The EU-ASEAN Business Council (EU-ABC) is seeking stronger regional measures against illicit trade, saying the Philippines’ 2026 ASEAN Chairship presents an opportunity to solidify support among member countries.

In a report titled "Driving ASEAN Action Against Illicit Trade" submitted to the Philippine government and the ASEAN Secretariat, the council provided a blueprint for integrating "Cooperation-First" strategies into the regional economic agenda.

The council said that the Philippines is well-positioned to lead efforts to secure ASEAN trade routes increasingly threatened by sophisticated transnational networks. By championing cross-border coordination and policy coherence, the Philippines can help advance more resilient and integrated supply chains.

The report highlights ongoing Philippine reforms as potential models for ASEAN, including the Anti-Agricultural Economic Sabotage Law, which criminalizes large-scale smuggling and uses technical verification mechanisms to intercept non-compliant shipments before export, and the Preboarded Technical Verification mechanism (PTV), aimed at preventing noncompliant shipments before export.

The report states that the Philippine Chairship may also highlights existing national practices that help reduce the diversion risks at the point of export, including the requirement that tobacco products intended for export reflect the fiscal and regulatory marking requirements of the destination market, as set out in the Implementing Rules and Regulations of Republic Act No. 10643 (Graphic Health Warnings Law). By aligning export packaging with destination-market requirements prior to shipment helps limit opportunities for re-routing and leakage into unintended markets.

Building on this, the report underscores that effective enforcement is essential to ensuring that such measures function as intended, and the Philippine Chairship offers a timely opportunity to encourage steady progress and share practical, workable approaches across the region.

At the regional level, the Chairship can further advance these efforts by strengthening existing ASEAN customs and cooperation mechanisms, enhancing risk-based controls, and promoting data-driven, trade facilitative approaches that protect legitimate commerce while addressing illicit activity.

The Council aligns its recommendations with current ASEAN Priority Economic Deliverables (PEDs) to reinforce existing regional goals rather than introduce new mandates. As the Philippines prepares to lead the bloc under the theme "Navigating Our Future Together," the council sees a critical window to integrate illicit trade prevention into core economic priorities.

EU‑ABC Executive Director Chris Humphrey said that the 2026 chairship emphasizes strengthening trade and investment linkages, enhancing supply chain resilience, and accelerating digital transformation.

“Achieving these objectives requires not only deeper integration, but also stronger safeguards to ensure that trade remains secure, transparent, and rules-based,” Humphrey said.

The Council noted that illicit trade undermines fiscal resources and weakens confidence in supply chains across sectors such as pharmaceuticals, fuels, consumer goods, agricultural products, alcohol, and tobacco. According to the report, responding to these activities is a strategic economic imperative closely linked to the delivery of regional goals.

To strengthen ASEAN’s collective defenses, the report proposed actionable steps, including the enhancing customs cooperation, adopting artificial intelligence-enabled risk management technologies, and leveraging digital traceability tools such as the ASEAN Single Window to improve visibility across supply chains. It also recommends targeted assurance tools like PTV applied selectively to high-risk goods, routes, or operators for pre-export shipment control to prevent diversion at source.

The Council said these measures are intended to be trade facilitative, protecting legitimate commerce while removing criminal actors from the market. Aligning these safeguards with the 2026 agenda could reinforce investor confidence and demonstrate ASEAN’s commitment to as secure and future-ready economic community.

“By building on existing ASEAN mechanisms, promoting risk-based and trade facilitative approaches and strengthening cooperation with the private sector and Dialogue Partners, ASEAN can reinforce its commitment to a resilient, sustainable and future-ready regional economy,” Humphrey said.

The report followed an EU-ABC business mission to Manila last year and has been submitted to key agencies, including the Department of Trade and Industry and the Department of Finance. The EU-ASEAN Business Council (EU-ABC) serves as the primary advocacy organization for European businesses operating across Southeast Asia.

Across ASEAN, illicit tobacco trade robs governments of billions in revenue while fueling smuggling and organized crime

In the Philippines, Senator Win Gatchalian revealed that BIR data showed ₱50 billion in losses in 2024. Of this, ₱34.37 billion came from illicit cigarettes, ₱14.84 billion from misdeclared vapor products, and ₱840 million from heated tobacco.

The losses have grown year after year: ₱13.9 billion in 2019, ₱26.3 billion in 2020, ₱32.5 billion in 2021, ₱39.3 billion in 2022, and ₱48.3 billion in 2023. By 2025, the figure reached ₱54.1 billion, with forecasts pointing to ₱58.2 billion by 2026, ₱62.1 billion by 2027, and ₱65.9 billion by 2028.