Smuggling of tobacco products on the Brazil-Paraguay border: the case of Ponta Porã and Pedro Juan CaballeroAbstract
This article analyzes the social, economic, and institutional dynamics that shape the smuggling of tobacco products across the border between Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay), one of the so-called Twin Cities of South America. Based on a qualitative approach, using a single case study and fieldwork conducted in 2024, the study examines the causes of smuggling, its impacts on public health, the economy, and local governance, as well as the limitations of current enforcement strategies. The research included interviews and direct observation in the territory. The findings show that smuggling is not an isolated practice but a structural component of the local informal economy, driven by tax asymmetries, institutional vulnerabilities, and the lack of sustainable economic alternatives. The analysis also reveals the links between illicit networks, corruption, and the weakening of public policies, particularly in the health and security sectors. The study highlights the need for intersectoral policies and cooperation among government levels, as well as coordination with international bodies, as established in the Protocol to Eliminate Illicit Trade in Tobacco Products. It concludes that addressing tobacco smuggling in border regions requires a systemic and territory-sensitive approach, combining qualified enforcement with strategies for local development and social inclusion.
Keywords:
Tobacco smuggling; Brazil-Paraguay border; Public health; Governance; Regional development.
Resumo
Este artigo analisa as dinâmicas sociais, econômicas e institucionais que estruturam o contrabando de produtos de tabaco na fronteira entre Ponta Porã (Brasil) e Pedro Juan Caballero (Paraguai), uma das chamadas Cidades Gêmeas da América do Sul. A partir de uma abordagem qualitativa, com estudo de caso único e trabalho de campo realizado em 2024, o estudo examina as causas do contrabando, seus impactos na saúde pública, na economia e na governança local, bem como os limites das estratégias de enfrentamento adotadas até o momento. A pesquisa considerou entrevistas e observação direta no território. Os resultados indicam que o contrabando não se restringe a uma prática isolada, mas constitui parte estruturante da economia informal local, sendo alimentado por assimetrias tributárias, vulnerabilidades institucionais e ausência de alternativas econômicas sustentáveis. A análise revelou ainda a articulação entre redes ilícitas, corrupção e enfraquecimento das políticas públicas, especialmente nas áreas da saúde e da segurança. O estudo aponta a necessidade de políticas intersetoriais e cooperação entre os entes federativos, bem como da articulação com organismos internacionais, conforme previsto no Protocolo para Eliminar o Comércio Ilícito de Produtos de Tabaco. Conclui-se que o enfrentamento do contrabando na região fronteiriça exige uma abordagem sistêmica e sensível às especificidades territoriais, que combine ações de repressão qualificada com estratégias de desenvolvimento local e inclusão social.
Palavras-chave:
Contrabando de tabaco; Fronteira Brasil-Paraguai; Saúde pública; Governança; Desenvolvimento regional.
Introduction
Borders between countries can contribute to the practice of illegal activities, among which the smuggling of tobacco products stands out as a significant problem, with impacts on public health, the economy, and the social structures of the nations involved. In the case of the border between Ponta Porã, Brazil, and Pedro Juan Caballero, Paraguay, the illicit cigarette trade has persisted for decades, despite attempts at control and the regulations in force in Brazil (Brasil, 2018), challenging the policies implemented in the region.
In Paraguay, low taxation, the lack of registration requirements for producers, the absence of control over production, import, and distribution, coupled with weak police and customs governance, contribute to a permissive scenario for the illicit production of cigarettes, which is frequently tolerated or not monitored by the State (Iglesias et al., 2018). Furthermore, this environment of illegality favors the coexistence of various illicit practices in Brazil as well, such as slave-like labor in clandestine factories established in Brazilian territory for the production of counterfeit cigarettes (Metrópoles, 2023), the sale of loose cigarettes, including to minors, and non-compliance with the ban on smoking in enclosed public spaces (Szklo et al., 2023; Szklo, 2024). These elements reveal that the illegal trade in tobacco products persists, supported by an articulated structure that involves institutional and regulatory weaknesses in both countries (Receita Federal, 2025; Iglesias et al., 2017).
