GENEVA, Switzerland—The illicit trade in cigarettes costs governments $40.5 billion in lost revenue every year, with losses falling disproportionately on low- and middle-income countries, and the benefits of international action are likely to far outweigh the costs, latest research has shown.

In this Swiss city, the international agreement—The Illicit Trade Protocol—is being negotiated under the Framework Convention on Tobacco Control (FCTC), which is the first global health treaty.

The data is stark. The World Health Organization estimates that since October 25, 1999, when the first working group started work, about 43.5 million people will have died from tobacco-related diseases as of Monday June 29.

“The case for coordinated worldwide action against tobacco smuggling and other forms of illicit trade in tobacco has never been stronger,” said Laurent Huber, director of the Framework Convention Alliance (FCA) a global alliance of more than 350 nongovernment organizations working on the global tobacco treaty. 

“There is no denying that government delegates arriving in Geneva today are faced with a week of difficult negotiations in the face of the global illicit tobacco trade. But they cannot leave this meeting justifying inaction by saying it was too difficult—the costs are simply too great,” he added.

Released for the opening of the third intergovernmental negotiating body on the Protocol on the Illicit Trade in Tobacco Products (INB-3) in Geneva today, are two reports.

These are “How Eliminating the Global Illicit Cigarette Trade Would Increase Tax Revenue and Save Lives” by the International Union Against Tuberculosis and Lung Disease, and “Cost Benefit Analysis of the FCTC Protocol on Illicit Trade in Tobacco Products” by Paul Johnson and others, for ASH UK.

They add to mounting evidence the costs of smuggling and other forms of illicit trade in tobacco are counted not only in the millions of lives lost but also in billions of government revenue lost through inaction.

The ASH UK report shows the potential financial and health benefits to Britain of a strong illicit trade protocol. It also provides a methodology that other researchers can use to measure the possible impact of the protocol in their own country. It provides powerful evidence in favor of a strong protocol, suggesting once again that it could lead to major advances in public health and to significant increases in tax revenues to governments across the world.

The International Union Against Tuberculosis and Lung Disease report, the most authoritative report yet produced on the extent of the global illicit trade in cigarettes, includes:

• Updated country level estimates of the illicit cigarette market around the world, using 2007 data or as close to 2007 as available;
• Evidence that higher-income countries, where cigarettes are more expensive, have lower levels of cigarette smuggling than lower-income countries, contrary to the tobacco industry claim that the overall level of smuggling is dependent on cigarette price;
• Evidence that the burden of cigarette smuggling falls disproportionately on low- and middle-income countries, where the majority of the world’s tobacco users live; and
• Estimates of the number of lives saved and revenue gained globally in the future if smuggling was eliminated. The report shows that 11.6 percent of the global cigarette market is illicit, equivalent to 657 billion cigarettes a year and $40.5 billion in lost revenue.

 According to the report, if this illicit trade was eliminated, governments would gain, in principle immediately, at least $33 billion; and from 2030 onwards save over 160,000 lives a year. This will be in combination with the resulting overall increase in cigarette price of 3.9 percent and a consequent fall in consumption of 2.0 percent.

In just six years over a million lives would be saved, the vast majority of them in middle- and low- income countries such as the Philippines.