The Serious Impact of Global Illegal Trade

Aug.23.2022
The Serious Impact of Global Illegal Trade
Illegal trade causes significant economic, societal, and health impacts, highlighting the need for education, innovation, and law enforcement.

Illegal trade is a grave global issue, with staggering financial losses amounting to over $2 trillion annually, according to the United Nations. Naturally, discussions on illegal trade and its negative impacts often focus on its economic costs. However, while facts and figures are important, we also need to highlight its effects on people's lives and the various harms it inflicts on global consumers and communities.


Poses a threat to consumers.


All illegal products have one common characteristic: they are not regulated or subject to any form of proper supervision. Basic safety and quality standards, as well as laws, are often overlooked, which is hazardous to consumers.


Currently, many adult smokers are unable to purchase legal tobacco products, which also applies to those who would have continued smoking but are looking for a better alternative to cigarettes. Both circumstances are a result of increased taxation and the current economic environment. This implies that millions of people are turning to illegal, rolled tobacco products to continue smoking.


Data from the European Union (EU) is highly convincing. A recent report by KPMG found that the illegal consumption of cigarettes in the EU increased by approximately 3.9% in 2021, totaling 35.5 billion illegal cigarettes. This accounts for 8.1% of the total consumption of cigarettes in the entire EU.


The results of this annual study clearly indicate that we need to continue focusing on education and awareness to help the most vulnerable individuals in our society understand the real dangers behind illegal trade. It is also essential to develop and implement innovative policies that are truly inclusive of everyone. These policies should continue to discourage smoking and encourage smoking cessation, while also promoting better alternatives for adult smokers, including smoke-free products.


Encouraging organized crime.


One cannot overemphasize this point: consumers need to understand the consequences of buying unregulated counterfeit products. Illicit trade is often regarded as a victimless or minor crime, with little impact on society. However, this is far from the truth. Many are unaware that the financial flows generated by illicit trade fuel transnational organized crime groups. These funds help facilitate other crimes, such as human trafficking, corruption, and money laundering.


This is why at PMI, we collaborate with others to raise awareness of this global issue. In 2020, we partnered with a private sector alliance to launch a US campaign to combat illegal trade, highlighting the importance of protecting against fraud and substandard products.


Furthermore, we are spearheading a public education program called "United to Safeguard America from Illegal Trade (USA-IT)". USA-IT collaborates with individuals from both the private and public sectors to provide information and training programs to local officials, law enforcement agencies, and thought leaders, in order to address the issue of illegal trade and increase awareness of the depth and severity of the problem.


Damage to Public Services


Illegal trade of goods deprives the government of much-needed tax revenue. A report by PwC found that if all illegally traded cigarettes were to be bought legally in the countries where they were discovered, the EU government could generate an estimated €10.4 billion in additional tax revenue. This loss of tax revenue could limit the government's ability to invest in public services, public safety, and infrastructure, while people in Europe and other parts of the world are already grappling with rising prices of basic goods.


Enforcement, awareness, cooperation, and technology.


There is no quick fix for combating illegal trade. The only way to bring positive change for consumers and society is through education, partnerships, innovation, and the specific implementation of the rule of law. Given the immense and widespread human cost of illicit trade, we should use every tool at our disposal to address it - technology is key. PMI is using cutting-edge technology and innovative tracking and authentication solutions to safeguard our supply chain and protect our products.


Governments around the world should consider strengthening punishment for those engaged in illegal trade and enforcing it strictly. In a climate of escalating inflation and geopolitical instability, it is particularly important for governments to fulfill their role in ensuring security through harsh punishment of criminals and effective law enforcement. For instance, OECD recommended measures for effective policy in free trade zones.


An important tool in combating illegal trade is public-private collaboration. According to a recent survey by PMI, most people believe that leaders need to consider all perspectives when finding solutions to the world's biggest issues. For illegal trade, this means stakeholders coming together. PMI IMPACT is our global initiative that supports projects dedicated to reducing or preventing illegal trade and addressing its negative consequences - proving the effectiveness of this approach.


Finally, many consumers are still unaware of the human cost of illegal trade. That's why at PMI, we invest so much energy in awareness-raising activities. You can learn more about our work to prevent illegal trade here.


Statement


This article is compiled from third-party information and is only intended for industry exchange and learning purposes.


This article does not represent the views of 2FIRSTS, and 2FIRSTS cannot confirm the authenticity or accuracy of the article content. The compilation of this article is solely for industry-related exchange and research purposes.


Due to limitations in translation skills, the translated article may not fully convey the same meaning as the original. Therefore, please refer to the original article for accuracy.


2FIRSTS maintains complete alignment with the Chinese government on any domestic, Hong Kong, Macau, Taiwan, and foreign-related statements and positions.


The copyright of the compiled information belongs to the original media and author. If there is any infringement, please contact us for deletion.



Disclaimer

This article is provided solely for professional research, industry discussion, and informational purposes. Any references to brands, companies, products, technologies, or policies are made for factual reporting and analytical purposes only, and do not constitute endorsement, recommendation, promotion, or advertising by 2Firsts.

Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.

The information contained in this article should not be regarded as investment, legal, medical, regulatory, or commercial advice. While 2Firsts strives to ensure the accuracy and reliability of its content, it does not assume liability for any direct or indirect loss arising from errors, omissions, inaccuracies, or reliance on the information contained herein.

This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.

 

Copyright Notice

This article is either original content produced by 2Firsts or content reproduced, translated, summarized, or adapted from third-party sources with attribution where applicable. The intellectual property rights of the original content remain with 2Firsts or the respective original rights holders.

No individual or organization may copy, reproduce, distribute, republish, modify, translate, or otherwise use this content without prior authorization. Any unauthorized use may result in legal action.

For copyright-related inquiries, corrections, or removal requests, please contact: info@2firsts.com.

 

AI-Assisted Translation and Editing Notice

Portions of this article may have been translated, edited, or reviewed with the assistance of artificial intelligence tools to improve efficiency and readability. Due to the limitations of AI-assisted translation and editing, discrepancies, omissions, or inaccuracies may exist when compared with the original source.

Where applicable, readers are advised to refer to the original source for the most complete and accurate information. If you identify any errors or believe that any content infringes upon your rights, please contact us at info@2firsts.com, and we will review and address the matter promptly.

Philip Morris Italia Invests €1 Million to Upgrade Retail Network, Supporting 45,000 Tobacco Shops in Smoke-Free Shift
Philip Morris Italia Invests €1 Million to Upgrade Retail Network, Supporting 45,000 Tobacco Shops in Smoke-Free Shift
Philip Morris Italia has launched the Trade Academy program, investing €1 million to provide training and development support for approximately 45,000 tobacco retailers in Italy. The initiative aims to strengthen retailers’ capabilities in heated tobacco products, digital tools and consumer services. The move reflects how nicotine companies are increasingly investing in retail networks and frontline capabilities as new nicotine products become more important in the market.
Jul.28
Philip Morris Romania Expands IQOS Boutique Network to 120 Locations With Retail 2.0 Store
Philip Morris Romania Expands IQOS Boutique Network to 120 Locations With Retail 2.0 Store
Philip Morris Romania has opened IQOS Boutique Victoriei in Bucharest, expanding the country’s IQOS retail network to 120 points of sale and advancing a Retail 2.0 concept that combines design, technology, interactive art and urban culture.
PMI
Jul.13
South Korean Lawmaker Jeong Jin-wook Pushes Synthetic Nicotine Vape Probe, Highlighting Supply Chain and Tax Concerns
South Korean Lawmaker Jeong Jin-wook Pushes Synthetic Nicotine Vape Probe, Highlighting Supply Chain and Tax Concerns
South Korean lawmaker Jeong Jin-wook has again called for stronger government action against liquid synthetic nicotine vape manufacturers and sellers, alleging that some businesses may have avoided regulation through product labeling changes and corporate restructuring. According to Newsworks, JNILBO and other Korean reports, Jeong has held his third press conference on the issue, calling for a government-wide investigation. The dispute involves whether synthetic nicotine products should fall under tobacco regulations, tax implications and supply-chain transparency. South Korean government agencies have previously said some estimates of potential tax losses cannot be verified due to limited sales data.
Jul.27
2Firsts Hosts U.S. Market Mid-Year Briefing: Companies Need to Reassess Product and Market-Access Strategies
2Firsts Hosts U.S. Market Mid-Year Briefing: Companies Need to Reassess Product and Market-Access Strategies
2Firsts held its 2026 U.S. Market Compliance and Development Mid-Year Briefing in Shenzhen, China, on July 28. The discussion examined how state-level requirements, proposed foreign-establishment registration rules and expanding supply-chain responsibilities are changing product and investment decisions in the U.S. tobacco and nicotine market.
Jul.29
Alaska Warns 1,500 Tobacco Retailers Over Unauthorized Vapes and Nicotine Pouches
Alaska Warns 1,500 Tobacco Retailers Over Unauthorized Vapes and Nicotine Pouches
Alaska Attorney General Stephen J. Cox has sent notices to more than 1,500 tobacco retailers and distributors warning them against selling vape and nicotine pouch products that lack authorization from the U.S. Food and Drug Administration (FDA). According to the Alaska Department of Law, businesses were advised to verify products against FDA authorization databases and avoid selling unauthorized nicotine products. The action highlights how state-level enforcement is increasingly extending federal product authorization requirements to retail channels.
Jul.24
ATF Cancels Webloc Contract, Raising Questions Over Commercial Location Data in Enforcement
ATF Cancels Webloc Contract, Raising Questions Over Commercial Location Data in Enforcement
The U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has stopped using Webloc, a commercial phone-tracking tool, after lawmakers, a prosecutor and a judge raised legal and privacy concerns over warrantless use of ad-tech location data, a development that may affect data-use boundaries in U.S. enforcement against illicit tobacco, nicotine products and cross-border distribution networks.
Jun.29