Free Trade

The EU-Mercosur Agreement is an opportunity, not a threat

This agreement provides the tools to oppose China in the region…

The agreement between the European Union and Mercosur is being called into question – under false pretexts. It is time to realise what is really at stake.

The trade agreement between the European Union (EU) and Mercosur (an economic community comprising several South American countries) is criticised – or even practically dead to some. This was France’s intention from the outset: more protectionism, less free trade.

It all started with the fires in the Amazon, in Brazil. According to the forest and environmental expert Emmanuel Macron:

“Our house is burning. Literally. The Amazon, the lung of our planet that produces 20% of our oxygen, is on fire. It is an international crisis. Members of the G7, meet in two days’ time to talk about this emergency. #ActForTheAmazon”

With such calls, the right thing to do is to put things into perspective. We know that the number of fires in Brazil this year is higher than last year, but it is also about the same as in 2016 and lower than in 2002, 2003, 2004, 2005, 2006, 2007, 2010 and 2012.

Although the number of fires in 2019 is indeed 80% higher than in 2018 – a figure that has been widely reported recently – it is only 7% higher than the average for the last ten years. Moreover, most of the fires are currently occurring on already deforested land in the Amazon.

The popular myth is that the Amazon is “the lung of the Earth”, producing “20% of the world’s oxygen”. At least that’s what Emmanuel Macron’s tweet says. In reality, both are inaccurate… and not just because your lungs don’t produce oxygen. Yet this figure will continue to circulate as long as there are reports to be delivered; the Associated Press agency itself has propagated it – it had to withdraw it afterwards.

According to the Scientific American :

“In fact, almost all of the Earth’s breathable oxygen comes from the oceans, and there is enough to last for millions of years. There are many reasons to be appalled by this year’s Amazon fires, but depleting the Earth’s oxygen supply is not one of them.”

So no, you won’t suffocate because of the fires in the Amazon.

Ireland and France are nevertheless proposing to terminate the agreement with Mercosur for environmental reasons. Unfortunately for them, no environmentalist pretext can hide their real motives: to defend the protectionist interests of Irish and French farmers, who have complained about increased competition from countries like Argentina.

This agreement is of great geopolitical importance; it is a vital sign against protectionism. If ratified, this agreement with Mercosur would establish the largest free trade area that the EU has ever created, covering a population of over 780 million inhabitants, and would consolidate the close political, economic and cultural links between the two areas.

The agreement eliminates tariffs on 93% of exports to the EU and grants ‘preferential treatment’ to the remaining 7%. In addition, it will eventually eliminate customs duties on 91% of the goods that EU companies export to Mercosur. The number of formal complaints to the WTO in 2018 was 122% higher than in 2009. In 2018, the EU was the second biggest defender of WTO complaints, almost twice as many as China.

Then there’s the importance of China.

This country is not mentioned at random. It is crucial to understand the Chinese influence in South America. Since 2005, the China Development Bank and the China Export-Import Bank have granted more than $141bn in loans to countries and companies belonging to Latin American and Caribbean states.

In Latin America and elsewhere in the world, Chinese loans are seen as both profit-seeking and a form of diplomacy. The Development Bank focuses on eight areas: electricity, road construction, railways, oil, coal, telecommunications, agriculture and public services. With this agreement, it becomes possible to counter Chinese influence. France and Ireland must stop opposing it and work on a joint agreement in Europe.

Giving consumers more choice, guaranteeing more free trade for producers on both sides and defending geopolitical interests through trade policy: all this should be obvious. Unfortunately, it seems that nothing is obvious any more, at least for the current political class.

Originally published here.

Illicit trade in pesticides is booming: why?

If the legal market cannot ensure farmers are able to buy pesticides to protect their crops from various diseases, then the black market fills the gap.

Pesticides are some of the most regulated products in the world. At the same time, if illegal pesticide producers were a single company they would be the 4th largest company in value in the world. Overregulating pesticides doesn’t decrease demand for them. In 2018, the European Union Intellectual Property Office stated that €1.3 billion are lost every year in Europe due to fake pesticides. This translates to €299 million and 500 jobs lost per year in Germany, €240 million and 500 jobs each year lost in France, and €185 million and 270 jobs lost annually in Italy.

