EU, tobacco firm team up against cigarette smuggling

(BRUSSELS) - The European Commission and the British American Tobacco company signed a cooperation agreement Thursday to combat the smuggling of cigarettes, which often come from China and Russia.

The British company, the world's second biggest cigarette maker, will provide 200 million dollars (134 million euros) to the European Union over the next 20 years as part of the deal.

"Today's agreement will help greatly in combating the illegal trade in cigarettes and will send a strong signal to criminals that they have both the authorities and industry working against them," said European anti-fraud commissioner Algirdas Semeta.

The agreement includes intelligence sharing and puts in place measures to make it easier for law enforcement authorities to determine the source and destination of BAT brands and verify whether they are counterfeit.

BAT will indicate the destination of its products on certain packaging and put barcode labels on cases that can be scanned by machines.

China is the biggest source of counterfeit cigarettes, but many are also smuggled in from the former communist bloc including Russia and Ukraine, the commission said.

Counterfeit cigarettes from China are often discovered in 40-foot containers that carry 10 million cigarettes, the EU's executive body said. They are also smuggled in lorries, trains and cars, but also by people and by post.

Russia, Ukraine, Moldova and Belarus are the main sources of genuine smuggled cigarettes because they are cheaper to buy in those countries than in the EU.

The smuggling of cigarettes costs EU states 10 billion euros in lost taxes per year. About 65 percent of the cigarettes are counterfeit.

Contraband and counterfeit cigarettes - guide