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Tobacco Groups (Could) Face Fines Over Contraband

By Frances Williams in Geneva – The Financial Times

Published: February 16 2008 02:00 | Last updated: February 16 2008 02:00

Tobacco companies could be made responsible for clamping down on cigarette smuggling, with stiff financial penalties for failure, under proposed guidelines for a new global treaty to tackle the multi-billion dollar illicit trade in tobacco products.

The trade is estimated to deprive national exchequers worldwide of $40bn-$50bn (£20bn-£25bn) in lost taxes every year and undermines the drive to raise cigarette prices, which experts say is the single most effective way of deterring people from smoking, especially the young.

At the end of a week of negotiations in Geneva involving about 130 countries, delegates said yesterday there was broad agreement to require companies to track and trace tobacco products from manufacture to point of sale and fine them if contraband is seized.

The proposals are modelled on an existing agreement between 26 of the 27 European Union countries (excluding the UK) and two tobacco companies, Philip Morris International and Japan Tobacco International, that has already led to a big decline in cigarette seizures in the EU.

The negotiations, conducted under the auspices of the World Health Organisation, marked the first step towards a legally binding protocol on illicit tobacco trade under the WHO’s 152-member Framework Convention on Tobacco Control, which took effect in 2005.

Other measures envisaged for the protocol, scheduled for adoption in 2010, include strengthened international co-operation to prosecute smuggling gangs, tougher penalties for offenders and better law enforcement, and help for poorer countries to put the measures into effect.

Ian Walton-Georges of the EU’s anti-fraud office, who chaired the negotiations, said he planned to draft a protocol that was “practical, effective and strong” ahead of a second round of negotiations later this year.

The Framework Convention Alliance, a coalition of some 300 anti-tobacco groups, says the global illicit trade – dominated by organised criminal gangs – may have amounted to nearly 11 per cent of total sales, or 600bn cigarettes, in 2006.

Contraband trade is particularly rife in Russia and other countries in eastern Europe, in Latin America, and especially Brazil, and in Africa and the Middle East.

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