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This week, the World Bank will release its Human Capital Index. This index rates countries on how close they are to having a healthy, educated workforce that is prepared for the more highly-skilled jobs of the future; and to compete effectively in the global economy.

The health and economic costs of tobacco are clear: it kills more than seven million people every year and millions more suffer from tobacco-related disease – often during their most economically productive years. The global economic cost of smoking amounts to nearly 2 trillion dollars annually, almost 2 per cent of the world’s GDP.

The tobacco industry pushes a narrative about its own economic contribution as an obstacle to the implementation of tobacco control policies. The true cost of tobacco is to be found in the stories of suffering told by the victims like Ike, a non-smoking mother of two from Indonesia, who developed throat cancer from second-hand smoke exposure, or Sunita, a 27-year old smokeless tobacco user from India, who never smoked but developed fatal oral cancer.

The FCTC and the ITP are solutions to reducing tobacco’s harm. If they are properly implemented, cost savings from improved health and productivity, and increased taxes, can fund investments in a country’s human capital and save lives.

Vital Strategies


Trends in illicit tobacco trade require us to pay attention to illicit manufacturing, and particularly to “cheap or illicit whites” over counterfeit and contraband of major cigarette brands. This will require us to improve oversight and control of Free Zones.


Free zones (FZ), also known as free trade zones (FTZ) or Special Economic Zones (SEZ), are areas where regulations and controls are relaxed in an attempt to foster international investment, trade, and employment. This relaxation includes exemptions from import duties and taxation, as FZs are considered to be outside the applicable customs union for the country in which they are located. There are more than 4,000 such zones worldwide.


Because FZs are created to improve business and investment opportunities, these incentives often result in reduced financial and trade controls. Some countries totally disregard business in their FZs and often do not treat them as part of the customs territory, providing minimal or no oversight.

FZs facilitate the transit of illicit manufacturing (counterfeit or “illicit whites”) and their untaxed leakage into the customs areas of neighboring countries. Cigarettes may also be re-stuffed (repackaged) into new untraceable containers that are falsely presented as containing other products and leave the FZ to be sold illegally in other markets.


Article 12 of the ITP requires Parties to implement “effective controls” on manufacturing of and transactions in tobacco and tobacco products in FZs. It also requires Parties to prevent the intermingling of tobacco products with non-tobacco products (where tobacco products and other products are mixed in a single container or other transportation unit in FZs, with the intention of facilitating smuggling). Article 12 also states that Parties should adopt and apply control and verification measures on the transit and transshipment of both tobacco products and manufacturing equipment. These controls need to be in place within 3 years of the ITP coming into force.


There are real challenges to the effective implementation of Article 12, particularly for low and middle-income countries, where many FZs are located, and which face financial constraints to effective enforcement.

Since many Parties remain committed to FZs on the grounds of their claimed economic benefits, the Protocol’s required controls will need to be implemented with considerable care. Detailed guidance and technical assistance will be needed. Implementation of Article 12 also requires effective engagement with international enforcement agencies such as the World Customs Organisation, Interpol, Europol, and the Financial Action Task Force on Money Laundering (FATF/OECD). FCA is calling for:

  • The establishment of a working group on free zones to provide detailed guidance to Parties on implementing Article 12 of the Illicit Trade Protocol.
  • This working group should develop a set of criteria outlining what legislative options are available for effective controls in free zones, as well as;
  • Clarifying the level of oversight that customs authorities are expected to perform within free zones, and;
  • Recommending models for effective interagency cooperation (e.g. customs, law enforcement) to address illicit trade within FZs.

PMI Supports FCTC Protocol to Tackle Illicit Trade

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The first Meeting of the Parties to the Illicit Trade Protocol (ITP) starts today. It is crucial for delegates to understand the tobacco industry’s role in illicit trade before discussions begin.

The ITP aims to eliminate all forms of illicit tobacco but has a particular focus on securing the supply chain of legally manufactured tobacco products. Latest estimates suggest that approximately 60–70 per cent of the illicit market is tobacco industry product, indicating that, at the very least, tobacco companies are failing to control their supply chain in the knowledge that their products will end up on the illicit market.

