Bat­tling il­licit trade needs co­op­er­a­tion: ex­perts

First na­tional meet on ‘de­struc­tive’ phe­nom­e­non fo­cuses on tobacco prod­ucts

The Daily Star (Lebanon) - - LEBANON - By Ga­sia Tr­trian

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.

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