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INTERNATIONAL CONFERENCE ON ILLICIT
TOBACCO TRADE
July 30 - August 1, 2002
Chairpersons' Executive Summary
This is an executive summary of the International Conference on Illicit
Tobacco Trade (ICITT), hosted by the Bureau of Alcohol, Tobacco and Firearms
(ATF) with assistance from the World Health Organization (WHO) at the
United Nations in New York from July 30 to August 1, 2002. A comprehensive
report by the ICITT Chairpersons prepared with the Co-Chairs of the Working
Groups will be circulated in the official languages
of the United Nations, providing the detailed account of the proceedings
and the potential best practices identified and described.
Representatives from 142 countries and other observers participated in
the ICITT. Also attending were approximately 50 representatives from organizations
in official relations with WHO (NGOs), other members of civil society,
industry, media, and the public.
The goals of the Conference were to:
- Enable officials with taxation and revenue, law enforcement, and
customs experience to identify and recommend viable measures or best
practices to combat illicit tobacco trade at the national, regional,
and global level.
- Create and enhance partnerships and coalitions to facilitate information
sharing and international cooperation for revenue collection and law
enforcement purposes.
- To help inform the Intergovernmental Negotiating Body (INB) of the
Framework Convention on Tobacco Controls, WHO, and other interested
parties on issues related to the illicit tobacco trade, and to present
to the INB a Summary Report prepared by the ICITT Chairpersons with
the Co-Chairs of the Working Groups.
The first day of the Conference was devoted to opening remarks(1) and
three preliminary panel discussions.
The substantive work of the Conference was carried out during the second
day in three Working Groups that met concurrently for the entire day.
The Working Groups addressed the following:
- Working Group I: Licensing and Record Keeping.
- Working Group II: Labeling - Tracking and Tracing - Border Controls
- Counterfeit and Contraband.
- Working Group III: Information sharing - Mutual Assistance - International
Cooperation.
On the third day in the morning session, the Working Group Co-Chairs
reported on the previous day's work. Discussion followed these reports.
The final afternoon session was devoted to the Conference Chairpersons
summarizing the reports presented by the Working Group Co-Chair and discussion
by the delegates.
All three Working Groups recognized that there was some overlap with
regard to their respective topics. Moreover, a common theme throughout
the Conference on most topics was recognition that particular measures
or best practices must fit the national context that is sensitive to each
country's specific needs and resources.
A summary of the Working Group discussions is as follows:
1. Working Group I: Licensing and Record Keeping
Working Group I agreed that licensing and record keeping requirements
are important tools for combating illicit tobacco trade. Highlights of
this working group include the following observations and statements:
2. Working Group II: Labeling - Tracking and Tracing - Border Controls
- Counterfeit and Contraband
Working Group II developed several general observations and identified
seven themes that provided the basis for measures and best practices that
were identified. The Working Group agreed on the following general elements:
- International response begins with strong domestic action.
- The variety of best practices reflects the variety of unique circumstances
faced by individual countries: no single solution is effective for everyone.
- Enhanced communication between the various arms of governments and
ministries, as well as regional and inter-governmental organizations
is essential.
Working Group II found that the measures and best practices that it identified
fell within seven categories. These were as follows:
A. Labeling is particularly useful to constrain the distribution of contraband
and as such is necessary to identify the manufacturer, country of origin/destination,
and the legal status of the product (i.e., tax or duty paid or exempt).
Practices (some of which have not been implemented) that are available
for this purpose include:
- Name and address of manufacturer.
- Destination or color-specific marks.
- Country specific health warnings.
- Export and fiscal markings or tax stamps.
- Bar code, batch number, or expiry date.
- Labeling of individual cigarettes.
B. Monitoring and documenting the movement of tobacco and tobacco products
is essential to controlling the movement of such goods. The delegates
identified a range of measures that could be used to ensure such control:
- Certificate of origin or end user.
- Identification of customers.
- Export and import permits.
- Single transit document.
- Bonding and guarantee requirements.
- Export tax regime.
- Early warning system and pre-authorization system based on the Rotterdam
Convention.
C. Capacity building may be required to assist countries in implementing
their anti-illicit tobacco trade regimes. Such assistance could be provided
through:
- Training and technical assistance.
- Full automation or computerization of customs procedures.
D. Monitoring and assessment are important to determine the size, nature,
and scope of the tobacco black market. Effective monitoring and assessment
should:
- Establish legitimate demand thresholds.
- Identify trends and safe havens.
- Provide for the assessment of risks.
E. Cooperation and collaboration, though covered by Working Group III,
were considered essential requirements to effectively control illicit
tobacco trade. Important components associated with these practices include:
- Data banks on seizures.
- Joint enforcement operations and inter-operability of data systems.