This region, characterized by its geographical porosity and socioeconomic complexity, favors the illicit transit of goods, including tobacco products, due to a combination of geographical, economic, and social factors that hinder enforcement and control efforts. The Protocol to Eliminate Illicit Trade in Tobacco Products, a supplementary instrument to the Framework Convention on Tobacco Control, defines illicit trade as "any practice or conduct prohibited by law relating to the production, shipment, receipt, possession, distribution, sale or purchase of tobacco products, including any practice or conduct intended to facilitate such activity" (WHO, 2013). Both smuggling and the illicit manufacture of cigarettes fall under this definition and are forms of illegal trade that subtract substantial tax revenue from governments and undermine public tobacco control policies by facilitating access to cheaper and less regulated products (Szklo et al., 2018; Shafey et al., 2002).
The problem of smuggling on the border between Ponta Porã and Pedro Juan Caballero is not just an economic or public health issue; it is also deeply intertwined with security aspects, due to the involvement of transnational criminal organization networks. These interconnected networks facilitate the illegal flow of goods, challenging the response capacity of local and national authorities (OECD, 2012). The actions of these organizations, often linked to the illicit production of cigarettes in Paraguay and their distribution to neighboring countries, have been documented as part of a broader mechanism involving industrial interests and a lack of effective enforcement (Iglesias et al., 2018). Furthermore, the wide availability and low cost of smuggled tobacco products hinder smoking cessation and encourage initiation of consumption, especially among more vulnerable populations (Drope et al., 2022). The border region with Paraguay has the lowest prices for these products in Brazil, which significantly contributes to early experimentation and the development of nicotine dependence (Szklo; Drope, 2024).
In response to these challenges, cross-border cooperation policies have been proposed, the main one being the effective implementation of the Protocol to Eliminate Illicit Trade in Tobacco Products, an international instrument ratified by Brazil in 2018, which seeks to harmonize legislation, strengthen tracking mechanisms, and expand cooperation between countries (WHO, 2013). However, its implementation faces serious obstacles, especially due to interference from the tobacco industry and sectors of the government itself that show little interest in its full adoption, acting to perpetuate the scenario favorable to illicit trade, as in the Paraguayan case (Szklo; Iglesias, 2020; Drope et al., 2022).
In Brazil, entities such as the Brazilian Institute of Competitive Ethics (Instituto Brasileiro de Ética Concorrencial - ETCO) and the National Forum against Piracy and Illegality (Fórum Nacional contra a Pirataria e Ilegalidade - FNCP) have influenced authorities and advocated for measures such as reducing taxes on legal cigarettes as a solution to the illegal market, contradicting international evidence and the principles of the Protocol (Ribeiro; Pinto, 2020). Although there are cases of corruption at border control points, the problem is broader and involves concrete actions to be carried out by institutional structures, including the judiciary and diplomacy. The effectiveness of any cross-border policy therefore depends not only on the implementation of international agreements, but also on the parallel fight against corruption and resistance to pressure from the tobacco industry (Szklo et al., 2018).
Given this scenario, this article aims to analyze the dynamics of tobacco product smuggling on the border between Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay), based on a qualitative case study. The institutional and economic causes that sustain this illegal market are investigated, as well as its consequences for public health, security, and local development, and the coping strategies adopted by public authorities.
Methodology
This is a single, exploratory case study with a qualitative approach, carried out in the border municipality of Ponta Porã, located in the state of Mato Grosso do Sul, Brazil. Ponta Porã is strategically important as one of the Twin Cities, and suffers from the impacts caused by the smuggling of tobacco products due to its location on the border with Pedro Juan Caballero, Paraguay. The choice of a qualitative approach and a single case study is based on the proposal of Minayo (2014), who defends this strategy as adequate to understand complex phenomena, embedded in specific social contexts.
Ponta Porã is one of the Brazilian municipalities that make up the Twin Cities, as defined by the Ministry of National Integration (MIN) in 2014. This concept applies to municipalities located on the border line that have significant potential for economic, social and cultural integration with cities in neighboring countries (Silva; Ribeiro, 2018). Its location is strategic, as it allows access via BR-163, a highway that crosses the country from north to south. However, this advantage also transforms Ponta Porã into one of the main smuggling routes, enabling direct access to Paraguay, connecting a complex of secondary routes and facilitating the transport of illegal goods.
In July 2024, technical visits and direct observations were carried out at points of sale and in locations strategically identified as the main smuggling routes in the municipalities of Ponta Porã and Pedro Juan Caballero. These activities allowed a direct assessment of market dynamics and enforcement operations. For security reasons, no structured interviews were conducted with professionals working in the municipalities. However, informal conversations were held with various local actors, with the aim of understanding their perceptions and gaining a better understanding of the challenges faced in the territory. To protect the identity of the study participants, their professions, employment ties, or any other information that could identify them will not be mentioned.
