1 / 47

Busting the Myths Tobacco Control and Illicit Trade

Busting the Myths Tobacco Control and Illicit Trade. November 29 th , 2011 International Legal Consortium Campaign for Tobacco-Free Kids. Introduction. Patricia Lambert Director International Legal Consortium Campaign for Tobacco-Free Kids. Questions and Answers.

krysta
Download Presentation

Busting the Myths Tobacco Control and Illicit Trade

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Busting the MythsTobacco Control and Illicit Trade November 29th, 2011 International Legal Consortium Campaign for Tobacco-Free Kids

  2. Introduction Patricia Lambert Director International Legal Consortium Campaign for Tobacco-Free Kids

  3. Questions and Answers Type your questions here throughout the webinar and we will answer them at the end.

  4. John W. Colledge III Consultant on Anti-Illicit Trade Supervisory Criminal Investigator (Retired) Department of Homeland Security and the U.S. Customs Service

  5. h Moderator Aaron Schwid Legal Advisor International Legal Consortium Campaign for Tobacco-Free Kids

  6. http://www.youtube.com/user/WelcomeToBAT

  7. http://www.jti.com/cr_home/cr_positions/cr_positions_anti-contraband/cr_positions_anti-contraband_drivers/?Culture=sk-SKhttp://www.jti.com/cr_home/cr_positions/cr_positions_anti-contraband/cr_positions_anti-contraband_drivers/?Culture=sk-SK KEY FACTORS FACILITATING CIGARETTE CONTRABAND 1. High taxation 2. Inadequate law enforcement 3. Trade & regulatory controls

  8. Fact or Fiction? Studies show that public health measures increase illicit tobacco trade.

  9. Unreliable Sources and Misinformation • Think tank reports: • Mackinac Center for Public Policy. • Frasier Institute. • International Tax and Investment Center (ITIC). • Industry Sites, e.g. Plainpack.com • News media • Misused Terms or Slang

  10. Reliable Sources

  11. Elements of Reliable Sources • Not funded by industry • Industry involvement in illicit trade considered • Well sourced • Published dates and timeframe of data • Proper Use of Key Terms

  12. Key Terms • Illicit trade. • Tax evasion. • Contraband. • Smuggling. • Illegal Manufacturing. • Counterfeit.

  13. Contraband Tax Evasion: Non-tax paid products. It’s about the money – Crime of greed, not passion • Smuggled merchandise. • Illegal Manufacture • Stolen

  14. Smuggling and Diversion • A form of tax evasion. • Smuggling - across int’l border • Diversion - within national boundaries • Concealment • Avoiding Customs Controls • Intermingling • Fraud • False Documents • False Statements

  15. Illegally Manufactured • Counterfeit • Non-licensed production • Over-production • Authentic trademarks • Likely identical products • Undeclared

  16. Counterfeit • A form of tax evasion. Never legal. • Fraudulently manufacturing, altering, or distributing a product that is of lesser value than the genuine product. • Trademark protection: Trade-Related Aspects of Intellectual Property (TRIPS) • Trends. • History • Volume. • Authenticity determinations.

  17. Slang Terms to Avoid • Bootlegging. • Large Scale/Small Scale Smuggling. • Ant Smuggling. • Cheap Whites.

  18. Fact or Fiction? Illicit Trade started in the 1990s and increased after the FCTC came into force.

  19. Brief History of Illicit Tobacco Trade • Began immediately after the discovery of tobacco to avoid tobacco monopolies and taxes. • Cigarettes became a cash substitute. • Constantly evolving schemes. • Tobacco products used to launder crimes proceeds.

  20. Transnational Organized Crime • UNTOC – United Nations Convention Against Transnational Organized Crime. • “Organized criminal group” shall mean a • “structured group of three or more persons, • existing for a period of time and acting in concert • with the aim of committing one or more serious crimes or offences established in accordance with this Convention, • in order to obtain, directly or indirectly, a financial or other material benefit”

  21. Illicit Trade is Organized Crime • Raises seriousness of tobacco crimes • Additional police powers for the government, e.g. special investigative techniques • Seizure and forfeiture of criminal proceeds • Other increased criminal sanctions