- Identification of counterfeit products and purchasers of tobacco
manufacturing equipment.
- Mutual Legal Assistance Treaties.
Countries relayed different experiences with respect to cooperation provided
by tobacco manufacturers.
F. Strong domestic legislation and policy frameworks are required to
provide for sanctions and penalties to deter illicit tobacco trade. Such
measures could include:
- Penalties, sanctions and prohibitions (against contraband, counterfeit,
corruption, and violence towards authorities).
- Seizure of contraband, conveyances and proceeds of crime.
- Disposal (or destruction) of contraband tobacco products.
- Collection of taxes at time of manufacture (including for exported
product).
The delegates expressed different views as to whether any proceeds generated
by the sale of such products should be earmarked. Among supporters of
earmarking, views differed on using the proceeds for health or law enforcement
programs.
G. Distinguishing between contraband and counterfeit products is important
because one product is considered legal but for the payment of taxes and
authorized import and the other is totally fraudulent. The delegates felt
that the following could address this problem:
- Appropriate technical resources.
- Training and laboratory services.
- Independent verification.
3. Working Group III: Information sharing - Mutual Assistance
- International Cooperation
Working Group III generally agreed that to eradicate illicit cross border
trade in tobacco products, countries must provide mutual assistance and
cooperate through the sharing of information relating to the exportation
and importation of tobacco products. Some of the more prominent issues
addressed by this Working Group were:
- Cooperation between the WHO and the World Customs Organization (WCO)
is useful because of the WCO's disciplines and experience in information
sharing among customs authorities.
- Periodic intergovernmental conferences would enhance and keep current
the level of understanding of countries on methods of information sharing
and cooperation.
- Create a database of all information sharing agreements and the each
country's information sharing contact points.
- Information exchange agreements must be legally binding in nature
but such a requirement presented problems for some countries.
o The type of information to be exchanged could include, but is not
limited to: the value of the goods, the quantity of the goods, and
the name of the producer.
o Information exchange should be available on a real time basis (i.e.,
electronic transmission).
- WTO Rules of Origin agreement, WCO agreements, the United Nations
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances, the Rotterdam Convention (movement of hazardous materials),
and the Nairobi Convention might serve as useful models in developing
specific processes.
o A model bilateral information sharing agreement developed under
the auspices of the World Customs Organization has been used by various
customs organizations to create bilateral information sharing agreements.
o A memorandum of understanding (in lieu of a bilateral agreement)
enables neighboring countries to share very specific information about
the border crossing of tobacco products in certain types of individual
transactions.
o A mutual legal assistance treaty allows countries to exchange specific
information but the process is time-consuming and forecloses real-time
information exchange.
o The value of multilateral and bilateral agreements and the benefit
of one such approach over the other.
- Information sharing should be expansive and should include all elements
of government, beyond customs and law enforcement agencies to include
agriculture, health, finance, tax, licensing, etc.
- Confidentiality of information received should be ensured and the
right for a country to decline to furnish information in the event a
requesting country has failed to respect confidentiality requirements.
- Consider compiling export and import information in a common database
that would be accessible electronically to all parties though the administrative
costs and burdens of establishing and maintaining such a database could
be prohibitive and impractical.
Respectfully submitted:
David L. Benton and Arthur J. Libertucci
Conference Chairpersons August 7, 2002
Bureau of Alcohol, Tobacco and Firearms
United States Treasury Department
Washington, DC
Download the Executive Summary in -
(1) The speakers included:(1) Ray Kelly, Police Commissioner,
New York, New York, (2) Bradley Buckles, Director, ATF, (3) Ambassador
L. P. de Seixas Correa, Permanent Representative of Brazil, Geneva, Switzerland
and Chair of the Framework Convention on Tobacco Control, (4) Dr. Derek
Yach, Executive Director, Noncommunicable Diseases and Mental Health,
WHO, (5) Kunio Mikuriya, Deputy Secretary General, World Customs Organization,
(6) Dr. Joy de Beyer, Tobacco Control Coordinator, the World Bank, (7)
Kenneth Bell, First Assistant United States Attorney, Western District,
North Carolina, and (8) Eve Slater, Assistant Secretary, Department of
Health and Human Services.
(2) Andre Basse, First Secretary at the Permanent Mission
of Senegal in Geneva and Bolivar Puno, Jr., Special Investigator and Prosecutor,
the Philippines, chaired Working Group I. Joe Oliver, Senior Policy Advisor,
Royal Canadian Mounted Police and Eugene Fatakanwa, Advisor on Customs,
Excise and Exemptions, Ministry of Finance, Rwanda chaired Working Group
II. John Daffron, Deputy Assistant Director (Alcohol and Tobacco), ATF,
and Mainaga Taape, Acting Director, Customs and Tax Control, Tuvalu, chaired
Working Group III.
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