New research exposes tobacco industry behind most cigarette smuggling

Bangkok, 15 June 2018: Tobacco companies are facilitating tobacco smuggling while simultaneously attempting to manipulate a global system designed to prevent illicit trade, according to a new study by the Tobacco Control Research Group at the University of Bath.

The new research, which draws on leaked documents and investigates tobacco industry front groups, highlights the continuing complicity of tobacco companies in smuggling and the elaborate schemes of the industry to control a global track-and-trace system and undermine a major international treaty – the Illicit Trade Protocol (ITP). As part of the WHO Framework Convention on Tobacco Control (FCTC), the ITP was designed to protect public health by tackling tobacco smuggling. It was adopted in 2012 by 181 Parties to the WHO FCTC after multiple inquiries, court cases, and fines aimed at making transnational tobacco companies (TTCs) accountable for their involvement in tobacco smuggling.

To prevent tobacco industry smuggling, the ITP requires an effective track-and-trace system in which tobacco packs are marked so they can be tracked through their distribution route and, if found on the illicit market, traced back to where they originated. Leaked industry documents show how the four major TTCs operationalized a joint plan to use front groups and third parties to promote to governments an industry-created track-and-trace system called ‘Codentify’ as if it was independent of the industry. Study authors recommend that governments should not trust any track-and-trace system linked to ‘Codentify’.

In the ASEAN region, from 2012 to 2015, the same period this study refers to, Philip Morris International (PMI) funded US- and UK-based think tanks, International Tax and Investment Center (ITIC) and Oxford Economics Ltd., to conduct illicit trade studies that have since been discredited (see here and here) for using flawed methodology and unreliable data and resulting in biased conclusions and inflated smuggling figures. These studies were used to systematically oppose tobacco tax increases in ASEAN countries and recommended that governments work with tobacco companies to tackle smuggling.

“The tobacco industry often claims to be the victim of smuggled and counterfeit tobacco, despite the growing evidence from government investigations, whistleblowers, and leaked tobacco industry documents that all suggest ongoing industry involvement. This new study reveals that about 70% of smuggled cigarettes are derived from the industry; by contrast counterfeit cigarettes make up only about 5% to 8% of the illegal cigarette market.  Any claims by tobacco companies about smuggling are dubious, and tobacco companies should be investigated and held to account for smuggling,” said Dr. Ulysses Dorotheo, FCTC Program Director of the Southeast Asia Tobacco Control Alliance (SEATCA).

In addition to using the smuggling issue to lobby against tax increases, tobacco companies also use trade groups, such as US-ASEAN Business Council (US-ABC), as a platform to gain access to top-level government officials and influence policy on illicit tobacco trade. Last May, PMI was in the US-ABC delegation for a meeting in Malaysia with Director-Generals of Customs of ASEAN governments, while in March this year, PMI participated in US-ABC meetings in Vietnam, Indonesia, and the Philippines.

The paper published today in the Tobacco Control journal calls on governments and international bodies to crack down on tactics of TTCs and instead ensure that systems to control tobacco smuggling are free of industry influence.

“Governments in the ASEAN region must reject partnerships and non-binding agreements with the tobacco industry to solve illicit trade. Instead, governments should secure the supply chain in accordance with measures contained in the ITP and collaborate with each other, rather than be misled and lied to by the tobacco industry that is complicit in illicit tobacco trade,” remarked Dorotheo.

Contact:
Wendell C Balderas, Media and Communications Manager – SEATCA
Email: wendell@seatca.org | Mobile: +63 999 881 2117 ##

 

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About SEATCA

SEATCA is a multi-sectoral non-governmental alliance promoting health and saving lives by assisting ASEAN countries to accelerate and effectively implement the evidence-based tobacco control measures contained in the WHO FCTC. Acknowledged by governments, academic institutions, and civil society for its advancement of tobacco control movements in Southeast Asia, the WHO bestowed on SEATCA the World No Tobacco Day Award in 2004 and the WHO Director-General’s Special Recognition Award in 2014.