  22. Fact or Fiction? High taxes are the root cause of illicit tobacco trade.

  23. Tax Increases and Illicit Trade • Fact: Tax disparities between jurisdictions provide an opportunity for smuggling. High taxes provide an opportunity for other forms of illicit trade. • BUT effective enforcement mechanisms work • Effective government-controlled tracking (pro-active detection) • Effective government-controlled tracing (investigation and post-seizure analysis) • Properly staffed, trained, and resourced enforcement personnel • Adequate criminal sanctions

  24. Example: California • High income, large population • Enforcement protections accompanied a tax increase • Enhanced revenue protection • Secure digital tax stamp • Additional staffing • Enhanced law enforcement powers • Additional criminal sanctions

  25. Example: Brazil • Rapidly developing economy, large population, large borders • Enforcement protections solidified before a major tax increase • Enhanced revenue protection • Secure digital tax stamp • Additional staffing • Enhanced law enforcement powers • Additional criminal sanctions

  26. Example: Arkansas • Small economy, small population • Interstate diversion bordering states with lower taxes • Enforcement protections accompanied a tax increase • Basic tracing system, but no effective tracking system • Enhanced revenue protection • Unique asset forfeiture fund • Additional staffing • Enhanced law enforcement powers • Additional criminal sanctions

  27. Fact or Fiction? Plain packaging will increase illicit tobacco trade.

  28. Plain-Packaging and Illicit Trade • FACT: Plain packaging has never been introduced on the market so there is no evidence that it will increase illicit trade. • Effective enforcement mechanisms work: • Tracking - Digital tax system. • Tracing - Criminal investigative techniques. • Counterfeit. • Trademarks. • Graphic warnings. • Other technologies to protect trademarks

  29. Fact or Fiction? Industry cannot meet quickly changing regulations so hole will be filled by organized crime.

  30. Regulatory Changes and Illicit Trade • Fact: Such claims encourage hoarding which is likely to result in increased earnings for industry and government. • Fact: Competition in marketplace encourages legal businesses to satisfy supply before organized crime does. • Fact: In countries with graphic health warnings, organized crime did not take over market. • Governments should include a rapid, but practical, implementation period for all regulatory measures.

  31. Fact or Fiction? Legal tobacco products are safer than illegal ones.

  32. Illegal Products and Safety • Fact: Safety allegations have not been supported by reliable evidence – simply unsupported statements. • Illegal manufacturers purchase tobacco, ingredients, key inputs and equipment from major companies. • Few countries regulate ingredients in tobacco products, in part because whether certain chemical combinations in tobacco are dangerous is unknown. • “High-quality” tobacco products are designed to deliver nicotine, a known poison. When used as intended, legal tobacco products kill.

  33. Fact or Fiction? Tobacco companies lose money because of illicit trade.

  34. Industry Involvement in Illicit Trade • FACT: Counterfeit manufacturing may damage the tobacco industry; however, existing trademark laws provide sufficient protection for the tobacco industry. • Government should prioritize public health and revenue (tax) protection. • FACT: Historic and ongoing evidence of industry involvement in illicit trade, especially smuggling and overproduction.

  35. Industry Involvement in Smuggling • Philip Morris International and Japan Tobacco International entered into a legal agreement with the European Community and 10 member states to settle litigation against them that would have further exposed their involvement in cigarette smuggling. (2004) • British American Tobacco and Philip Morris International settled its smuggling-related litigation with Canada. (2008) • Japan Tobacco International plead guilty to violations of tax laws and R.J. Reynolds pled guilty to criminal charges related to cigarette smuggling in Canada. (2010)

  36. CEO of Reynolds American and Fortune 500 most powerful women 4. The possibilities of GT exploitation were considered to be good (Ghana Cameroon). . . 7. I accept that in retrospect we may have been over optimistic about its potential in Togo, Benin, Niger, but the main reason for its launch in these markets was not to exploit domestic markets but for GT opportunities.

