Duty free reacts as WHO triggers tobacco ITP study

By Luke Barras-hill |

The Parties to the Protocol agreed to commission the evidence-based research at the reconvened MOP3 in Panama City this month. Source: marshalgonz/Shutterstock.

DF&TR lobbyists are preparing to move the industry’s robust defence of the tobacco sector into a new gear after the World Health Organisation (WHO) approved an evidence-based research study on illicit trading.

As anticipated, the study called for under Article 13.2 of the Illicit Trade Protocol (ITP) to ‘ascertain the extent of illicit trade in tobacco products related to duty free sales’ was given the green light at the rescheduled Third session of the Meeting of the Parties (MOP) to the Protocol to Eliminate Illicit Trade in Tobacco Products, held in Panama City on 12-15 February.

The meeting originally scheduled for late November 2023 was postponed due to security concerns in Panama.

Duty Free World Council (DFWC) has welcomed the decision to launch the planned study aligned to the protocol, which is targeting material sources of illicit trading within tobacco product sales globally.

In a statement, DFWC President Sarah Branquinho stated: “We have always been clear that we reject unfair and unsubstantiated allegations that our industry is a major contributor to illicit trade.

“Our supply chain is one of the most secure and transparent in the world, and we have worked closely with customs and enforcement agencies across the world for decades to ensure criminal activities such as illicit trade have no place in it.

“We therefore welcome the decision of the Protocol Parties to proceed with the planned evidence-based research, and we look forward to the opportunity to clearly demonstrate that our industry is a partner in the fight against illicit trade, not a contributor to it.

DF&TR has long maintained the argument that any study carried out under Article 13.2 should not be used as an excuse to target law-abiding-businesses.

“As we have said many times, we are fully prepared to offer any data, technical expertise or knowledge that may be helpful to the evidence-based research. We extend this offer to the WHO once again.”

The battle waged against duty free tobacco under the WHO’s Framework Convention on Tobacco Control (WHO FCTC) has manifested in persistent allegations of illicit trade over the course of many decades, claims that have been repeatedly rejected and rebutted by the industry.

The issue sharpened in 2018 when the Illicit Trade Protocol – an international treaty – entered into force in September.

For the uninitiated, the WHO delayed the study at MOP1 that year. At the time, the WHO Secretariat proposed the study under Article 13.2 should be carried out within five years of the protocol’s entry into force and commence immediately.

It was decided that a roadmap on the duty free question would be produced within two years. At MOP2 in 2021, no reference was paid to the study. Subsequently, it was widely understood that the study would be commissioned at MOP3 in Panama.

What are the timescales?

Sarah Branqhinho, President, DFWC: “As we have said many times, we are fully prepared to offer any data, technical expertise or knowledge that may be helpful to the evidence-based research. We extend this offer to the WHO once again.”

In a MOP3 document confirming the decision to launch the evidence-based research study, the WHO FCTC noted several aspects that require defining: what constitutes illicit trade in the context of duty free sales in relevant jurisdictions; what legal and regulatory frameworks are applicable to duty free sales of tobacco products in relevant jurisdictions; and which common unit of reference (dollars, millions of units, share of total trade, share of duty free trade etc.) would be used when estimating the scale of illicit trade in tobacco products for the purpose of facilitating comparisons across jurisdictions.

“Parties may wish to consider requesting the Convention Secretariat to partner with relevant international organisations to address the preliminary research aspects regarding the subjects of key inputs and duty free sales,” reads the document.

“A practical, case-study-based approach is proposed. The use of case studies will facilitate intelligence gathering in the jurisdictions most affected by illicit trade in tobacco products in its linkages to key inputs and duty free sales. The Convention Secretariat will ensure coordination among consultants who would be engaged to conduct the studies and the focal points of Parties.”

The document confirms that a ‘tentative timeline’ (subject to revision) has been proposed to undertake the duty free research.

Parties to the Protocol will be invited to consult at regional level to identify one or two parties in each WHO region interested in participating in case studies covering March-April 2024.

Between April – June, consultants will conduct on-site activities for the purposes of quantitative data gathering, and collect qualitative information through face-to-face interviews with government representatives and local law enforcement officials, ‘with particular attention to the reported sources and levels of illicit trade in duty free tobacco products compared to duty free sales’.

A maximum of 12 case studies are to be completed from July – December, it adds.

Data obtained via the case studies will be compared against available information on duty free sales; examples could be references to available air and sea traffic data or cross-border sales, plus existing estimates on the size of the global market for illicit tobacco products.

Source: FCTC/MOP3 Annex.

The document notes that such information will be used ‘to produce a first estimate of the relationship between duty free sales and illicit tobacco trade globally, using the standardised unit of reference’.

Next year (January – March 2025), consultants will submit to the FCTC Secretariat a final report outlining activities undertaken and findings from the case studies on duty free sales.

This is due to be finalised and circulated to parties via the FCTC Secretariat’s website six months in advance of the MOP4 (April-May 2025).

Panama Declaration

During the Third session of the Meeting of the Parties, the governing body of the ITP, WHO FCTC established the Panama Declaration.

This calls on national governments exercise caution on what it calls the ‘ceaseless campaign’ of the tobacco industry and those working within it to further its interests and undermine efforts to eliminate illicit trade.

The declaration stresses the importance of effective action to prevent and combat such activities by taking a collective international stance against all aspects of illicit trade in tobacco, tobacco products and manufacturing equipment.

MOP3 drew representatives from 56 Parties to the Protocol and 27 non-Party States, who heard that illicit trade accounts for approximately 11% of total global tobacco trading.

Its elimination could increase global tax revenues by an estimated $47.4 billion annually, says WHO FCTC.

Alongside approving the roadmap for the evidence-based research into duty free sales, the meeting took decisions on tobacco track-and-trace systems.

“We also agreed on improvements for the reporting system our Parties use, which will strengthen the quality of data on implementation of the Protocol that can help guide future tobacco control efforts,” commented  Dr Adriana Blanco Marquizo, Head of the Secretariat of WHO Framework Convention on Tobacco Control that oversees the Protocol.

For a link to the decision in full, click here. For further background on WHO ITP and industry comment, access a detailed report in the November/December e-zine.

Stay close to TRBusiness for more as this story develops…

Middle East

JEDCO launches multi-category tenders at KAIA T1

Jeddah Airports Company (JEDCO KSA) has issued a request for proposals for several...

International

Alcohol insights: Conversion up, spend down in Q4

Conversion of visitors in the alcohol category in duty free has risen to 54% in Q4 2023,...

Asia & Pacific

Heinemann Asia Pacific makes breakthrough in New Zealand at AKL

Heinemann Asia Pacific is set to enter the New Zealand market with three new retail concepts at...

image description

In the Magazine

TRBusiness Magazine is free to access. Read the latest issue now.

E-mail this link to a friend