Over the period 2011-2018, the sales of pesticides remained stable at around 360 million kilograms per year in the EU. In France, for example, despite the government’s ambition to drive down the use of pesticides, demand for pesticides have risen considerably in the past years. In Poland, the sale of pesticides in Poland in 2016 increased by 12.3 per cent compared to 2011. What this tells us is that as long as that overregulating pesticides only boosts illicit trade.

A quick look at the role of pesticides in farming explains why demand for them persists. Pesticides are instrumental in helping farmers prevent and/or manage pests such as weeds, insects, and plant pathogens. Substantial increases in yields recorded over the past 80 years can be mainly attributed to the use of pesticides. Without pesticides, crop losses would be between 50-80 per cent. Between 1950 and today, the world’s population grew between 1% and 2% each year, and to ensure it can be fed, we have to utilise natural resources in a smart way, and that is what pesticides allow us to do.

However, since the health of consumers is of paramount importance, pesticides need to undergo the necessary rigorous safety assessments by food safety authorities. The main danger associated with counterfeit pesticides – now estimated to represent 14% of the European crop protection – is that they go unchecked thereby endangering the lives of European consumers. Untested products can also lead to considerable harvest lost, resulting in less food security for European consumers.

When it comes to illicit trade in any product, not just pesticides, increasing the customs control and penalty for counterfeiting activities seems like a straightforward solution. Neither of these can fully fix is the issue which, however, doesn’t undermine their significance as a tool to tackle illicit trade. Although we as a society can all agree that fighting illicit pesticides that pose threat to our health should be our priority, very few crimes are taken to courts. For example, in Slovenia, 27,1 tons of illegal pesticides have been detected and seized since 2003 according to the Financial Administration, and yet not a single court case was initiated. In Belgium and Italy, the situation isn’t any better. The justice system should take illicit trade more seriously.

Along with increasing the punishment for illicit trade, it is also necessary to re-evaluate, conjointly with farmers associations the approval of these substances. If outlawing some chemical substance on a member state or the EU level leads to a spike in illegal trade, then a comprehensive discussion to find a solution that works for consumers and producers has to take place. Demand for pesticides won’t simply go away, and we cannot solve the problem of booming illicit trade by turning a blind eye to this fact. We need a compromise to protect the wellbeing of European consumers.

Originally published here.

Biden Has an Opportunity to Improve Trade With Europe

The Europeans killed a potential deal during the Obama years, but the world is a different place now.

Trade relationships with Europe have been painstakingly petty for the last four years. In 2019, the U.S ended the WTO’s appellate body by refusing to appoint new members, which meant that the world’s arbiter on trade had had a more difficult time opposing new tariffs—and new tariffs there have been. The ongoing trade war has targeted a wide range of products on both sides, from Harley-Davidson motorcycles to French wine and Kentucky bourbon. Whenever Trump would target a new product, the EU would reciprocate with new tariff implementations or hikes.

What ended up targeting American blue jeans-lovers in Estonia and Bordeaux wine connoisseurs in New York began as a much less symbolic tariff on steel and aluminum. In Donald Trump’s protectionist mindset, he believed he was doing U.S manufacturing a favor, but in reality he punished those businesses that rely on imported industrial goods for their production. During his administration, many Republicans who had held dear the principle of free trade seem to have forgotten their own position. Perhaps his upcoming departure from the White House will allow them to remember it.

Under the Obama administration, the U.S had pushed for the Transatlantic Trade and Investment Partnership (TTIP). The free trade agreement would have created one of the largest trade zones, with the (then) 28 member states of the European Union and the United States. The EU’s executive body, the European Commission, said that TTIP would boost the EU’s economy by $142 billion, the U.S economy by over $100 billion and the rest of the world by $118 billion.