The ITP requires a global track and trace system to reduce tobacco smuggling which will be achieved by each party requiring that every pack manufactured in or imported to their territory has a unique, secure marking providing information on manufacture, shipping and distribution.

The ITP stipulates that this ‘shall not be performed by or delegated to the tobacco industry’- a crucial requirement given that the industry has a vested interest in controlling measures aimed at controlling its supply chain. To this end, PMI adapted its pack marker system Codentify and freely licensed it to its three main competitors who then collectively promoted it to governments using front groups and third parties, despite the system being ineffective and inefficient as a track and trace solution.

In 2016 the system was sold to a company called Inexto, with PMI claiming this complied with WHO requirements.

Yet some of Inexto’s staff feature long-time PMI employees credited with creating Codentify and a complex web of shared intellectual property interests exists between these individuals and the two companies.

This is not the only threat that the industry poses to the ITP. Tobacco companies are a major funding source of data on illicit tobacco with the industry regularly commissioning reports which provide data on the scale of illicit tobacco across various countries and continents.

Recent research from the Tobacco Control Research Group at the University of Bath found that existing assessments of industry-funded data demonstrate that such data are not reliable. When compared with independent sources, they consistently overestimate the scale of illicit tobacco and frequently fail to meet the quality and transparency standards of peer-reviewed research.

Such data enables the industry to promote conclusions about the scale and nature of the illicit trade which cannot be easily disproved. The industry argues it is the victim of the illicit market, emphasising the role of counterfeit cigarettes, while arguing that that public health measures rather than the industry’s supply chain failures fuel illicit trade.

Parties to the ITP must reject the industry’s track and trace system while remaining vigilant against industry obscurantism. Parties also need to be aware that industry data on illicit serve as a platform for the industry’s lobbying and PR strategies. When fighting illicit trade, we shouldn’t look to the industry fuelling the problem to tell us how to understand or solve it.



Article 15 on the illicit trade in tobacco products was the first article on which an agreement was reached during the Framework Convention on Tobacco Control (FCTC) negotiations. The Parties recognised in this article that the elimination of all forms of illicit trade in tobacco products was an essential component of tobacco control. It is was rather novel that a public health treaty deal with illicit trade. Article 15 was only a first step. At the second Conference of the Parties, the decision was taken to start the negotiations for a separate protocol to eliminate the illicit trade in tobacco products (ITP). The ITP was adopted in 2012 and entered into force a week ago on 25 September 2018.

In the nineties, a big concern was that globally, a third of all exported cigarettes went missing while they were being transported internationally and entered into the contraband market. The evidence suggested that the tobacco industry was the chief beneficiary of smuggling. The industry benefited, using smuggling as a market entry strategy.

An article in the British Medical Journal in October 2000 outlined the reasons for the Protocol. “Tobacco smuggling has become a critical public health issue because it brings tobacco to markets cheaply, making cigarettes more affordable and thus stimulating consumption, consequently increasing the burden of ill health caused by its use. Smuggling is not a small phenomenon: we have estimated that, globally, a third of legal cigarette exports disappear into the contraband market. This extraordinary proportion results in a second key effect of smuggling—the loss of thousands of millions of dollars of revenue to government treasuries.”

The suggestion was made for a protocol to address the active involvement of the tobacco industry in smuggling operations. “In October 2000, the World Health Organisation will start negotiations for a framework convention on tobacco control. A specific protocol could deal with tobacco smuggling. It could, for instance, require “chain of custody” markings on all packages of tobacco products, placing the onus on the manufacturers to show that cigarettes arrive legally in their end user markets. Only such action at international level will resolve the problem, but it has now been shown to be soluble.”

Evidence of the direct and indirect involvement of the tobacco industry in cigarette smuggling is well documented–in internal documents that tobacco companies were forced to release in the course of litigation and in their own admission and court judgements. Since 1997, there have been several official investigations and subsequent court cases in different parts of the world (Hong Kong, Canada, Colombia) that have accused the industry of supplying smuggled cigarettes or at least of being aware of the illegal destination of their products.

