Paradoxical increase in cigarette smuggling after the market opening in Taiwan

State owned tobacco monopolies, which still account for 40% of global cigarette production, face continued pressure from, among others, the International Monetary Fund (IMF), to be privatised. This review of available literature on tobacco industry privatisation suggests that any economic benefits of privatisation may be lower than supposed because private owners avoid competitive tenders (thus underpaying for assets), negotiate lengthy tax holidays and are complicit in the smuggling of cigarettes to avoid import and excise duties. It outlines how privatisation leads to increased marketing, more effective distribution and lower prices, creating additional demand for cigarettes among new and existing smokers, leading to increased cigarette consumption, higher smoking prevalence and lower age of smoking initiation. Privatisation also weakens tobacco control because private owners, in their drive for profits, lobby aggressively against effective policies and ignore or overturn existing policies. This evidence suggests that further tobacco industry privatisation is likely to increase smoking and that instead of transferring assets from state to private ownership, alternative models of supply should be explored.

Section: Methodsmentioning

confidence: 99%

A review of the impacts of tobacco industry privatisation: Implications for policy

Gilmore

Fooks

McKee

2011

“…It is notable that the increase in market share by imports during this period was two to five times higher than in Japan, South Korea and Thailand, which all liberalised their markets during the same time. An important reason, according to Wen et al ( 2006 ), was that Taiwan was immediately flooded with smuggled cigarettes after market opening in 1987. According to internal industry documents, smuggled cigarettes in the 1990s constituted 17% of the total market (78% of legal imports on average) comparable to the level of legal imports.…”

Section: Resultsmentioning

confidence: 99%

The Taiwan Tobacco and Liquor Corporation: To ‘join the ranks of global companies’

Eckhardt

Fang

Lee

2017

Until the late 1990s, the Taiwan Tobacco and Liquor Corporation (TTL) focused almost exclusively on serving the domestic market as a highly protected monopoly. This paper describes how the company has adopted a more outward looking strategy since 2000, with ambitions to become a regional, and eventually global, business by 2021. Drawing on company documents and industry sources, the paper argues that this shift in strategy was a direct reaction to the decline in domestic market share following liberalisation of the Taiwanese tobacco market and adoption of tougher domestic tobacco control measures. Market opening occurred as a result of pressure from the U.S. Trade Representative in the 1980s, as well as World Trade Organization membership in 2002. It is argued that TTL’s efforts to globalise operations have been limited by bureaucratic company management and structures, and ongoing political tension between Taiwan and China. However, the relative success of TTL’s alcohol branch, and potential détente as the Taiwanese government reaches out to improve relations with China, may provide TTL with new opportunities to achieve its goal of becoming a regional player with global ambitions. This article is part of the special issue ‘The Emergence of Asian Tobacco Companies: Implications for Global Health Governance.’

“…BAT complicity in contraband has been described in a UK House of Commons Select Committee report (United Kingdom, 2000), by investigative journalists (Center for Public Integrity, 2015) and in peer-reviewed articles on Africa (LeGresley et al, 2008), the Middle East (Nakkash & Lee, 2008) and Eastern Europe (Gilmore & McKee, 2004). In Asia, a regional study (Collin, LeGresley, MacKenzie, Lawrence, & Lee, 2004) has been accompanied by studies of Vietnam (Lee et al, 2008), Cambodia (MacKenzie, Collin, Sopharo, & Sopheap, 2004), China (Lee & Collin, 2006; Lee, Gilmore, & Collin, 2004a), and Taiwan (Wen et al, 2006). Findings suggest that smuggling was an integral component of BAT’s corporate strategy to expand access to emerging markets worldwide from the 1980s onwards.…”

Section: Background: Trends In Cigarette Smuggling In Thailandmentioning

confidence: 99%

To ‘enable our legal product to compete effectively with the transit market’: British American Tobacco's strategies in Thailand following the 1990 GATT dispute

MacKenzie

Lee

LeGresley³

2015

The opening of the Thai tobacco market, following action brought by the US Trade Representative under the GATT, is seen as a key case study of the tensions between trade and health policy. Interpretations of the dispute cast it, either as an example of how trade agreements undermine national policy making, or how governments can adopt effective public health protections compliant with international trade rules. As a UK-based company, British American Tobacco has been regarded as peripheral to this dispute. This paper argues that its close monitoring of the illegal trade during this period, the role of smuggling in the company’s global business strategy, and its management of the relative supply and pricing of legal and illegal products after market opening provide a fuller understanding of the interests and roles of transnational tobacco companies and the government in this dispute. The findings have important policy implications, notably the role of effective governance in countries facing pressure to open their tobacco sectors, need to better understand corporate-level activities within an increasingly globalized tobacco industry, and need to address the intertwined legal and illegal trade in implementing the WHO Framework Convention on Tobacco Control Protocol to Eliminate Illicit Trade in Tobacco Products.