The thematic analysis was guided by five main categories, which reflect the complexity of the phenomenon studied: (1) socioeconomic and cultural dynamics on the Brazil-Paraguay border; (2) infrastructure and geographical characteristics of the border region; (3) governance, corruption and the challenges in controlling tobacco product smuggling; (4) impacts of tobacco smuggling on public health; and (5) political economy of smuggling on the border between Brazil and Paraguay.
The study setting consisted of two municipalities: Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay) (Figure 1).
Areas of influence and location: Ponta Porã and Pedro Juan Caballero, Brazil-Paraguay border, South America
The municipalities of Ponta Porã, in Brazil, and Pedro Juan Caballero, in Paraguay, have distinct territorial characteristics, according to the most recent data from the 2022 census. Ponta Porã has a population of 92,017 inhabitants and an area of 5,330.40 km2, while Pedro Juan Caballero has a larger population, with 122,190 inhabitants, in an area of 4,733 km2. In socioeconomic terms, Ponta Porã has a Gini Index of 0.6 and a per capita income of US$ 130.67. Pedro Juan Caballero, on the other hand, has a Gini1 Index of 0.43 and a significantly lower per capita income of US$ 0.33 (Table 1).
Demographic and socioeconomic indicators for the municipalities of Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay), 2010 and 2022
Results
Socioeconomic and cultural dynamics on the Brazil-Paraguay border
The relationship between the twin cities of Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay) reveals how geographical borders can be highly permeable, with deeply intertwined economies, cultures, and social dynamics. The conurbation between the two municipalities facilitates not only legal trade but also creates favorable conditions for the development of illegal trade, such as the smuggling of tobacco products. This reality is sustained by a network of social, economic, and cultural interdependencies that make the boundaries between legality and illegality diffuse (Iglesias et al., 2018; Szklo; Drope, 2024).
The region is marked by intense cultural integration. The population shares a hybrid language (“Portunhol”) and daily habits that transcend territorial boundaries. Cross-border sociability networks operate in formal and informal markets, and smuggling, in this context, is often naturalized, seen as a daily practice, and not as a legal transgression (Banco Mundial, 2019). This social acceptance of illicit trade, coupled with a low perception of risk, contributes to the maintenance and expansion of these practices (Paraje; Stoklosa; Blecher, 2022). A significant example is the widespread acceptance of the real as currency in Pedro Juan Caballero (including via Pix), while Brazilian trade is restricted to the real. Such dynamic highlights the focus of Paraguayan trade, whether legal or illegal, on Brazilian consumers.
From an economic standpoint, tobacco product smuggling is driven by tax and regulatory disparities. While Brazil applies a high tax burden on cigarettes, Paraguay maintains a permissive regulatory structure, with low taxation, lack of traceability, and weak enforcement (Iglesias et al., 2018). However, studies show that price disparity is not the only determining factor in illicit trade. Countries with low taxes and weak institutional governance tend to have larger illegal markets, regardless of the tax burden (Banco Mundial, 2019; WHO, 2023). It is also noted that the profit margin for smugglers is high, because even if Brazil drastically reduced its taxes, Paraguayan cigarettes would remain cheaper due to the local production model (Ribeiro; Pinto, 2020).
Geography also plays a central role. The so-called “dry border”, without natural barriers and with free movement of people and goods, facilitates smuggling operations. The absence of constant surveillance and territorial porosity favor the actions of organized criminal networks that exploit these conditions to sustain their activities (OECD, 2012). These factors, combined with social and institutional tolerance, favor the persistence of the illegal tobacco market in the region and its expansion to other areas of the country, such as the Northeast (Szklo; Drope, 2024).
Another point of concern is the marketing of Electronic Smoking Devices (ESDs). While banned in Brazil since 2009 - with updated regulations by RDC No. 855/2024 of Anvisa (Brasil, 2024) -, they are legally sold in Paraguay. This asymmetry allows legal and illegal practices to coexist in the same urban territory, separated only by a street. The legalization of EDCs in Brazil, by itself, would not solve the problem of smuggling, as the structural determinants of illegal trade are the same, regardless of the type of tobacco-derived product.
These dynamics are also reflected in education. It has been observed that many Paraguayan students, especially those from families in situations of social vulnerability, attend Brazilian public schools. A recurring phenomenon is known locally as the “blue wave”, an expression that refers to the blue color of the school uniform worn by students in the public school system of Mato Grosso do Sul. Daily, at the beginning and end of the school year, one can observe an intense flow of children and adolescents crossing the street that separates the two countries, heading towards the schools in Ponta Porã.
