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Einojoemon Ando Chairman, Duty Free Shop Association of C/o Japan Terminal Co., Ltd. 3rd Floor, Cosmo Catering Building New International Airport (Narita) Narita City, Chiba Prefecture, Japan

Tel: 81-476-32-7716 Fax: 81-476-32-8607 E-mail: [email protected]

30 August 2000 Tobacco Free Initiative World Health Organization

Opposition to a Ban on Duty-free Sales Clause in WHO Framework Convention on Tobacco Control (Draft)

In regard to the clause concerning the banning of duty-free sales in the Framework Convention on Tobacco Control which is being drawn up within the WHO, I am writing in the capacity of representative of airport duty-free store operators in Japan to advise that this Association finds the article completely unacceptable and to express the following points in opposition to the article.

1. Overview of Association (1) The Association was founded in Tokyo in 1974 and is currently comprised of 28 corporate members involved in sales of tax and duty-free goods at international in Japan. (2) These corporate members employ 5,159 staff. (3) The Association is funded almost entirely from membership dues. (4) The Association was founded to assist and develop the airport duty-free shop industry through mutual cooperation and understanding between members and to help achieve the objectives for creating airport facilities for the convenience of users and thereby contribute to air transport in Japan and the international tourism industry. (5) The Association’s scope of activities and authority is as follows. 1 To study all issues related to the operation of duty-free shops 2 To liaise and cooperate with government agencies, airlines and other organizations in relation to the operation of duty-free shops 3 To liaise and negotiate with exporters of bonded goods handled by Association members and with other associated organizations 4 To facilitate contact between members 5 Other activities as required to achieve the objectives of the Association

2. Items of interest in the Framework Convention As mentioned in my opening statement, the Association would like to express the following points in opposition to a ban on duty-free sales. (1) First, by international legal standards, tobacco is recognized as a lawful product. (2) This leads to the conclusion that the prohibition or restriction of sales of such lawful products is a violation of the right to conduct commerce in terms of free trade. (3) The sale of tobacco is permitted under law in Japan and duty-free shop operators in Japan sell tobacco duty free on the basis of that legal recognition. (4) Accordingly, duty-free sales of tobacco produced in Japan are permitted under the Tobacco Consumption Tax Law and duty-free sales of foreign made tobacco are permitted under the Customs Law. (5) Therefore, as stated in sub-paragraph (2) above, the prohibition or restriction on duty-free tobacco products sold by our members can only be described as a violation of the right to conduct commerce. (6) Also, in relation to sales to “minors”, a source of concern in the WHO, duty-free sales to persons under the age of twenty are prohibited under law. Further, our members’ duty-free sales activities are, in principle, conducted directly with the customer and no vending machines are used. (7) Duty-free sales, including sales of tobacco, have a history stretching back 35 years since 1965 in Japan. The industry has grown in popularity and evolved as one of the means of promoting travel abroad. (8) Today, around 21 million outbound Japanese and non-Japanese travelers depart from Japanese airports. More than 12 million make some sort of purchase at a duty-free shop in Japan and more than 4 million purchase tax and duty-free tobacco. (9) As mentioned in sub-paragraph (2), tobacco is a legally recognized product and its purchase is left to personal preference and is the right of freedom of individual choice. (10) Should these steps be taken to prohibit duty-free sales of tobacco, these overseas travelers will lose one of their privileges, and one of the pleasures of duty-free shopping will disappear for the more than 4 million purchasers of tax and duty-free tobacco. (11) For members of this Association, such a move would have catastrophic consequences with a loss of tax and duty-free tobacco sales of more than 100 million dollars a year. (12) Consequently, we are concerned that this loss of sales would have dire consequences for the businesses operated by our members and destroy the foundations of those companies which have been built up over many years. (13) The airport duty-free business in Japan currently consists of 28 corporations employing 5,159 people, as mentioned in paragraph 1 above. Additionally, there are many other associated businesses and, including those businesses, the total number of people working in the industry is around 6,700. When families are added, this figure would be closer to 10,000. (14) We are concerned that this move to prohibit the duty-free sales of tobacco would only serve to threaten the existence of not only those working in the industry, but also their families. (15) We have also heard some claims that duty-free sales adversely affect moves to prevent illicit trafficking, but the volume of duty-free sales is only an insignificant amount compared to overall tobacco sales and any effect, therefore, would be limited. The legal limit for duty free tobacco products brought into Japan also restricts passengers to one carton of Japanese produced cigarettes and one carton of cigarettes produced abroad each. (16) Passengers are always advised of duty-free limits for each country when sales are made and efforts are oriented towards preventing illicit trafficking through, for example, voluntary regulation of individual bulk purchases. 3. Conclusion The above views are expressed on behalf of the airport duty-free shops of Japan. I wish to repeat that prohibiting or regulating the sale of tobacco, a lawful product, violates the right to conduct commerce. Prohibiting the sale of tobacco will lead to a serious situation for not only the members of this Association, but also the industries associated with the duty-free business, and will affect the foundations of their operations. It is obvious that this will also threaten the very existence of those who work in the industry and their families. Duty-free businesses at airports are one of the key elements in airport operations today and I fear that this may also be subjected to a grave situation.

The disappearance of one of the delights of duty-free shopping for travelers departing overseas from Japan will also likely develop into a problem with serious ramifications for the travel industry.

I petition the WHO to take heed of this situation and drop the article on banning duty-free sales from its list of items under consideration immediately.

The global spread of tobacco, which is the focal point of the Framework Convention For Tobacco Control, is a concern also shared by this Association. We are prepared to do everything possible in this regard including stepping up our activities to prevent duty-free sales to minors and sell only products that clearly state that tobacco is a health hazard.

In closing, allow me to ask on behalf of all members of the Duty Free Shop Association of Japan that you take our position into careful consideration. The ban on duty-free sales will destroy the economic and social mechanisms of this industry overnight. It will drastically reduce sales at airport duty-free shops in Japan, curtail the industry’s development and have an enormous adverse effect on those employed in the industry and their families. Attachment Duty Free Shop Association of Japan – Members

1. Airport Terminal Co., Ltd. 2. Airport Terminal Building Co., Ltd. 3. Airport Building Co., Ltd. 4. Terminal Co., Ltd. 5. Airport Building Co., Ltd. 6. Japan Airport Terminal Co., Ltd. 7. Empire Airport Service Co., Ltd. 8. JAL/DFS Duty Free Shoppers Co., Ltd. 9. ANA Trading Duty Free Co., Ltd. 10. Airport Building Corporation 11. Hokuriku Air Terminal Building Co., Ltd. 12. Terminal Building Co., Ltd. 13. Nagoya Airport Terminal Building Co., Ltd. 14. Airport Senmon Daiten Co., Ltd. 15. The Asahi Airport Service Co., Ltd. 16. Blanc de Blancs Co., Ltd. 17. Kansai (Osaka) International Airport Co., Ltd. 18. Kansai International Airport Co., Ltd. 19. Terminal Co., Ltd. 20. Airport Building Co., Ltd. 21. Airport Terminal Building Co., Ltd. 22. Building Co., Ltd. 23. Building Co., Ltd. 24. Terminal Co., Ltd. 25. Building Co., Ltd. 26. Kyushu Industrial Transportation Co., Ltd. 27. Industry Co., Ltd. 28. Naha Air Terminal Co., Ltd.