Battling illicit trade needs cooperation: experts
First national meet on ‘destructive’ phenomenon focuses on tobacco products
BEIRUT: At Lebanon’s first national conference to combat illicit trade Wednesday, experts agreed that a multidisciplinary approach between private and public bodies is needed to combat the phenomenon, described as a “destructive crime” that spares none of the country’s sectors.
The conference was held at the Seaside Pavilion in Beirut Wednesday and was organized by Regie, the national body that regulates all tobacco production and distribution in Lebanon.
Regie is the fifth-largest source of revenue for the state Treasury, according to a press release announcing the event. This is despite the rising illicit trade of tobacco and other products.
Mohammad Zaher, head of fighting illicit trade and counterfeit at Regie, said illicit trade in Lebanon had increased in the past few years, with more than 2,000 related cases pending in court.
While the conference focused heavily on tobacco products, it was made clear that illicit trade in Lebanon is broad, covering counterfeit or contraband goods, human trafficking, human organs, weapons and intellectual property.
The reason for the focus on tobacco, however, was not only because of the background of the organizing institution.
According to a study shared by international law expert Lawrence Hutter, tobacco products are the second-most illicitly traded items globally after drugs.
This is coupled with a special regional significance of tobacco.
According to the United Nations Office on Drugs and Crime expert David Izadifar, the MENA region is one of the “rare regions” where tobacco consumption is on the rise.
This regional increase corresponds with a local increase in illicit trade. According to Regie general manager Nassif Seklaoui, local tobacco smuggling has surged in recent years, with 30 percent of tobacco products in the country being illicit in 2017 compared to around 6 percent in 2013.
Seklaoui also said the company’s revenue was falling, despite a small bump that he credited to efforts by the Finance Ministry since 2016.
He said smuggling and illicit trade of tobacco products alone cost the government LL300 billion ($198 million) in potential annual revenue.
Finance Minister Ali Hasan Khalil also spoke at the event, describing the phenomenon of illicit trade as “destructive in every meaning of the word.”
“The threat of illicit trade surpasses that of most wars, if we consider the criteria as the sheer number of people put at risk,” Khalil claimed, labeling it as the cause of some of the country’s greatest problems, including unemployment.
According to Hutter, when it comes to choosing smuggled packs of cigarettes over legal ones, the main factor affecting the decision is affordability. Since legally sold cigarettes are heavily taxed, counterfeit and smuggled ones are cheaper on the market.
However, Hutter said increasing taxes on products does not guarantee increased tax revenue and instead contributes to an increase in illicit trade.
Zaher said that one of the main reasons for smuggling is the price gap between products of neighboring countries and Lebanon.
“Every country has their customs and prices. So why is there an increase in smuggling? Because you have products [in other countries] priced lower than the price here [in Lebanon],” Zaher said, adding that the current customs tax on tobacco products in Lebanon is 113 percent but as “illicit products bypass customs,” much of that potential revenue is lost.
However, Finance Ministry Director-General Alain Bifani said that if the government works on preventing smuggling, then the amount of the tax “won’t make a difference.”
Meanwhile, on the legislative side, both MP Yassine Jaber and former Interior Minister Ziad Baroud agreed that passing laws was not a problem when it comes to government efforts to combat the issue.
Instead, Jaber said that laws issued by Parliament are not implemented. “Ministries even brazenly announce they won’t implement a law because they don’t like it,” Jaber said, before announcing a new parliamentary committee tasked with following up on law implementation, which he will head.
Baroud also said there were health concerns tied to illicit tobacco trading as taxes were put in place to discourage tobacco purchases and protect the public from the harmful effects of smoking.
The illicit trade of medicines also poses a direct risk to public health.
Head of the Association of Lebanese Industrialists Fadi Gemayel said that “one in 10 pharmaceuticals that enter a country like [Lebanon] is counterfeit.”
In order to combat the phenomenon, which harms health, the economy, industry and even national security – through money laundering and financing terrorism – an expert from Europol, Howard Pugh, suggested that Lebanon adopt a set of measures derived from European Union methods.
Pugh presented a multidisciplinary approach that could be carried out in cooperation with security bodies working on the ground, the Judicial Court, private manufacturing companies that are harmed by illicit trade, official legislative and administrative bodies, as well as “open sources” that can provide information on smugglers.
Additionally, Pugh stressed the importance of raising public awareness. “They have to be aware that they are part of the problem,” he said.
In following sessions, representatives from the Internal Security Forces, Customs, the Financial Prosecutor, Parliament and other state bodies all unanimously supported Pugh’s suggestion on the need for cooperation to reach a feasible solution. The officials also stressed the need for stricter charges for smugglers, especially in the case of repeat offenders.
Tobacco products are the second-most illicitly traded items globally after drugs, according to a study.