Despite strong American advocacy in Europe for the agreement, the European Union itself stalled and then walked away. Environmentalists held massive demonstrations throughout the EU, claiming that TTIP would undermine European food standards and distort the marketplace by reducing prices. They made a safe bet on the skepticism of Europeans toward American food, and on consumer nationalism. The Anglo-Saxon approach to business does not play well in countries like France, where labor regulations thoroughly protect workers, and the flexibility and entrepreneurship of Americans is seen as obsessively commercial. This played right into the hands of those industries that considered American competition as a scourge.

When Barack Obama left office, TTIP negotiations were not just at a standstill—they were unofficially dead. The election of Donald Trump worsened trade relationships with Europe, but TTIP had been killed by Europeans, not Trump.

That said, political institutions in Europe currently have every reason to be warmer toward trade relations with the U.S. The trade war has been difficult for everyone, and Europe understands that it leads nowhere. After four years of Donald Trump, Joe Biden should present a real alternative based on free trade, not just case-by-case mini-agreements (such as a recently signed deal on free lobster trade). Crucially, if the U.S reaches a comprehensive trade agreement with the United Kingdom (which officially leaves the European Union’s single market at the end of this year), then the EU has no choice but to prevent a loss of its competitive edge. 

Unfortunately, Joe Biden has not quite grasped this window of opportunity but has supported the European Union on the issue of Brexit. Meddling in European affairs, Biden claims that he will not sign any FTA with the U.K. unless Boris Johnson’s government respects the withdrawal agreement’s so-called Northern Ireland protocol. In essence, if the U.K. reestablishes a border (or something resembling a border) between Northern Ireland and the Republic of Ireland, then the U.S will not be a willing trading partner. Both the U.K. and the EU have struggled to find an agreement that allows for the U.K. to leave the EU and make its own internal market decisions, while avoiding cross-border checks on goods between Northern Ireland and the Republic of Ireland. The Good Friday Agreement of 1998 ended most of the violence of the Troubles (between those loyal to the United Kingdom and those who wanted to unite the country with the Republic of Ireland), by promising not to establish hard border infrastructure. To separatists, this signaled a willingness to align the island more closely with the Republic, while loyalists remained under the laws of the United Kingdom. The UK’s exit from the EU might threaten this agreement, and Joe Biden has taken the side of the EU.

Outside of supporting an odd sense of Irish-American pride, how exactly does such a move benefit the United States? While it certainly upsets the British, it would be mistaken to believe that continental Europeans in Paris and Berlin will suddenly jump out of their seats to hand American businesses access to European consumers just because we’ve turned our backs on trade with the U.K.

TTIP would have allowed mutual access to public markets, slashed tariffs, and reduced bureaucratic regulations on everything from clothes to medicine and cosmetics. Many customs duties on products between the U.S and Europe are so high that it effectively kills any trading relationships. For Americans wanting to observe this phenomenon in real time: Follow a European entering an American supermarket for the first time. Choices!

There are also tariff differences depending on goods and destinations. For instance, EU tariffs on American cars are high, while American tariffs on European cars are relatively low. Meanwhile, certain types of peanut tariffs are so high (at a rate of 138 percent) that they never find their way on the European market. In essence, U.S-EU trade is a jungle of tariff distinctions that pile an avalanche of red tape on any type of producer. TTIP intended to scrap nearly all tariffs across the Atlantic, yet the will of the EU at the time was trumped by skepticism toward American agricultural products.

Many of the most political decisions in the European Union are taken because of a sense of urgent necessity. In the European Parliament, you will hear speakers claim that the EU needs to be more centralized, because despite being the largest single market in the world, it is also a declining market. If Joe Biden wanted to save Obama’s (and his own) trade policy legacy, he could do so on one hand by pressuring Europeans to understand that competition is at their doorstep, but also by showing them what the TTIP has to offer.

The more the U.S opens itself to free trade from all over the world, the more it will convince hesitant partners like the EU to drop subsidies to large industries, and allow small businesses not to put “Europe first” at a large price, but choose the best product, including from the United States.

Originally published here.

