly illegal activity. Today’s agreement will help greatly in combating the illegal trade in cigarettes and will send a strong signal to criminals that they have both the authorities and industry working against them."
Commission President José Manuel Barroso said: "I welcome this important agreement, which will help to protect the EU’s financial interests and strengthen our forces against contraband and counterfeit cigarettes."
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