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FCA Bulletin TEMPLATE 74.Pub Issue 74 Wednesday 13 February 2008 Geneva Building Support for Global Tobacco Control Strong start to negotiations Inside this issue must be maintained International trade 2 he FCA congratulates the Par- Licensing laws ties on progress they have All agreed licensing was neces- made so far. Having decided Respuestas 4 T sary but there was much discussion yesterday to continue to meet in ple- about exactly how it would operate. nary, drafting and negotiation of the Africa 5 Some Parties in particular had con- illicit trade Protocol got off to a cerns about the feasibility of operat- strong start. ing licensing at retail level in their Transnational crime 6 The Parties powered their way jurisdictions. through discussions on General Obli- Track and trace Middle East ‘dark gations, Licensing, Know Your Cus- 8 There was support for spot’ tomer procedures, Tracking and Trac- an international track- ing, Record Keeping, ing and tracing sys- Security and Preven- tem, but understand- tative measures, and able concerns were Today started on Internet raised by various Par- Sales. ties about the need to ensure that standards 14.15 — Salle 4 Views on the for such a system were equally applica- template The Chair made ble to developing as Technical briefing on clear he wanted to well developed coun- illicit trade in give everyone a tries. Support may be tobacco products chance to air their needed to enable de- general views on the veloping countries to template in order to reap the benefits of an feed into the specific international tracking drafting which needs “We want to ensure that by the and tracing system. It to take place before end of this week there is was suggested that it INB 2, later this enough substance in our hands would be helpful to year. Parties gave for the Chair to come forward have a working group detailed comments with a written text for discus- at the next INB to on all of these ele- sion at INB-2. That’s my in- look at tracking and Since the opening of the first ments of the Proto- tention.” tracing in more detail. working group for the Frame- col. Drafting the Protocol work Convention on Tobacco On the overall template, Ghana, The Chair responded that he ap- Control on 25 October 1999, for the Afro group, expressed hope preciated the need to take account of for a consensual outcome by the end 36,062,891 the differing needs of differing coun- of the process, based on the template. people have died from tobacco- tries in drafting the text of the related diseases. This view was generally supported. (Continued on page 2) (At 9am 13 February 2008) Today’s Weather: Sunny but a tad much the same as yesterday. High 9ºC Low –3ºC No reason why international trade laws should weaken the Protocol Benn McGrady, a lawyer specialising in international trade law and tobacco control, argues that a protocol on illicit trade in tobacco products should, if anything, enhance the synergies between the elimination of illicit trade and the WTO regime. Discussions over the past two days protocol as a consequence of the internalised via taxation in the cost have included the possible relationship effect of the WTO covered of the goods. Accordingly, the between a protocol on illicit trade in agreements. notion that taxation measures are tobacco products and international This conclusion is consistent enforceable is a fundamental trade agreements such as assumption underlying those covered by the WTO. economic theories WTO agreements prohibit relating to the benefits various kinds of conduct of trade. In addition, which restrict trade. transaction costs are However, these prohibitions reduced where relative are qualified by general uniformity in exceptions that allow Parties regulation exists. to pursue a range of public A protocol that policy objectives, such as the facilitates the elimination of illicit trade. standardisation of For example, Article XX international systems (d) of the General Agreement to govern illicit trade on Tariffs and Trade (GATT) is likely, therefore, to permits WTO Members to minimise the burden impose measures that are upon international necessary to secure compliance with with the approach taken in trade when compared to the use of laws or regulations, such as tax or multilateral legal instruments approaches to a problem that differ customs laws or regulations. governing illicit trade in other from one jurisdiction to another. This exception means that it is not goods. These instruments include In this context, a protocol on possible to conclude that measures to measures that may be restrictive of illicit trade in tobacco products eliminate illicit trade will necessarily trade. For example, Article 10 of should enhance the synergies violate the WTO covered agreements the Protocol against the Illicit between the elimination of illicit even if they appear to be trade Manufacturing of and Trafficking trade and the WTO regime. restrictive. Specific measures should in Firearms, Their Parts and