Protocol to Eliminate Illicit Trade in Tobacco Products

Illicit trade in tobacco products:

the problem

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Extent of illicit trade in tobacco products

▪  Close to 10 % of the global cigarette trade is illicit;

▪  Significantly higher in low- and middle-income countries, up to 50% and more;

▪  If illicit trade were eliminated, governments worldwide could gain at least USD 30 billion/year in tax revenue.

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Some consequences of illicit trade in tobacco products

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Public health Increased accessibility, affordability and

consumption of tobacco products Crime prevention

Organized crime, profits fund other criminal activity Loss in government revenue

The solution:

Protocol to Eliminate Illicit Trade in

Tobacco Products

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Protocol to Eliminate Illicit Trade in Tobacco Products

•  First Protocol to the WHO FCTC – once in force, new legal tool for international cooperation.

•  Adopted after 4 years of negotiations (2008-2012) in November 2012 in Seoul by the Parties to the WHO FCTC.

•  Based on Article 15 WHO FCTC

•  New international treaty

•  Involvement of all relevant government sectors required, including public health, customs, law enforcement and justice.

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Illicit Trade - definition

“Illicit trade” means any practice or conduct prohibited by law and which relates to production, shipment, receipt, possession, distribution, sale or purchase, including any practice or conduct intended to facilitate such activity. (Article 1.6 Protocol to Eliminate Illicit Trade in Tobacco Products)

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How does the Protocol work?

1) Preventing illicit trade – securing the supply chain 2) Law enforcement – establishing unlawful conduct

with dissuasive sanctions 3) International cooperation – cooperation on

technical, administrative, law enforcement and legal matters

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Entry into force is pending

•  All Parties to the WHO FCTC are eligible to become Parties to the Protocol.

•  Entry into force requires 40 ratifications (plus 90 days)

•  Signatories: 54.

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Protocol signatories: 54

Austria, Belgium, Benin, Botswana, Burkina Faso, China, Colombia, Costa Rica, Côte d'Ivoire, Cyprus, Democratic Republic of the Congo, Denmark, Ecuador, European Union, Fiji, Finland, France, Gabon, Germany, Ghana, Greece, Guinea-Bissau, Iran (Islamic Republic of), Ireland, Israel, Kenya, Kuwait, Libya, Lithuania, Madagascar, Mali, Mongolia, Montenegro, Myanmar, Netherlands, Nicaragua, Norway, Panama, Portugal, Qatar, Republic of Korea, Slovenia, South Africa, Sudan, Sweden, Syrian Arab Republic, the Former Yugoslav Republic of Macedonia, Togo, Tunisia, Turkey, United Kingdom of Great Britain and Northern Ireland, United Republic of Tanzania, Uruguay and Yemen.

§ Signature period closed on 9 January 2014.

Parties to the Protocol (27 May 2015)

Party Date Treaty Action

Nicaragua 29 December 2013 Ratification

Uruguay 24 September 2014 Ratification

Gabon 1 October 2014 Acceptance

Mongolia 8 October 2014 Ratification

Austria 28 October 2014 Ratification

Spain 23 December 2014 Accession

Turkmenistan 30 March 2015 Accession

Congo 14 May 2015 Accession

Protocol to Eliminate Illicit Trade in Tobacco Products:

Key provisions

Supply chain control (Part III):

§  Licensing (Art. 6), §  Due diligence (Art. 7), §  Tracking and tracing (Art. 8), §  Record-keeping (Art. 9), §  Security and preventive measures (Art. 10), §  Sale by Internet (Art. 11), §  Free zones and international transit (Art. 12), §  Duty free sales (Art. 13).

Licensing (Art. 6) and due diligence (Art. 7)

§  Parties shall establish a mandatory licensing system for anyone §  manufacturing, importing or exporting:

§  tobacco products or §  manufacturing equipment;

§  Other activities such as retailing or tobacco growing can be made subject to licensing ("Each Party shall endeavour to license…");

§  Any person engaged in the supply chain of tobacco, tobacco products and manufacturing equipment has to conduct due diligence.

Tracking and tracing (Art. 8)

§  An international tracking and tracing (T&T) regime will be established, with a "global information sharing focal point" in the Secretariat;

Ø Within 5 years of entry into force of the Protocol;

§  Each Party establishes a national T&T system, controlled by the Party, for all tobacco products manufactured in or imported onto its territory;

§  Parties establish a national central point to link the national T&T system and the international T&T regime;

Tracking and tracing (Art. 8) – tobacco industry

§  "Obligations assigned to a Party shall not be performed by or delegated to the tobacco industry." (Art. 8.12)

§  "Each Party shall ensure that its competent authorities, in participating in the tracking and tracing regime, interact with the tobacco industry and those representing the interests of the tobacco industry only to the extent strictly necessary in the implementation of.." Article 8. (Art. 8.13)

§  "Each Party may require the tobacco industry to bear any costs associated with that Party's obligations under.." Article 8. (Art. 8.14)

Other measures to control the supply chain

§  All persons engaged in the supply chain shall be obliged to maintain complete and accurate records (Art. 9);

§  Persons subject to licensing (in accordance with Art. 6) shall be obliged to take measures to prevent the diversion of tobacco products into illicit trade channels, e.g., reporting of cross-border transfers of cash to the competent authority (Art. 10).

Transactions via Internet (Art. 11)

§  Transactions with regard to tobacco products via internet, telecommunication or other evolving technology-based modes of sale are subject to all relevant Protocol provisions (Art. 11).

§  Parties shall consider banning retail sales of tobacco products through these modes of sales (Art. 11.2).

Free zones and duty free sales (Arts. 12, 13)

§  Effective control measures regarding manufacturing of and transactions in tobacco and tobacco products in free zones shall be implemented within 3 years of entry into force of the Protocol. (Art. 12)

§  Intermingling of tobacco products with non-tobacco products at time of removal from free zones shall be prohibited.

§  Duty free sales shall be subject to all relevant provisions of the Protocol. (Art. 13)

Other Protocol provisions include

§  Use of terms (Article 1), including manufacturing equipment, supply chain, tracking and tracing and free zone.

§  Offences, including unlawful conduct and criminal offences, seizure payments, disposal/destruction of confiscated products;

§  International cooperation, including information sharing, and mutual administrative and legal assistance and extradition;

§  Financing of the Protocol, governance and other institutional matters

Cooperation with international entities

§  The Protocol makes specific reference to enhanced cooperation between the Convention Secretariat and the UN Office on Drugs and Crime (UNODC) and the World Customs Organization (WCO) and other bodies, as appropriate.

Ø Preamble, Ø Article 1.8, Ø Article 2.4.

Governance: Meeting of the Parties

§  Meeting of the Parties (MOP) established as governing body of the Protocol (Art. 33);

§  Sessions of the MOP shall be convened immediately before or immediately after the sessions of the Conference of the Parties (COP);

§  First session of the MOP to be convened immediately before or after the next regular session of the COP following the entry into force of the Protocol.

Self-assessment checklist

§  A self-assessment checklist for Parties to assess their legal, regulatory and policy frameworks in view of the requirements of the Protocol was prepared by the Convention Secretariat in the six official languages of the COP.

§  Parties are invited to utilize it at their convenience. §  The checklist is available on the Convention

Secretariat's website: http://who.int/fctc/protocol/about/en/

Secretariat assistance

§  More information: http://www.who.int/fctc/protocol/about/en/

§  Contact the Convention Secretariat: protocolfctc@who.int.