issues and experts
Rise of Paraguayan cigarette production and illicit trade uncovered by SFU researchers
Benoît Gomis, Health Sciences, email@example.com
Roberto Iglesias, firstname.lastname@example.org
Globalization and Health has published two studies by SFU researchers on the history of the cigarette trade via Paraguay from the 1960s to 2003, and the subsequent rise of Paraguay’s Tabacalera del Este (known as Tabesa) from the 1990s. In both papers, the illicit trade of tobacco products has figured centrally, thus undermining global tobacco control efforts.
In the first study, "From transit hub to major supplier of illicit cigarettes to Argentina and Brazil", Roberto Magno Iglesias, Benoît Gomis, Natalia Carrillo Botero, Philip Shepherd, and Kelley Lee conduct the first systematic analysis—independent of the tobacco industry— of the legal and illegal tobacco trade via Paraguay within the Latin American sub region, examining the role of transnational tobacco companies (TTCs) and domestic manufacturers over time.
Researchers sifted through internal industry documents, mapped trade volumes and patterns using United States government and United Nations data, and estimated cigarette production using trade flows from the United Nations Commodity Trade Statistics Database.
“This research exposes how transnational tobacco companies have been complicit in illicit trade in this region despite prosecution in several jurisdictions, regional tobacco control initiatives and efforts by the World Health Organization,” says Kelley Lee, principal investigator and professor of health sciences at SFU. “Our findings confirm the need to better understand the factors influencing how the illicit tobacco trade has changed over time, in specific regional contexts, and amid tobacco industry globalization.”
In a second paper, "“We think globally”: the rise of Paraguay’s Tabacalera del Este as a threat to global tobacco control", the researchers map how Tabesa became the largest cigarette manufacturer in Paraguay. They found that Tabesa expanded its markets worldwide, largely through the illegal trade and export of billions of low-priced brands, while expanding legally to the U.S. to fend off smuggling allegations. The election of Tabesa owner Horacio Cartes as Paraguay’s president (2013-2018) presented clear conflicts of interest.
“Tabesa has become a major supplier of illicit tobacco products across Latin America and increasingly beyond. Although Brazil continues to account for the bulk of Tabesa's revenues, our findings suggest the company continues to grow, in large part, thanks to its complicity in illicit trade beyond the immediate region - including Europe and Asia,” says Gomis.
“The continuing expansion of Tabesa is part of ongoing tobacco industry globalization which has seen a growing role for aspiring transnational tobacco companies in some countries,” says Iglesias. “While attention to the global business strategies of leading tobacco companies is critical to global tobacco control, understanding the role of other actors will improve implementation of the World Health Organization (WHO) Framework Convention on Tobacco Control and its Protocol on Eliminating the illicit trade which came into force in October 2018.”
The WHO estimates that one in nine (11.6 percent) cigarettes smoked worldwide is illicit. This illegal activity undermines tobacco control efforts by increasing the affordability of tobacco products. This, in turn, leads to higher consumption of cigarettes, especially among the poor and youth, and an increased incidence of tobacco-related illness and death. Cigarette smuggling also fuels corruption, undermines the rule of law, and causes governments to lose an estimated US$40.5 billion per year in tax revenues.
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