  37. Recent Allegations against JTI • Executives of Japan Tobacco International stood by as its distributors engaged in widespread cigarette smuggling in a dozen countries. • When the company’s anti-smuggling unit cracked down on smuggling routes and raised questions about suspect distributors, JTI retaliated by hacking into the team’s computers, firing its leaders, and phasing out nearly a dozen contractors who knew about the smuggling. • Big Trouble at Big Tobacco, Organized Crime and Corruption Reporting Project, available at: http://www.reportingproject.net/troubles_with_big_tobacco/

  38. Fact or Fiction? Tobacco companiesmust be involved in designing policies around illicit trade.

  39. Industry Interference in Policy Making • FACT: Industry may have a legitimate interest in preventing illicit trade • BUT any government interactions should follow all recommendations from FCTC Art. 5.3 Guidelines relating to necessity and transparency • Consultation v. Partnership distinction • Information flow on case-by-case basis • OECD Guidelines – Managing Conflicts of Interest in the Public Sector, available at: http://www.oecd.org/dataoecd/54/31/48994419.pdf?contentId=48994420 • United Nations Convention Against Corruption, available at: http://www.unodc.org/unodc/en/treaties/CAC/index.html

  40. Who does the industry talk to? • International Agencies • World Customs Organization • Interpol • Domestic Policy Makers • Legislators • Ministries (Finance, Industry, Trade, Interior, & Justice) • Enforcement Agencies • Tax, Customs, Police, Antifraud, Anticorruption

  41. Why does the industry talk to these organizations? • Influence Legislation and Policy • Influence Enforcement Priorities • Protect the Profits

  42. What You Can and Must Do • Self-education: Learn the subject matter. Verify sources. If you still have questions, reach out. • Monitor tobacco trade and taxation in your region • Identify and lobby appropriate policy makers and enforcement agencies • Acknowledge the role of organized crime in tobacco, but put tobacco in context with other commodities

  43. What You Can and Must Do • Prepare counterarguments on illicit trade arguments before proposing tax and other public health measures. • Remind policymakers, media, and public of industry’s role in illicit tobacco trade and their profit motivation • Support additional funding and training of enforcement agencies • Insist on transparency for any interaction between tobacco industry and any policy makers or enforcement agencies

  44. Additional Resources More information available at: http://tobaccofreecenter.org/resources/illicit_trade_smuggling • Campbell D. Further Evidence By Duncan Campbell in Respect of Smuggling in Africa by British American Tobacco Plc, Obstruction of Access to Evidence. UK House of Commons Health Select Committee, Inquiry into the Tobacco Industry and the Health Risks of Smoking. London. January 15, 2000. Available at: http://duncan.gn.apc.org/bat/Health_Committee_Evidence_2.htm. Accessed: November 30, 2011. • The Center for Public Integrity, Tobacco Underground, The Blooming Global Trade in Smuggled Cigarettes. available online at: http://www.publicintegrity.org/investigations/tobacco/articles/. Accessed: November 30, 2011. • Collin J, LeGresley E, MacKenzie R, Lawrence S, Lee K. Complicity in Contraband: British American Tobacco and Cigarette Smuggling in Asia. Tobacco Control 2004;13((Supp II)):ii96-ii111.; • Lee K, Collin J. 'Key to the future': British American Tobacco and cigarette smuggling in China. PLoS Medicine 2006;3(7):228-37. • LeGresleyE, Lee K, Muggli ME, Patel P, Collin J, Hurt RD. British American Tobacco and the "insidious impact of illicit trade" in cigarettes across Africa. Tobacco Control 2008;doi:10.1136/tc.2008.025999. • U.K. Action on Smoking and Health. Submission to the House of Commons Health Select Committee. February 16, 2000. Available at: http://www.ash.org.uk/files/documents/ASH_567.pdf. Accessed: November 30,2011. • World Bank and World Health Organization. Tobacco Control in Developing Countries. (2000)Chapter 16: Issues in the smuggling of tobacco products. Available at: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTHEALTHNUTRITIONANDPOPULATION/EXTETC/0,,contentMDK:20226973~menuPK:478900~pagePK:148956~piPK:216618~theSitePK:376601,00.html. Accessed: November 30, 2011 • World Health Organization. The cigarette "transit" road to the Islamic Republic of Iran and Iraq. Illicit tobacco trade in the Middle East. Cairo: WHO_EM/TFI/011/E/G/07.03/1000) http://www.emro.who.int/tfi/TFIiraniraq.pdf. Accessed: November 30, 2011.

  45. Busting the MythsTobacco Control and Illicit Trade Questions and Answers

  46. Thank You. Join Us in February for our next Webinar on Tracking and Tracing. For more information, go to: www.tobaccocontrollaws.org

More Related