Culturally, smuggling is widely normalized as an alternative to the scarcity of formal jobs. This practice shapes local social norms and perpetuates cycles of informality and marginalization. Many residents of the two cities do not identify exclusively as Brazilian or Paraguayan, but as “brasiguaios”, a term used to express a hybrid sense of belonging that reflects daily life in an economically and culturally integrated territory. This self-identification highlights the blurring of national borders in everyday life and poses concrete challenges to the formulation of binational public policies and the construction of truly cross-border governance.
Infrastructure and geography of the border
Road infrastructure intensifies this dynamic. BR-163 and BR-277 highways are fundamental logistics corridors for the flow of smuggled tobacco products. BR-163, in particular, cuts across the country from north to south, crossing rural and difficult-to-access regions, which makes it strategic for criminal groups. In addition to the main roads, Brazil has an extensive network of secondary, state, and federal roads, as well as informal paths that quickly connect entry points on the border with consumer centers in other parts of the territory (Drope et al., 2022).
Smuggling is not restricted to border municipalities. An inland expansion process is observed, with the arrival of illegal Paraguayan brands in various regions of the country (including the Northeast and Amazonian areas, such as Acre and Rondônia), and even along the Suriname-Pará route (Szklo; Drope, 2023; Metrópoles, 2023). Criminal organizations operate exclusive routes by state and adapt their strategies according to surveillance, taking advantage of the capillarity of the road network to maintain flows. Cargo moves with the support of sophisticated logistical structures (scouts, lookouts, clandestine warehouses and transporters), which quickly adjust to repression actions (Szklo et al., 2022).
In many cases, where there is circulation of smuggled tobacco products, the simultaneous presence of other illegal practices is observed, such as loose sale, offering to minors and violation of smoking restrictions in enclosed environments (Szklo; Bertoni, 2023; Szklo; Cavalcante, 2018). This accumulation of illegalities reveals the fragility of state control and the environment of impunity that is established, particularly in the so-called “secondary zones” of surveillance (where public agents, in some cases, actively participate in corruption networks) (OECD, 2012).
The result of this scenario is the normalization of smuggling in everyday life. The physical and emotional proximity between the twin cities, coupled with the perception of low punishment associated with this practice (that is, impunity and the reduced presence of the State), leads the population to see illegal trade as a tolerable activity (often reduced to the idea of “not paying taxes”). This naturalization makes it difficult to build social and moral barriers against the consumption and sale of these products, emptying the meaning of public policies to control tobacco use.
The low effectiveness of enforcement actions also stems from the scarcity of logistical and human resources. The territorial extension, combined with the lack of technology and qualified personnel, limits the capacity to control the routes used. As pointed out by Iglesias et al. (2017), even though taxes on cigarettes in Brazil are high, non-price factors (such as corruption, institutional fragility, and social acceptance of smuggling) are more robust determinants for the maintenance of the illegal market. This reality contributes, directly and indirectly, to the increase in the consumption of tobacco products and, consequently, imposes a high cost on the Brazilian health system (it is estimated that the impacts of the tobacco epidemic cause an annual expenditure of approximately R$ 153.5 billion to the country) (WHO, 2023; Pinto et al., 2024).
Governance, corruption, and the challenges in controlling tobacco smuggling
Corruption is one of the main barriers to the effectiveness of actions to control tobacco smuggling on the border between Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay). Illegal trade networks are largely sustained by the bribery of local authorities and public agents, who facilitate the movement of illicit goods between the two countries (Tobacconomics, 2019). Local press reports point to evidence of collusion between enforcement agents and smugglers, which compromises institutional legitimacy and weakens public governance in border territories (Metrópoles, 2023).
Even with repressive efforts, the effectiveness of state actions is limited by a combination of factors: insufficient human and technological resources, fragmentation of institutional competencies, and direct interference from the tobacco industry, which acts to distort the perception and, consequently, the solution to the problem (Szklo; Iglesias, 2020). Furthermore, the absence of effective internal control and accountability mechanisms makes public institutions vulnerable to pressure and capture (Ribeiro; Pinto, 2020). The mere existence of legal frameworks does not guarantee their application, especially in contexts where impunity is systematic.
The dispute between factions for control of smuggling routes frequently results in episodes of violence, directly affecting the safety of the local population. The actions of criminal organizations, sometimes supported by networks of institutional corruption, hinder the implementation of public security policies and contribute to the erosion of the rule of law. In these regions, the feeling of insecurity is permanent and reinforces the population’s distrust in state structures.
