The Protocol to Eliminate Illicit Trade in Tobacco Products (ITP) requires a global tobacco tracking and tracing system.1 Packs of cigarettes and rolling tobacco need to be marked with a secure, unique ID so they can be tracked from their point of manufacture to the point where all taxes have been paid. If they then end up on the illicit market, they can be traced back to identify where the problem arose and where they were originally manufactured.
This system was developed in light of overwhelming evidence of tobacco industry involvement in smuggling their own cigarettes2 and was deliberately intended to stop this involvement. For this reason, the protocol specifically says that responsibility for track and trace cannot be delegated to the tobacco industry.
The latest evidence suggests that the tobacco industry, including the world’s major tobacco companies, remains involved in smuggling.3 They therefore have a clear vested interest in trying to control track and trace systems. Doing so would enable them to continue this involvement with impunity, thereby evading tax payments and potential litigation.
In line with this, research on leaked industry documents and other materials reveals that the major tobacco companies are seeking to achieve this control through an elaborate and underhand effort, implemented over years. They have come to control most of the data on tobacco smuggling and used this to exaggerate the problem of counterfeiting and the involvement of small local competitors while obscuring their own involvement, thereby convincing governments they are the victims not the perpetrators of smuggling. To further their influence, they have made payments to the regulatory authorities and agencies meant to hold them to account. They have increasingly used third parties, often ex-policemen, to present their data and increase the credibility of their case. They have now developed their own digital tax verification system which they are promoting as a track and trace system, and using third parties to claim it is independent of industry. If governments allow such a system to be implemented they will lose their ability to control tobacco smuggling.
This briefing summarizes this research. It aims to alert regulatory agencies and government departments to this scandal which must be exposed and stopped in order to ensure that a functional, independent track and trace system can be implemented. Only this, and not a system the tobacco industry controls, will help reduce tobacco smuggling and increase government revenues.
Part 1 of the briefing outlines the evidence of the industry’s involvement in tobacco smuggling, both past and present, and its motivations for controlling tobacco tracking and tracing.
Part 2 describes the tactics it has been using to achieve this goal and explains how the industry has sought to hoodwink governments, regulatory agencies, the media and the public.
Part 3 explains what we can expect next, what works and what governments should do.