UICC GLOBALink Presents...
The Tobacco Reference Guide
by David Moyer, MD.


Chapter 31 Tobacco exports, imports and smuggling

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Tobacco exports, imports and smuggling: Smuggling

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Northern Brands International, an RJR International affiliate, pleaded guilty to charges

that it smuggled cigarettes into Canada to avoid paying $2.5 million in U.S. excise

taxes. The company agreed to pay a $15 million fine for its role in a scheme to

transfer cigarettes out of Canada ostensibly for export to Eastern Europe, then

smuggling them back into Canada through an Indian reservation in New York state to

avoid U.S. excise taxes. US Attorney Thomas Maroney accused RJR of setting up

Northern Brands specifically for smuggling.

New York Times, December 23, 1999, p. A1

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About 30% of internationally exported cigarettes, 355 billion in all, are lost to

smuggling, a far higher percentage than most internationally traded consumer

products.

Curbing the Epidemic, p. 63

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About 30% of cigarettes smoked in Canada in the early 1990's were smuggled in,

including contraband cigarettes accounting for up to 75% of the market in Quebec.

Because of this, Prime Minister Jean Chretien slashed federal tobacco taxes by $11

per carton in February 1994.

JAMA, March 2, 1994, p. 647

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By early 1994, two-thirds of the cigarettes sold in Quebec and one-third of those sold

in Ontario were contraband. In February, the federal government in Ottawa cut the tax,

and the price of a "legal" carton of 200 cigarettes sold in Quebec fell from $47 to

$22.73 overnight. Public health authorities warn that despite cutting smuggling from

the United States, the price decreases will induce additional 245,000 Canadian

teenagers to begin smoking.

Canadian Medical Association Journal, April 15, 1994, p. 1295

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Monday, July 24, 2000 Page 17 of 18

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