Tobacco Asia

Volume 19, Number 3

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18 tobaccoasia / Issue 3, 2015 (July/August) By Nattira Medvedeva In a press release earlier this year, WHO said that eliminating the illicit trade in tobacco would gen- erate an annual tax windfall of US$31 billion for governments. Approximately 600 billion cigarettes a year are illegal, counting for 12% of global con- sumption. A recent KPMG study commissioned by the "big four" tobacco companies – Philip Morris, British American Tobacco, Imperial To- bacco, and JT International – estimating the scale and development of the illicit cigarette market in the EU, Norway, and Switzerland found that a to- tal of 56.6 billion illegal cigarettes were consumed in 2014 in these markets, representing 10.4% of total consumption. Other findings include the fact that illicit grew by 8% to 21.1 billion cigarettes in 2014, with consumption of such products being most prevalent in Poland, Italy, Spain, and Greece; in 2014, 10.4% of all cigarettes consumed in the EU were illegal, compared to 10.5% in 2013 and 11.1% in 2012; and as prices have risen in the EU, flows of illicit cigarettes from outside of the EU increased from 37.3 billion in 2009 to 44.6 billion in 2014. Aside from the fact that governments are losing revenue due to illicit trade, part of the prof- its from illicit trade is often used to fund other illegal activities. Various measures have been taken against illicit trade, whether it is laws and regulations passed by governments or using tracking and trac- ing systems. WHO has introduced its Protocol to Eliminate the Illicit Trade in Tobacco Products. The Protocol is an international treaty in its own right negotiated by parties to the WHO Frame- work Convention on Tobacco Control (FCTC), which has been ratified by 180 Parties. Article 15 commits signatories to eliminate all forms of illicit trade in tobacco products. The Protocol requires a wide range of mea- sures relating to the tobacco supply chain, includ- ing the licensing of imports, exports, and manu- facture of tobacco products; the establishment of tracking and tracing systems; and the imposition of penal sanctions on those responsible for illicit trade. It would also criminalize illicit production and cross-border smuggling. So far, 8 countries have ratified the Protocol, short of the target of 40 needed for it to become international law. FCTC requires the implementation of systems to track and trace tobacco products throughout the supply chain by means of technology such as tax stamps (either paper or digital), bar codes, and radio-frequency identification (RFID). The European Commission has also recently revised its Tobacco Products Directive (TPD) and is cur- rently drafting implementing and delegated acts for Article 15 – Tracking & Tracing, and Article 16 – Security Features. The TPD, which entered into force May 2014, requires measures including Combating illicit tobacco trade is an issue that is being seriously addressed by not only those in the tobacco industry but also governments around the world and international bodies such as the World Health Organization (WHO) and INTERPOL. Track and Trace: What to Expect with the Revised TPD

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