At the level of local development, the effects are equally severe. Economic dependence on illicit activities perpetuates cycles of poverty, informality, and social exclusion. Literature shows, for example, that in Brazilian states with high levels of severe food insecurity (such as Acre), monthly spending on manufactured cigarettes can represent significant portions of household per capita income (Szklo; Souza; Carvalho, 2024). This consumption pattern reinforces the vulnerability of families and accentuates social inequality. This is a direct obstacle to achieving the Sustainable Development Goals, especially the goal of eradicating poverty and promoting health (SDG 1 and SDG 3).
Despite the ratification of the Protocol to Eliminate Illicit Trade in Tobacco Products by both Brazil and Paraguay (WHO, 2013), reality shows that its implementation faces concrete limitations. The Protocol focuses on controlling formal production and distribution, but does not reach the informal circuits, where illegal farms, clandestine factories, and structures of judicial and police corruption operate (Banco Mundial, 2019). In fact, institutional leniency toward these practices reveals that the governance challenge goes beyond the technical scope and reaches political and diplomatic dimensions.
In this sense, actions within the scope of institutional cooperation have been marked by a certain reticence in openly addressing the problem of Paraguayan cigarettes, despite the evident harm to Brazil. Without effective diplomatic engagement, bilateral efforts remain fragile. Cooperation between the two countries is essential, but it requires more than good intentions: it demands an ethical and political pact that confronts corruption mechanisms head-on, with the creation of joint channels for monitoring, accountability, and institutional integrity.
In parallel, it is urgent to advance discussions on tax reform in Brazil, with special attention to the implementation of a selective tax on products that cause harm to health, such as those derived from tobacco or with other types of nicotine. This measure represents a concrete opportunity to align fiscal policy with public health objectives, provided it is accompanied by effective enforcement strategies and resistance to industry interference (Iglesias, 2016; WHO, 2023). Maintaining minimum prices, with periodic adjustments above inflation and income gains for the population, is fundamental to reducing consumption, both of the product in the legal market and that in the illegal market (Paraje et al., 2022; Szklo; Dopre, 2024).
Finally, it is necessary to invest in the professionalization of border enforcement teams. This includes technical training, access to modern technologies, institutional autonomy, and robust accountability protocols. Strengthening control institutions is essential to interrupt the cycle of permissiveness and restore public trust in public actions.
Consequences of tobacco smuggling on public health
The smuggling of tobacco products across the border between Ponta Porã (Brazil) and Pedro Juan Caballero (Paraguay) are a significant challenge in the field of public health as well. The wide availability of these products at reduced prices facilitates access, especially among populations with lower income and education levels, who already have higher prevalences of smoking, according to the National Health Survey (IBGE, 2020).
Furthermore, the presence of low-cost smuggled cigarettes, coupled with the sale of single cigarettes, sales to minors, and the availability of flavored and scented products, encourages early experimentation and the development of nicotine dependence (Szklo et al., 2024; Szklo, 2023). This combination of factors is particularly concerning among adolescents and young adults, hindering future attempts at cessation and perpetuating the harm associated with smoking throughout life (HHS, 2014).
Studies show that, although smuggling is still a concern, the proportion of illegal cigarettes consumed in Brazil has been decreasing since 2017 (Szklo; Iglesias, 2019). Even so, the combination of legal and illegal factors contributes to keeping tobacco widely accessible, hindering the effectiveness of public control policies. It should be noted that all tobacco-derived products or those containing other types of nicotine, such as various electronic cigarettes (whether legal or illegal), cause serious illnesses and preventable deaths, directly impacting the Unified Health System (SUS), which bears the costs of hospitalizations, medications, and specialized treatments, in addition to the economic losses associated with reduced productivity (Pinto et al., 2024).
In the border region, this scenario is aggravated by cross-border flows related to access to health. Many residents of Pedro Juan Caballero, who call themselves “brasiguaios”, seek to obtain Brazilian documents (such as CPF, identity card, and SUS Card) to access public services in Ponta Porã. This search is not limited to health: it also includes access to education, social programs, pensions, and emergency benefits (observed, for example, during the Covid-19 pandemic).
The circulation of illegal products also compromises institutional efforts to promote health and prevent smoking. Policies such as increased taxes, advertising bans, and the use of health warnings on packaging become ineffective when unregulated products circulate freely at points of sale (often formal ones), ignoring these measures (Szklo et al., 2024).