To reduce illicit trade, make licit goods available and accessible

Criminal groups have been exploiting the pandemic to enrich themselves through illicit trade and undermine global security.

In August, the US Justice Department knocked down three $2 million worth cryptocurrency campaigns involving the Islamic State. The terrorists were selling fake masks and protective equipment for hospitals online claiming that it was FDA approved and used the profit to fund terrorist attacks.

Illicit trade across the board is a devil in disguise that lures us with cheap prices at the expense of our safety, security, and wellbeing. In order to fight it, we need to guarantee access to and availability of licit goods, especially drugs.

Weak law enforcement and corruption among customs officials are often seen as the main reason why illicit trade flourishes. Both do help facilitate illicit trade but hardly explain its persistence. According to a research conducted by Oxford Economics in 2018, only 11% of illicit trade is seized on average across Europe. Tracking and tracing smugglers is an uphill battle not least because a lot of illicit trade is carried out through official retail channels too.

Yet curbing supply alone won’t help: reducing consumer demand for illicit products is key. That would include raising awareness among consumers about illicit trade and making sure that licit goods are available and accessible. The price does play a role in consumer decision of whether to buy illicit goods or not, but as the said research by Oxford Economics showed it is not the only reason.

At the beginning of the pandemic – which hardly any country was prepared for – many Europeans countries ran out of masks and protective equipment as demand had been spiking. Combined with export bans this has naturally created favourable conditions for illicit trade. For example, OECD data suggests that since March 2020, at least 100 000 new domain names containing coronavirus related words (e.g., Covid, corona or virus) were registered on the darknet to sell medical items.

Lockdowns, trade restrictions and generally global unpreparedness for the pandemic are some of the reasons why illicit trade has scaled up, and tackling these unintended consequences will be a major challenge for the years ahead.

We should start by strengthening IP rights and cutting the red tape to protect brands on a local level so their products are accessible and available to the public. COVID-19 is unfortunately not the only public health issue we have faced, and we have to keep in mind that every flawed policy of peaceful times provides criminals with an opportunity to strike harder in a crisis.

Since the beginning of the pandemic, there has been a 20% increase in enquiries for brand protection, most of which came from the pharmaceutical sector. Multiple European policymakers have made calls against intellectual property rights, while in fact in order to protect ourselves from fake PPE and drugs from China and alike, we have to safeguard IP rights at home.

A failure to mutually commit to regulatory harmonisation between the US FDA and Europe’s EMA is also one of the reasons why illicit trade has been booming. This would allow regulators on both ends to compete for better market approval procedures thereby gradually decreasing the bureaucratic costs for innovators.

We still don’t know how to cure 95 per cent of diseases, and it is crucial that as soon as a new drug is developed it becomes available on both sides of the Atlantic. To make it accessible though, the EU will have to allow consumers to access legal online pharmacies across the bloc.

Illicit trade of medicines puts the lives of millions of consumers in the EU and globally at risk. Reinforcing criminal responsibility for outlawed trade practices is essential but not enough. Curbing demand for illicit products by ensuring the licit ones are available and accessible should be the way forward.

By Maria Chaplia, European Affairs Associate at the Consumer Choice Center

Originally published here.

Black market — an existential threat to consumers

The latest Organisation for Economic Co-operation and Development (OECD) report found that between 72,000 and 169,000 children may die from pneumonia every year after receiving drugs from the black market.

Since that was before the world had entered the Covid-19 crisis that turned out to be a public health emergency of global scope, the shocking numbers have likely gone up by now and will continue to rise.

That is the cost of flawed policies that have failed to effectively tackle the black market.

From pharmaceuticals to tobacco products, the black market has expanded into every area of our life and international exchange. Unlike many legal small businesses that get driven out of the market because of excessive taxation and red tape or are unable to enter it at all, the black market has been booming.

According to the United Nations Office on Drugs and Crime, the transnational organised crime of the black market is a business worth US$870 billion (RM 3.6 trillion).