The Protocol should seek to not, therefore, be omitted from a Components and Ammunition, enhance decision-making in the supplementing the United Nations context of the WTO. The terms of Convention against Transnational the Protocol should highlight the Organised Crime, imposes import regulatory purpose and the (continued from page 1) and export licensing requirements effectiveness of the measures it Protcol and that “the objective of the that are contrary to Article XI includes. Such language would protocol is to achieve certain ends…. but (quantitative restrictions) of the reinforce the necessity of particular there may be discretion in how individ- ual countries achieve these results.” GATT. The inclusion of this measures as means of enforcing tax The FCA supports the need for ap- provision is premised upon the and customs laws and regulations. propriate flexibility. But, as South Af- assumption that exceptions in Additionally, depending upon the rica declared so eloquently, the strong Article XX of the GATT extend eventual content of the Protocol, it terms of the template must not be wa- protection to the measures. could provide that its terms prevail tered down or we risk undermining the Economic theories of over those of trade agreements in effectiveness of the Protocol. South Af- international trade also support the the event of any conflict. rica reminded us that the tobacco indus- adoption of an international system try will exploit any loopholes to our to eliminate illicit trade in tobacco Benn McGrady will be speaking cost. The tobacco epidemic is a public products. at Wednesday’s lunchtime briefing health disaster killing 5.4 million people Trade in goods with negative at 14.15 hours in Salle 4. each year and illicit trade in tobacco externalities (such as tobacco defrauds governments of billions of dol- products) may produce economic lars of annual revenue. losses if these externalities are not 2 ALLIANCE BULLETIN, INB-1, 13 February 2008 “Know Your Customer?” John College III, former US Customs and law enforcement officer, applies his frontline experience to moving forward international efforts against the illicit tobacco trade What do we mean by “Know Your Customer?” • Routine installation, training, or maintenance Simply put, this is a policy of due diligence directed services are declined by the customer. towards high risk industry customers. Two examples • Delivery dates are vague, or deliveries are planned familiar to many are the financial and arms industries. for out of the way destinations. Banks and other financial institutions exercise due diligence with clients to ensure they are not laundering • A freight forwarding firm is listed as the product's criminal proceeds or supporting international terrorism. final destination. Financial institutions report suspicious transactions to • The shipping route is abnormal for the product and government agencies who analyze these reports in destination. Financial Intelligence Units. Arms manufacturers and • Packaging is inconsistent with the stated method brokers industry, working with various government of shipment or destination. agencies, verify the end users of military equipment When questioned, the buyer is evasive and especially sales to prevent the illicit diversion of weapons and unclear about whether the purchased product is for other military equipment. domestic use, for export, or for re-export. Various international conventions recommended suspicious transaction reporting. The indicators of suspect transactions are commonly referred to as “Red Flags.” Here are some examples of “Red Flags” that may be useful in the detection of suspicious transactions in tobacco products supply chain: Red Flags • The customer or its address is similar to one of persons or entities found on the many lists maintained by parties to various international conventions, such as persons sought by Interpol, the International Court of Justice, as well as entities and persons embargoed by the United Nations. • The customer or purchasing agent is reluctant to offer information about the end-use of the item. • The product's capabilities do not fit the buyer's line of business. (Such as an order for cigarette packaging equipment for a bakery.) • The item ordered is incompatible with the technical level of the country to which it is being shipped. (Such as cigarette tubes shipped to a country that has no cigarette industry.) • The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing. • The customer has little or no business background. • The customer is unfamiliar with the product's performance characteristics but still wants the product. ALLIANCE BULLETIN, INB-1, 13 February 2008 3 Los problemas globales requieren una res- puesta internacional El Convenio Marco para el Control región. auditoria y / o investigación del Tabaco de la Organización El gran desafío que hoy enfren- 6. Medidas contra el blanqueo de Mundial de la Salud ha sido defi- tan los países para desarrollar un capitales.
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