In this context, the maintenance of a structured illegal market weakens the implementation of national legislation and highlights the need to strengthen structural policies. The current discussion on tax reform in Brazil, for example, offers a concrete opportunity for the implementation of a selective tax on tobacco products, a measure already recommended by international organizations such as the WHO and the World Bank (Paraje; Stoklosa; Blecher, 2022; WHO, 2023). Raising the price of legal cigarettes, combined with increasing the price of illegal cigarettes at market parity, is an effective strategy to reduce overall consumption (Iglesias, 2016). However, its effective implementation in a borderline scenario, such as the one described in this article, may represent an additional challenge to achieving fiscal and health gains.
The political economy of tobacco smuggling on the Brazil-Paraguay border
The smuggling of tobacco products on the border between Ponta Porã (MS) and Pedro Juan Caballero (Paraguay) is fueled by a complex interplay of economic, structural, political, and institutional factors. One of the main causes of this dynamic is the tax asymmetry between the two countries. While Brazil imposes a tax burden of over 70% on cigarettes, Paraguay applies around 20%, creating a market distortion that favors the entry of illegal products into Brazilian territory (Drope et al., 2022).
During fieldwork, it was found that there is no open sale of tobacco products on the Brazilian side of the border, while the trade is widely visible in Pedro Juan Caballero. There, traditional cigarettes and electronic smoking devices are sold freely, in local and foreign currency (real, dollar, and guarani), at prices much lower than those practiced in Brazil. In some places visited, a pack of cigarettes was sold for R$ 0.70,2 and electronic devices from R$ 5.00. This pricing was verified in the field and represents how well informality adapts to regional consumption dynamics (Figure 2).
Images of cigarette packs and electronic devices sold at the Brazil-Paraguay border, June 2024
Although these products are manufactured in Paraguay, the distribution of these brands in Brazil follows a regional logic. Brands such as Fox are predominant in Mato Grosso do Sul, Classic or Lennon in Paraná, Eight in São Paulo, and GIFT in Rio de Janeiro (Szklo; Drope, 2024). This sectorization reflects the control of routes by different factions, highlighting the strategic organization of criminal networks. In cities like Rio de Janeiro, there is even the legal manufacture of GIFT brand cigarettes with judicial authorization (possibly to confuse consumers and boost consumption of the illegal Paraguayan version) (Machado et al., 2021).
The high profitability of the illegal market is one of the factors that maintain its expansion. The low cost of production in Paraguay, coupled with the absence of robust tracking and inspection mechanisms, makes smuggling highly advantageous for criminal groups that control everything from manufacturing to distribution in Brazilian urban peripheries (Szklo et al., 2020). A study conducted by the Working Group established by Ordinance No. 263/2019 of the Ministry of Justice and Public Security concluded that the proposed reduction in taxes on domestic cigarettes would not result in a significant reduction in smuggling. On the contrary, it would result in a loss of revenue and a greater incentive for consumption, thus recommending the strengthening of actions aligned with the Protocol to Eliminate Illicit Trade in Tobacco Products (Brasil, 2018).
Although taxation is cited by interested sectors as the main cause of smuggling, studies have shown that about 25% of Paraguayan cigarettes sold in Brazil in 2019 were sold at the same price (or above) the minimum price of legal domestic cigarettes (Szklo; Drope, 2024). This shows that, in addition to the low minimum price of legal cigarettes established by law, there are factors such as the failure of enforcement, corruption, lack of logistical control, brand loyalty, and social tolerance of illegality (Paraje; Stoklosa; Blecher, 2022; Tobacconomics, 2019).
Besides economic and fiscal losses, the growth of the parallel market compromises public tobacco control policies, weakens national revenue, and jeopardizes the progress made with the price increase policy (which was one of the most effective in reducing the prevalence of smokers in the country) (Iglesias, 2016). The 2022 National Drug Policy Plan (Plano Nacional de Políticas sobre Drogas - PLANAD) reiterates this perspective, arguing that increasing the cost of products and the risk associated with illegal trade is more effective than tax relief (Brasil, 2018).
Discussion
The smuggling of tobacco products profoundly and multifacetedly affects the economic development of border regions, especially in cities like Ponta Porã (Brazil), which maintains an intense relationship with Pedro Juan Caballero (Paraguay). In this territory, many families find in the informal economy associated with the resale of smuggled cigarettes a source of livelihood in the face of the scarcity of opportunities in the formal market. Although illegal, this activity ends up consolidating itself as a survival strategy, especially among the most vulnerable segments of the population.
