British American Tobacco supports WHO fight against illicit trade

Billions of smuggled and counterfeit cigarettes – enough to circle the Earth more than 60 times – are costing increasingly indebted governments some US$20-40 billion a year worldwide in lost taxes, British American Tobacco said today. 

Up to 660 billion cigarettes worldwide are estimated to pass through the hands of smugglers, counterfeiters and local tax evaders every year. In packs of 20 laid end to end, the cigarettes would circle Earth more than 60 times or stretch to the moon and back almost four times.

British American Tobacco supports a new World Health Organisation (WHO) treaty being debated this week in Geneva – the Protocol on Illicit Trade in Tobacco Products – which aims to combat the problem through stronger international co-ordination and enforcement. The Protocol acknowledges that legitimate tobacco industry interests are damaged by illicit trade along with those of governments.

Pat Heneghan, British American Tobacco’s Head of Anti-Illicit Trade, said: “Cigarettes must be one of the world’s most smuggled legal products.  This treaty can give governments the opportunity to hit the bad guys hard - and it’s vital that they do.

“Organised crime is increasingly dominating tobacco smuggling. Weapons, drugs and people traffickers are attracted by the high profits – with only minor fines or suspended jail sentences if they’re caught.”

Just one 12 metre freight container with 8.5 million cigarettes, smuggled into the UK and sold at half the recommended retail price, can net the criminals around US$2 million in profit.

Tracking and tracing must work

British American Tobacco is piloting a new system in its Polish factory, one of the largest in Europe and an export hub for its business. The system tracks every carton and mastercase manufactured, enabling the business to detect any breaches of its supply chain. Customs and other enforcement officers will have open access to the system 24 hours a day, 7 days a week. Pilot results are exceeding expectations for accuracy.
Said Pat Heneghan: “We fully agree with the WHO that track and trace technologies can potentially be an effective tool, but it’s vital that all tobacco companies – including the smallest - take part with no opt outs. To make this happen, we call on the WHO to set a standard for global tracking and tracing rather than a ‘one-size-fits-all’ technology that not all companies will be able to run. A standard will allow companies to choose a system that best enables them to meet it, ensuring they can all afford to comply regardless of their size.”

Free Trade Zones must be included

British American Tobacco is also calling for the Protocol to include better oversight and enforcement by the authorities in Free Trade Zones. There are around 700 worldwide – black holes where goods move in with one set of paperwork and out with another, fuelling illicit trade.

The World Customs Organisation and the Organisation for Economic Co-operation and Development agree that the zones play a significant role in facilitating illicit trade.

Notes to editors 
 

• British American Tobacco is the world’s second largest stockmarket-listed tobacco group by global market share, with brands sold in more than 180 markets. Its subsidiary companies produced some 715 billion cigarettes through 49 cigarette factories in 41 countries in 2008 and employed more than 54,000 people.
•  There is more about the illicit tobacco trade and British American Tobacco’s strong efforts to help tackle it at www.bat.com.