Table 6 Key moments in the history of Paraguay’s tobacco industry and TTC complicity in the illicit trade

From the 1960s

Paraguay serves as a transit hub for BAT and PMI cigarette smuggling from the US to Argentina and Brazil

Late 1980s - early 1990s

BAT and PMI increase their focus on cheaper brands, paving the way for Paraguay manufacturers to capitalize on this market

1989–1994

BAT and PMI compete in the illicit market in north-east Argentina

Mid-1990s - late 1990s

BAT and PMI compete in the illicit trade in southern Brazil

1990s

While BAT and PMI increase legal exports of cigarettes from Brazil to Paraguay for them to be smuggled back to Brazil, they lobby the Brazilian government to lower the excise tax on cigarettes, claiming this would reduce the black market. Brazil eventually reduces the excise tax per pack from approximately 40% of retail price to about 25% in 1999.

1994

Creation of Tabacalera del Este (Tabesa), soon to become Paraguay’s largest tobacco company and major regional supplier of illicit cigarettes

1994–1998

Brazil becomes Paraguay’s main source of cigarette imports (4 to 7 times the volume of Paraguayan cigarette consumption), with Uruguay becoming another major supplier.

From the mid-1990s

Domestic cigarette production and illicit trade out of Paraguay begins to grow (tripled between 1995 and 1998, doubled between 1999 and 2003 to 27 bn sticks, approximately 8 times total domestic consumption)

1999

Brazil’s 150% export tax on cigarette exports to Latin American countries ends TTC scheme but shifts supply of illicit trade to Paraguay