The fiscal losses for the Brazilian State resulting from the dynamics of cigarette smuggling are significant. However, it is important to contextualize that widely publicized estimates of the losses caused by smuggling should be analyzed with caution, as they are often based on data inflated by sources linked to the tobacco industry (Szklo; Iglesias, 2020). Even so, the impacts of tax evasion are evident, reflecting in the limitation of investments in essential public policies, such as health, education and security, in addition to compromising the actions of inspection and repression of the illegal market. Beyond fiscal losses, it is crucial to consider the public health losses resulting from maintaining the proportion of smokers in the country (marked by higher initiation and lower cessation), which contributes to an increase in the burden of diseases attributable to smoking. These losses generate high direct and indirect costs to the health system and the economy as a whole, exacerbating the burden of tobacco for the State (Pinto et al., 2024). Losses to society in terms of direct and indirect costs of treating smoking-related diseases are aggravated by smuggling, which contributes to higher initiation and/or lower cessation of the use of tobacco products. Such losses are significant and still far greater than fiscal losses (Iglesias, 2016).
At the regional level, the strengthening of the illegal economy compromises sustainable development efforts. The circulation of large volumes of money outside state control favors corruption, fuels criminal networks, and discourages formal entrepreneurship. The result is a structural distortion of the local market, marked by legal uncertainty, institutional distrust, and social instability.
Another relevant aspect is the transformation of labor market dynamics. Individuals are frequently recruited to work in various stages of the smuggling chain (from transportation to storage and marketing of products), often in precarious conditions and under the control of criminal organizations. This accentuates informality, violence, disrespect for labor rights, and the social vulnerability of the populations involved.
The dependence on the illegal economy and the consequent violation of legal statutes also compromise municipal governance. The scarcity of revenue resulting from informality limits the investment capacity of municipalities, which become almost exclusively dependent on transfers of resources from the Federal Government. This situation generates territorial inequalities, with border municipalities showing low financial autonomy compared to regions less exposed to smuggling. In addition, the expansion of this activity damages the region’s image as an attractive space for new investments, discouraging the establishment of legal businesses and reducing the potential for innovation and the generation of formal jobs.
Given this scenario, the fight against the smuggling of tobacco products (or other types of nicotine, such as the synthetic nicotine present in electronic smoking devices) must be articulated with regional development and productive inclusion strategies. Professional qualification programs, encouragement of entrepreneurship, and strengthening of local economies are fundamental to offering sustainable alternatives to the population and breaking with the logic of dependence on the illegal economy that predominates in many border regions, such as Ponta Porã.
In addition, it is essential to develop public policies that consider the socioeconomic, cultural, geographic, and institutional specificities of the region. Measures such as strengthening border intelligence, using remote monitoring technologies, increasing cooperation between national and international bodies, and integrated action between the security, health, and economic sectors are strategic to mitigate the impacts of smuggling and weaken the networks that sustain it (Perez; Viegas, 2024; Kong et al., 2024).
The fight against corruption, in turn, must include the engagement of local society. Citizen education initiatives and awareness campaigns about the social, economic, environmental, and health impacts of smuggling can foster a culture of legality and reduce social tolerance for corruption. Strengthening community leadership is a strategic step in building a safer, fairer, and more sustainable border.
It is also necessary to consider the environmental impact of cigarette consumption, whether legal or illegal. The pollution generated by cigarette butts, in addition to the production chain based on unsustainable practices, reinforces the urgency of holding the tobacco industry accountable according to the polluter-pays principle (Ribeiro et al., 2024). This accountability is aligned with the Sustainable Development Goals (SDGs), since reducing the prevalence of smokers directly contributes to tackling poverty, inequalities, and chronic non-communicable diseases.
The problem of smuggling transcends Brazilian borders. In several developing countries, the combination of a lack of information about the risks of tobacco products (legal or illegal) and the wide availability of illegal products results in alarming rates of smoking. This scenario highlights the need for an internationally coordinated approach, supported by instruments such as the Protocol to Eliminate Illicit Trade in Tobacco Products (United Nations, 2024).
At the local level, it is unfeasible to expect the municipality to face this complex and risky reality alone. Municipal agents, because they reside in the affected territory, are frequently exposed to contexts of insecurity and possible retaliation from criminal networks. For this reason, it is up to the state and federal entities to take the lead in coordinating actions to combat smuggling in border regions. The role of the municipality should be to support the sanitary inspection of points of sale and to collaborate, never to lead in isolation, given its limited institutional capacity and the high degree of exposure of its managers and employees.
