Unfair competition in the cigarette market not only erodes business for tobacco companies but also harms the participation of genuine brands in the market, impairs the perception of the consumers and affects, to a high extent, tax collection of the states. Smuggling, brands forgery, and tax evasion are its three main components.
Unfair competition is a global issue that stalks products manufacturers who already face a high tax burden, or restrictions to the free importation of products. The tobacco industry is no exception. Unfair competition in the cigarette market involves three illegal activities clearly identified: smuggling, brand forgery, and tax evasion.
All three, smuggling, brand forgery, and tax evasion erode the formal cigarette distribution network. Forgery is a direct attempt to copy authentic products and, performed with different levels of skills, results in a package almost identical to the original.
In general, forged cigarettes evade taxes and fees, jeopardize a high number of work posts, harm the participation of authentic brands in the market and, because of its inferior quality, twist the perception of the consumers.
The high tax on cigarettes, the fiscal asymmetries between bordering countries, the vast frontiers with a low control level, a permissive legislation, and the restrictions and prohibitions to importations (regularly aimed to protecting official monopolies) are the main sources of this phenomenon that threatens the legal activity of the industries around the world.
Our consumers associate our brands and commercial names with a specific level of quality and consistency, and the threats to that guarantee may harm the brand loyalty and profitability. We consider it to be of a high relevance to preserve the integrity of our brands and we encourage regulators to demand the strict compliance with the laws of protection of intellectual property.
This is why more than 135 nations worked on the drafting of a protocol for the elimination of the illegal trade of tobacco products that was finally approved by the parties in the World Health Organization (WHO) Framework Convention on November 12, 2012 in Seoul (Republic of Korea), and which was declared open for signing in a ceremony that took place in the headquarters of the WHO. At this event, more than 50 Parties, and 12 countries signed representing the six areas of the organization, namely: China, France, Gabon, Libya, Myanmar, Nicaragua, Panama, Syria, Korea,
Turkey and Uruguay. Tunisia also joined the signees on January 11, while the Treaty was still open for signing in Geneva.
After those two initial days in Geneva, the Protocol was open for signing at the United Nations in New York until January 9, 2014. When the signing was closed, the Protocol had been signed by 53 nations and the European Union. The Protocol will be put into force 90 days after its signing by the fortieth party.