The black market has to be fought by economic, legal, and political means. Where free markets that safeguard property rights – including intellectual property rights – and economic freedom flourish, there is no space for black markets simply because it’s not needed: every consumer can easily find and access what they need.

Black markets exist to satisfy the unmet demand, and why that happens is the key question we have to address to solve the economic part of the puzzle.

Let’s consider the tobacco black market in the EU. In 2019, 15 billion illegal cigarettes were found in Europe, contributing to €2 billion (RM 9.7 billion) in tax revenue losses. Intrusive and anti-consumer national policies have to take the blame for that.

These policies include a second annual 50 centime tax that came into force in France, bringing the price of a pack of cigarettes up to 10.50 euros (RM 51). Similarly, in Ireland, excise duty on a pack of 20 cigarettes will rise by 50 cents for the fifth year in a row.

As long as there is a substitute available in the form of cheap smuggled cigarettes, the overall demand for cigarettes is inelastic. The higher price stops consumers from buying them legally, but it doesn’t stop them from buying it from the black market.

In another part of the world, Malaysia is losing about RM5 billion in taxes every year to the tobacco black market. It has been reported that Malaysia is today the No. 1 in the world for illegal cigarettes, where 65% of total cigarettes consumed are contraband products.

Interestingly, illegal cigarettes took up 36.9% of the market back in 2015. However, the Malaysian government wanted to discourage people from smoking by making it even more expensive. As such, excise duties were rapidly increased, resulting in legal cigarette prices, going up by 25%.

Affordability then became an issue and consumers decided to switch to a cheaper alternative, which is widely available.

This goes to show that governments should moderate tax policies to ensure that tax regimes are liberal enough not to drive demand for contraband products. Indirect taxes such as VAT, GST and excise duties make consumers foot the bill.

Despite political differences, we can all agree that the well-being of consumers is of the utmost importance, and the black market – especially in times of Covid-19 – poses an existential threat to consumers globally.

We should not only put in place smart policies to eradicate black market, but we should also repeatedly communicate the risks associated with black market to consumers and make them more aware of the tactics used by smugglers to lure them. It is time to Stop The Black Market!

Originally published here.

Illicit trade is an existential threat to consumers

The latest OECD report found that between 72 000 and 169 000 children may die from pneumonia every year after receiving counterfeit drugs. Since that was before the world had entered the COVID crisis that turned out to be a public health emergency of global scope, the shocking numbers have likely gone up by now and will continue to rise.

That is the cost of flawed policies that have failed to effectively tackle illicit trade.

From pharmaceuticals to tobacco products, illicit trade has expanded into every area of our life and international exchange. Unlike many legal small businesses that get driven out of the market because of excessive taxation and red tape or are unable to enter it at all, illicit trade has been booming.

According to the United Nations Office on Drugs and Crime, transnational organised crime of illicit trade is a business worth USD 870 billion.

Illicit trade has to be fought by economic, legal, and political means. Where free markets that safeguard property rights – including intellectual property rights – and economic freedom flourish, there is no space for illicit trade simply because it’s not needed: every consumer can easily find and access what they need.

Black markets exist to satisfy the unmet demand, and why that happens is the key question we have to address to solve the economic part of the puzzle.

Let’s consider tobacco counterfeiting in the EU. In 2019, 15 billion illicit cigarettes were found in Europe, contributing to €2 billion in tax revenue losses. Intrusive and anti-consumer national policies have to take the blame for that.

For example, on November 1st, a second annual 50 centime tax comes into force in France bringing the price of a pack of cigarettes up to 10.50 euros.

In Ireland, the excise duty on a pack of 20 cigarettes will rise by 50 cents for the fifth year in a row. Demand for cigarettes is inelastic. The higher price stops consumers from buying them legally but it doesn’t stop them from buying it elsewhere.

Therefore, member states should moderate tax policies to ensure that tax regimes are liberal enough not to drive demand for counterfeiting products. Indirect taxes such as VAT and excise duties make consumers foot the bill.

