Clear The Air News Tobacco Blog Rotating Header Image


The illicit trade in tobacco products is a threat both to government finances and to public health. It robs governments of much needed revenues, and it undermines efforts to reduce tobacco consumption, particularly through the imposition of high levels of tobacco taxation.

Although by definition the global illicit trade in tobacco products is hard to measure with accuracy, it is known to be very substantial. A 2009 study estimated that 11.6 percent of the global cigarette market was illicit. This is equivalent to 657 billion cigarettes a year, and means a loss of tax revenues of about US$40.5 billion.

Overwhelming evidence from the tobacco industry’s own documents shows massive involvement in global cigarette smuggling operations. In 2000, for example, they were accused by the European Union of “an ongoing global scheme to smuggle cigarettes, launder the proceeds of narcotics trafficking, obstruct government oversight of the tobacco industry, fix prices, bribe foreign public officials, and conduct illegal trade with terrorist groups and state sponsors of terrorism.”

While the tobacco companies made some effort to get their house in order after these damning revelations, World Customs Organisation data indicate that, in 2012, still 69% of global cigarette seizures were tobacco company cigarettes. Over the last few years whistleblowers, investigative journalists and even government reports suggest that industry involvement in the illicit tobacco trade has continued and, at best, tobacco companies are failing to control their supply chain in the knowledge their products will end up on the illicit market.

Despite this, the tobacco industry has been aiming to position itself as central to solving the smuggling problem and in this way fundamentally undermine the Illicit Trade Protocol. Its key aim has been to ensure that Codentify, the industry’s track and tracing system, is taken up by governments to meet their obligations under Article 8 of the Protocol to Eliminate Illicit Trade in Tobacco Products.

The system was developed and patented and the trademark registered by Philip Morris International (PMI) in 2006. To promote the system as an “industry standard”, the four major tobacco multinationals, PMI, British American Tobacco (BAT), Japan Tobacco International (JTI) and Imperial Tobacco Group (ITG) in 2011 created a Digital Coding and Tracking Association (DCTA), based in Zurich Switzerland.

The Codentify system uses relatively unsecured commercially available equipment on sites where operators may have a vested interest in misusing it. When enforcement agencies use Codentify codes in their investigations, the enquiries could be transparent to the industry, allowing it to manipulate replies and hide key data.

The system does not appear to prevent valid codes from being used twice. Therefore, counterfeiters and other illicit manufacturers could simply copy codes (sometimes called “code cloning”). Since Codentify codes are visible, it could be easy to collect a large number of such codes. If the same code is scanned twice on different packs it appears to be impossible to tell which is illicit.

Codentify also seems vulnerable to “code recycling”, to print valid codes on illicit products, for example by using codes originally printed on tobacco products that have been rejected and destroyed (which isn’t unusual during the production process).

There may also be a weakness around “code migration”; where codes printed in one country can be reprinted in another, creating apparently legal products that enforcement agencies could not effectively trace. Codes produced using inkjet printers may be easily erased or altered, and would therefore not be “securely affixed”, as required by the Protocol and Directive.

Some information required under the Protocol and Directive will not be known at the time of production, when Codentify codes would be printed. This includes shipment routes from manufacturing to first retailer, the identity of all purchasers from manufacturing to first retail outlet, and the invoices, order numbers and payments of all purchasers from manufacturing to first retailers. It is not clear how this information will be associated with Codentify codes.

The fact that the tobacco industry is controlling and promoting this system raises a serious concern notably because of the industry’s record of involement in illicit trade of
tobacco products.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>