The adopted Protocol is in line with the suggested solution outlined above, but is much more powerful. The ITP comprises 47 Articles; the substantive key provisions in Part III deal with supply chain control with the objective of tackling the illicit tobacco trade at the global level.

WHO FCTC COP8 concludes with new strategy to accelerate tobacco control efforts

WHO FCTC COP8 concludes with new strategy to accelerate tobacco control efforts and stronger transparency measures to counter tobacco industry interference

7 OCTOBER 2018 | GENEVA – Press release

The Conference of the Parties to the WHO Framework Convention for Tobacco Control (FCTC) yesterday closed its eighth session (COP8) after adopting a Medium-Term Strategic Framework (MTSF) outlining a new action plan to scale up the global tobacco control agenda over the next few years.

The MTSF, also known as the Global Strategy to Accelerate Tobacco Control, aims to strengthen implementation of the FCTC, with a roadmap to guide the work of the Parties, the Convention Secretariat and other stakeholders with regards to tobacco control from 2019 to 2025.

“The adoption of this strategy marks a key milestone in strengthening the FCTC,” said Dr. Vera Luiza da Costa e Silva, head of the WHO FCTC Secretariat. “This strategy provides a very clear path forward, with priorities and objectives to reinforce government policies and accelerate global action for more effective implementation of the tobacco control treaty.”

The six-day COP8 gathering brought together over 1,200 participants comprising delegations from 148 Parties to the global tobacco control treaty and included representatives of United Nations agencies, other intergovernmental organizations and civil society.

“COP8 has made substantial progress towards comprehensive tobacco control by the Parties to the treaty and will result in stronger protections against tobacco-related diseases and premature deaths,” said Ms. Preeti Sudan, COP8 President and Secretary of India’s Ministry of Health and Family Welfare.

In another significant action to ensure FCTC progress, Delegates at COP8 adopted today a series of measures to maximize transparency to protect FCTC related sessions and proceedings from the intrusion of tobacco industry representatives and interests.

New strategies were adopted for preventing further interference by tobacco industry in public health policies, in line with Article 5.3 of the FCTC, which requires Parties to the treaty to protect national public health policies “from commercial and other vested interests of the tobacco industry.”

Conference participants noted progress in reducing tobacco use through new legislation and regulations for limiting access and promotion of tobacco products. Since it came into force in 2005, the Convention has resulted in national strategies and legislation that have introduced health warning on packages of tobacco and comprehensive bans on tobacco advertising, promotion and sponsorship.

At the COP8 gathering, Parties also addressed the need for tobacco control efforts to integrate strategies to combat the destructive impacts of tobacco on the environment and sustainable development.

“The link between tobacco control and environmental protection and their integral link with the Sustainable Development Goals, has been emphasized, clearly indicating the critical need for Parties to apply tobacco control efforts in development strategies,” said Ms. Sudan.

The COP is the only existing global intergovernmental meeting exclusively devoted to tobacco control. It is a platform for policy formulation and the adoption of implementation mechanisms by the Parties to the Convention.

In her parting words to the delegations at COP8, Dr. da Costa e Silva urged Parties to the FCTC to press forward with their fight against the global tobacco epidemic.

“More than ever, we need to stay the course and strengthen our commitment to ensure that FCTC efforts to protect and promote public health and sustainable development are not hijacked by the tobacco industry,” Dr. Costa e Silva said. “We must yield no ground to the tobacco industry.

The recent entry into force on 25 September of the Protocol to Eliminate Illicit Trade on Tobacco Products marked another key milestone in global tobacco control efforts. To date, the Protocol has 48 Parties. The first session of the Meeting of the Parties (MOP1) to the Protocol will be held on 8-10 October, following the close of COP8.

A Global Strategy to Accelerate FCTC Implementation

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UN-led tobacco control advocates denounce ‘increasingly vicious’ industry interference

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