Accessibility is no less important. When it comes to counterfeiting of illegal products,  consumers should be able to have and quick and easy access to medicine. That includes nonprescription drugs in retail and delivery, prescription medicine with an online prescription through delivery.

In order to be successful, these measures need to be combined with increased IP protection of medicines and medical supplies. Since the beginning of the pandemic, there has been a 20% increase in enquiries for brand protection, most of which came from the pharmaceutical sector.

On the legal end, we have to create the conditions under which a cost-benefit analysis undertaken by every potential smuggler makes the costs seem higher. That is to say, we have to increase the existing penalties for illicit trading practices to better protect consumers from various risks. Harsh penalties will reduce incentives to commit illegal acts.

Despite political differences, we can all agree that the wellbeing of consumers is of the utmost importance, and illicit trade – especially in times of covid – poses an existential threat to consumers in Europe and globally.

We should not only put in place smart policies to eradicate illicit trade, but we should also repeatedly communicate the risks associated with illicit trade to consumers and make them more aware of the tactics used by smugglers to lure them. Time to stop illicit trade.

Originally published here.

Safeguarding IP rights is key to defeating COVID-19

COVID-19 has exposed our unpreparedness for a crisis of global scope. As much as globalisation is partly to blame for the virus’ speedy expansion, it is also thanks to the interconnectedness of our world that we have been able to preserve international trade – despite a bundle of constraints and cries for protectionism – during these tough times. In particular, that has to do with exports of essential medical devices such as masks, ventilators, personal protective equipment. The shortages experienced by many countries have triggered an intergovernmental discussion on the scope of compulsory licencing and IP protection covered by The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). 

As a global consumer advocacy group, we at the Consumer Choice Center are hereby sharing our perspective on the matter in the hope to contribute to this timely debate. 

The TRIPS agreement is an integral part of the World Trade Organisation’s intellectual property legal base. Among other things, the agreement whose primary aim is to safeguard intellectual property rights, also includes provisions on compulsory licencing, or use of subject matter of a patent without the authorisation of the right holder (Article 31). Essentially, this means that “in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use,” a Member government may allow someone else to produce a patented product or process without the consent of the patent owner. 

Whereas, under normal circumstances, the person or company applying for a licence must have first attempted, unsuccessfully, to obtain a voluntary licence from the right holder on reasonable commercial terms (Article 31b). However, there is no need to try for a voluntary licence first under TRIPS flexibilities.

TRIPS flexibilities, therefore, allow countries to override global IP rules to mitigate the damage caused by an emergency and have been mainly applied where pharmaceuticals have been concerned. 

In July, South Africa issued a communication titled “Beyond Access to Medicines and Medical Technologies Towards a More Holistic Approach to TRIPS Flexibilities.”  It was pointed out that the COVID-19 response required looking beyond patents towards a more “integrated approach to TRIPS flexibilities that include other various types of intellectual property (IP) rights including copyrights, industrial designs and trade secrets” (IP/C/W/666). As such, the recommendations submitted by South Africa are cross-field as they also touch upon the production and distribution of essential medical devices such as masks, ventilators, personal protective equipment.

Though proposed out of the noble motives, South African communication is ignorant of the need to protect IP rights instead of eroding them. Opponents of intellectual property rights often make the mistake of taking innovation for granted thereby turning a blind eye to the driving force of every kind of entrepreneurship: economic incentives. Patents and various other forms of intellectual property are not biased towards the inventor. On the contrary, they ensure that companies can continue to innovate and deliver on their products to consumers. 

The short-term result of eroding intellectual property rights would be increased access to innovations, but in the long-term, there would be no innovation. With the second wave of coronavirus on the way putting brakes on the economic recovery, it is not something we can afford.

In fact, we need to stay as firm as ever in our defence of intellectual property rights if we want to defeat coronavirus and many more diseases. Patients who may one day be diagnosed with incurable diseases such as Alzheimer’s, Cystic Fibrosis, Diabetes, or HIV/AIDS should benefit from the chance that a cure will become available, and protecting IP is the only way to give them that chance. If we act boldly now and weaken intellectual property rights even further – and expand the scope of TRIPS flexibilities – we will cause the damage that will be hardly reversible, and the post-pandemic world will have to foot the bill.

