Tobacco Asia

Volume 18, Number 2

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42 tobaccoasia Illicit trading of tobacco products remains one of the forefront challenges the industry faces. Latest industry figures show that an estimated 600 bil- lion illegal cigarettes are traded annually around the world. In monetary terms, 600 billion illegal cigarettes mean US$40-50 billion dollars of tax revenue that is lost. with authorities such as the World Customs Orga- nization (WCO), the European Anti-fraud Office (OLAF) and the International Criminal Police Or- ganization (INTERPOL), on measures to battle illicit trade, particularly contraband cigarettes. One such measure is the Illicit Trade Proto- col (ITP), part of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) treaty. The WHO FCTC treaty came into force on February 27, 2005. WHO FCTC Article 15 has seven clauses that are legally binding to over 170 governments with the aim of reducing illicit trade in tobacco products. The ITP was adopted in November 2012, and was open for signature until Jan 9, 2014. So far 53 states and the EU have signed. A clause in Article 8 of the ITP aims to establish a global tracking and trac- ing regime. Another measure taken to combat il- licit trade is the EU's Tobacco Product Directive (TPD), which follows the ITP very closely and also requires traceability on all tobacco products as well as bringing in changes to health warnings and banning all flavorings. There are also coun- try-specific legislative requirements. For example, Indonesia introduced local legislation that came into force in April 2014, requiring that production Illicit Tobacco Trade: Coding Technology Will Save the Market "Differing tax rates in different countries is one of the main contributing factors to illicit trade" Differing tax rates in different countries is one of the main contributing factors to illicit trade, which counts for an estimated 10-11% of the global cigarette market. Buying a pack of cigarettes in a country with lower excise tax will be less cost- ly than buying that same pack in a country with higher excise tax. This creates a demand for lower cost cigarettes in countries with higher excise tax, leading to illicit trading of contraband cigarettes. One 40-foot container of illicit cigarettes costs approximately EUR 1.5 million in lost excise tax. Tobacco companies have been working for years

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