JTI Raises Alarm on ‘Gathering Storm’ in Black Market

Tobacco Regulation

By Modupe Gbadeyanka

An alarm has been raised on how the illegal tobacco trade is operating during the COVID-19 global pandemic and preparing to reap the rewards in the economic aftermath that will follow.

This information was contained in a report released by the Japan Tobacco International (JTI), which was independently verified by Intrinsic Insight Limited.

The report titled The Gathering Storm has been welcomed by law enforcement agencies around the world because of the vital information packed in it.

In the survey, it was discovered with evidence that criminal groups are biding their time in readiness for an anticipated boom in illegal tobacco sales.

Also, it was found out that after initial disruption to the illegal supply chain in Western European markets, organized criminals quickly exploited the inconsistent approach to travel and lockdown rules and found alternative routes from production to distribution, leading to significant seizures of illegal factories or their components in countries such as the Czech Republic, Greece, Ireland, Belgium, and Spain.

In addition, the report said changed law enforcement priorities and border restrictions have been mixed in limited supply and the availability of illegal tobacco: whilst governments and authorities in Far East Asia were quicker to impose restrictions, those in the West failed to act with such precision.

It was observed that technology has been increasingly deployed throughout the pandemic to enable sales of illegal tobacco to continue where strict lockdowns were put in place by governments throughout Eastern Europe, the Middle East, Africa and Asia Pacific, where WhatsApp and Facebook have provided quick and easy methods of communication between the consumer and criminals.

Furthermore, the International Chamber of Commerce in a 2017 report predicted that global counterfeit trade will reach $4 trillion by 2022, primarily fuelled by e-commerce.

In the JTI survey conducted across 50 countries including Russia, Canada, Malaysia, and the Philippines where tobacco smugglers currently have a strong presence, it was found that the global public health crisis and the financial downturn has created the conditions for a ‘perfect storm’ where organised criminal groups will further exploit public demand for cheap goods, and capitalize on dwindling buying power in the impending global recession, particularly in countries with high tax regimes.

According to the World Bank, the global trade in illegal tobacco is already worth an estimated $40-50 billion each year to the criminal groups who produce, manufacture, smuggle, distribute and sell tobacco products on which there is no tax duty paid.

The loss of revenue to law-abiding retailers is also significantly felt, as is the impact on consumers who are lured into buying sub-standard products.

“To some consumers, illegal tobacco is a victimless crime, which is why we need to inform them not only of the hidden dangers they are consuming but the wider social consequences of buying from criminal groups who also traffic people and arms.

“Our report, shared with over 160 law enforcement agencies across the world, is the first of its kind for intelligence gathering during the pandemic, and we hope it will serve as a warning to governments of The Gathering Storm in the black market,” said Ian Monteith, JTI’s Global Anti Illicit Trade Director.

In view of these discoveries, JTI is calling for improved enforcement at national borders; improved intelligence sharing through public and private partnerships between all industries and law enforcement agencies; exploration of fiscal measures that will allow consumer confidence to grow and avoid the temptation to spend on illegal products; and co-ordinated global campaigns to inform consumers through increased awareness about the dangers of illegal tobacco and the consequences that arise through its trade.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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