As the former Czech Prime Minister, Jan Fischer pointed out, “Patents and other intellectual property protections enshrine the incentives that compel drug companies to take such extraordinary risks. By temporarily barring copycat products, the rules give innovators an opportunity to try and recoup their huge development costs. A substantial portion of the revenues achieved from the sale of those innovative drugs are dedicated to fund new projects, and enable the pursuit of path-breaking R&D in the first place.”

If we want more prosperity for all, we need to protect intellectual property rights. TRIPS flexibilities, and the call to extend their scope beyond patens, in particular, are an attempt to erode IP, and should be seen for what they really are: a threat to our economic recovery from COVID-19 and future innovation.

By Maria Chaplia, European Affairs Associate at the Consumer Choice Center

Global consumer advocacy group urges Malaysia to use Budget 2021 to address tobacco black market – Yahoo

Roeder said illegal cigarettes now command 62 per cent of the total market share cigarettes sold, making Malaysia the number one in the world for this black market. ― Picture by Miera Zulyana

KUALA LUMPUR, Sept 9 — An international consumer advocacy group is urging the government to use the upcoming Budget 2021 to implement measures to address the tobacco black market. 

Consumer Choice Center (CCC) wants the Malaysian government to take action against the tobacco black market and illicit trade, which it said is growing to become a serious threat to society and legal businesses.

Its managing director Fred Roeder said consumers are exposed to the risk of poorly-made and unregulated products with the black market.

“Transnational organised crime of illicit trade is a US$870 billion (RM3.6 trillion) problem. The global black market is not only immense but also growing rapidly. It is interesting to note that globally, the tobacco black market is higher in value than the illegal trade in oil, wildlife, timber, arts, cultural property, and blood diamonds combined,” he said in a statement.

Roeder argued that things are even more critical as illegal cigarettes now command 62 per cent of the total market share cigarettes sold, making Malaysia the number one in the world for this black market.

“Naturally this acute problem has and will continue to cause a severe drag to the economy while hurting consumers at large,” Roeder added.

In CCC’s recently-launched policy paper “Illicit Trade is Dangerous for Consumers”, it was found the tobacco black market damages public health and has been proven to finance organised crime. 

Additionally, it targets vulnerable groups in society while consumers are impacted because illegal cigarettes are produced in unsafe environments and using unsafe products.

It also highlighted that small retailers suffer considerably from the tobacco black market as they not only lose legitimate cigarette sales but also other items adult smokers usually buy from them.

“In addressing the tobacco black market, the Malaysian government should look into moderating tax policies to ensure that tax regimes do not create demand for more harmful illicit alternatives. 

“Simultaneously the government should increase the existing penalties for black market perpetrators and enforce these penalties dedicatedly, as the black market situation globally and in Malaysia is expected to deteriorate since consumers will turn to cheaper alternatives due to job security and income stretch resulting from the global Covid-19 pandemic,” he said.

The policy paper is available at consumerchoicecenter.org

Originally published here.


The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

Global consumer advocacy group urges Malaysia to use Budget 2021 to address tobacco black market

Roeder said illegal cigarettes now command 62 per cent of the total market share cigarettes sold, making Malaysia the number one in the world for this black market. ― Picture by Miera Zulyana

KUALA LUMPUR, Sept 9 — An international consumer advocacy group is urging the government to use the upcoming Budget 2021 to implement measures to address the tobacco black market. 

Consumer Choice Center (CCC) wants the Malaysian government to take action against the tobacco black market and illicit trade, which it said is growing to become a serious threat to society and legal businesses.

Its managing director Fred Roeder said consumers are exposed to the risk of poorly-made and unregulated products with the black market.

“Transnational organised crime of illicit trade is a US$870 billion (RM3.6 trillion) problem. The global black market is not only immense but also growing rapidly. It is interesting to note that globally, the tobacco black market is higher in value than the illegal trade in oil, wildlife, timber, arts, cultural property, and blood diamonds combined,” he said in a statement.