In this context, the ongoing tax reform is an opportunity to strengthen tobacco control in Brazil. The creation of a selective tax for tobacco products should be accompanied by the allocation of part of the revenue to policies for the prevention, control, and treatment of tobacco use, reinforcing the pillars of the national health policy. Studies indicate that increasing the price of legal cigarettes (an effective measure aligned with international recommendations) leads to a reduction in the consumption of legal and illegal products, especially among low-income populations (Szklo et al., 2024).
The analysis of the political economy of tobacco smuggling therefore requires a systemic approach that considers not only the relationship between supply and demand, but also the institutional incentives, fiscal asymmetries, and gaps in enforcement that sustain this market. Understanding these mechanisms is essential for the formulation of effective public policies capable of curbing the advance of smuggling without compromising the principles of tobacco control policy and public health in Brazil.
Final considerations
The study conducted in Ponta Porã highlights how the sociocultural, economic, and institutional dynamics of border regions shape the complex reality of tobacco product smuggling. The interdependence between the municipalities of Ponta Porã and Pedro Juan Caballero transcends geographical and legal boundaries, configuring a hybrid territory in which national borders become permeable to daily practices, both legal and illegal. The intense cultural, economic, and social integration contributes to the naturalization of smuggling as a survival strategy in contexts marked by informality and vulnerability.
In this scenario, smuggling emerges not only as a parallel economic activity but as a phenomenon that directly impacts public health, security, governance, and local development. The fragility of institutions, aggravated by corruption practices and insufficient resources for oversight, highlights the limits of municipal action in the face of a problem with structural and transnational roots.
Just as economic dependence on extractive activities can compromise the future of Amazonian communities, the maintenance of local economies based on smuggling poses lasting risks to the social, economic, and political fabric of border regions such as Ponta Porã. The absence of sustainable economic alternatives and inequality in tax and health control policies among neighboring countries exacerbate this situation, making the adoption of coordinated strategies among federative entities and international cooperation urgent.
Furthermore, it is necessary to recognize that solutions to combat smuggling require intersectoral policies that integrate regional development, institutional strengthening, and public health actions. Tobacco prevention and control initiatives, when accompanied by structural measures aimed at productive inclusion and fiscal justice, can contribute to reducing dependence on these informal economies and promoting more resilient territories.
Finally, it is reaffirmed that, in border territories marked by asymmetries, informality, and insecurity, it is fundamental that state and federal governments take the lead in actions to combat smuggling. The municipality should be involved as a strategic partner, but not as the main party responsible for initiatives that require institutional coordination, technical capacity, and security guarantees incompatible with the local reality. Overcoming smuggling, therefore, requires recognizing and addressing its multiple dimensions, in dialogue with territorial singularities and with active listening to the populations living on the margins of the state.
Acknowledgements
This article was published with resources from the Sustentabilidade Project of PNCT, coordinated by the Tobacco Control Division (Divisão de Controle do Tabagismo - DITAB) of the Prevention and Surveillance Coordination (Coordenação de Prevenção e Vigilância) of the National Cancer Institute, with support from Vital Strategies, Bloomberg Philanthropies, and the Center for Studies, Research and Technological Development in Public Health (Centro de Estudos, Pesquisa e Desenvolvimento Tecnológico em Saúde Coletiva - Cepesc) of the State University of Rio de Janeiro (UERJ).
Notes
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1
The Gini Index is a measure that ranges from 0 to 1 and expresses the degree of inequality in income distribution: the closer to 1, the greater the inequality; the closer to 0, the more equitable the distribution (IBGE, 2010).
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2
It is also interesting to note that the phrase "pita oporombojepokuaaval" appears to be written in Guarani, an official indigenous language of Paraguay and spoken in some regions of Brazil, Bolivia, and Argentina. It can be composed of several parts that, together, form a verb or a complex expression. This example of a bundle found reinforces precisely the cultural mix present in this specific border region.
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Reviewers:
Alessandra Machado and Yansy Delgado Orrillo
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All research data are available in this text.
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Editor:
Jane Russo
All research data are available in this text.
Source: ellaborated by the authors, using information from the Instituto Brasileiro de Geografia e Estatística (IBGE), 2022 Census, and Instituto Nacional de Estatística do Paraguai (INE Paraguay), 2022 Census. The analyses were performed using the QGIS georeferencing software.
Sources: collection of the PNCT Sustainability project (2020-2025).