Roeder argued that things are even more critical as illegal cigarettes now command 62 per cent of the total market share cigarettes sold, making Malaysia the number one in the world for this black market.

“Naturally this acute problem has and will continue to cause a severe drag to the economy while hurting consumers at large,” Roeder added.

In CCC’s recently-launched policy paper “Illicit Trade is Dangerous for Consumers”, it was found the tobacco black market damages public health and has been proven to finance organised crime. 

Additionally, it targets vulnerable groups in society while consumers are impacted because illegal cigarettes are produced in unsafe environments and using unsafe products.

It also highlighted that small retailers suffer considerably from the tobacco black market as they not only lose legitimate cigarette sales but also other items adult smokers usually buy from them.

“In addressing the tobacco black market, the Malaysian government should look into moderating tax policies to ensure that tax regimes do not create demand for more harmful illicit alternatives. 

“Simultaneously the government should increase the existing penalties for black market perpetrators and enforce these penalties dedicatedly, as the black market situation globally and in Malaysia is expected to deteriorate since consumers will turn to cheaper alternatives due to job security and income stretch resulting from the global Covid-19 pandemic,” he said.

The policy paper is available at consumerchoicecenter.org

Originally published here.


The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

The WTO is Missing In Action on COVID

According to the World Trade Organisation (WTO)’s latest report to the United Nationès High-level Political Forum (HLPF), global trade will fall by between 13% and 32% in 2020 as a consequence of the economic disruption caused by the COVID-19 pandemic. It is expected that the decline will exceed the collapse brought on by the global financial crisis of 2008-2009, and nearly all regions will suffer double-digit declines in trade volumes in 2020.

The prediction is grim but not surprising. The world was simply not prepared for the pandemic, and, while a lot can be said about whether opting for lockdowns was a reasonable decision or not, what matters more now is the logic behind rushed economic policies. International trade implies interdependence and trust, and, therefore, unilateral withdrawal from a trading relationship is damaging and costly.

More specifically, this has to do with export restrictions on medical supplies and food. In the midst of the pandemic, 72 WTO members and eight non-WTO member countries banned or limited the export of face masks, protective gear, gloves and other goods. In a similar fashion, 15 countries globally made it harder or impossible to export food.

In the said report, the WTO draws attention to the chaotic nature of those trade regulations and lack of international cooperation and coordination. Most countries didn’t notify the WTO of their intentions to restrict trade, and this tells us two things. First, the WTO needs urgent reform to justify its institutional necessity. Second, regardless of how integrated and globalised the world might seem, true power remains with nation-states.

The good news is that the WTO is due to elect its new director-general, and some candidates seem to have a good grasp of what needs to be done to reshape the organisation. One of the frontrunners Amina Mohamed, a 58-year-old minister and former WTO chair, argues that “the [WTO] rulebook needs to be upgraded because of the concerns that are being expressed about the rules not being fit for purpose.”

The persistence of nation-statism is undeniable, and the pandemic has reinforced some of its key traits such as self-sufficiency. Being able to stand on two feet instead of waiting for others to give you a hand and, generally, being concerned only with oneself has become a protectionist mantra during the pandemic. Changing the prevalent narrative in favour of more cooperation and independence is one of the biggest challenges the new WTO DG will face.

However, it’s not all gloom and doom. The COVID-19 situation has revealed that a number of essential goods, such as ventilators or medical-style face masks had previously been burdened with tariffs. Removing many of these trade barriers has been helpful during the crisis, yet these measures are equally unnecessary outside the realms of the Novel Coronavirus. This is a positive shift and the one that needs to be endorsed by the WTO and all its members individually.

The WTO’s impact has been consistently declining over time, and the pandemic exposed its weakest sides: lack of coordination. The coronavirus crisis is not the first and definitely not the last challenge we face, but whatever happens, we should preserve free trade at all costs. The WTO is a much needed organisation, but it has to change.


The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

Scroll to top