Geneva Meet Trains Sight on Illicit Trade in Tobacco Products

A new protocol to be discussed and signed by governments at a meeting in Geneva in March is expected to boost the war on illicit trade in tobacco products as it will make it possible for countries to disclose bank accounts of suspected smugglers.

Smugglers in east Africa are suspected to use their wide networks stretching across the war ravaged Somalia and DR Congo to peddle illicit tobacco products through the porous borders and escaping tax in the process and accumulating revenues which are deposited in several banks across the region.

If signed by governments attending the Geneva meeting, the protocol is expected to become an international convention to eliminate illicit trade in tobacco products across the globe.

The draft protocol, to be debated in Geneva in March, could prohibit manufacturers across the globe from using the internet, telecommunications or any other evolving technology based modes to sell tobacco products or manufacturing equipment used in the production of cigarettes.

Kenya has already barred the advertising of tobacco products in the media.

The manufacturing or distributing of tobacco products whose duty have not been paid or dealing in products that do not bear applicable fiscal stamps or unique identification markings is considered an offence under the protocol that would be ratified by governments.

Defacing or interfering with the applicable stamps on tobacco packaging will become an offence under the protocol.

The protocol also bars intermingling or mixing of tobacco products with non tobacco products during storage or transportation through the supply chain will also constitute an offence under the protocol as this is likely to conceal tobacco products.

Traders will also be barred from obtaining tobacco products from vendors or manufacturers who are not licensed to manufacture or deal in tobacco products.

People committing such offences shall be subjected to the domestic laws of the countries signatory to the protocol. Cigarette manufacturers in Kenya say counterfeiting is rife and that the country is used as a conduit to transport illicit tobacco products to the war ravaged DR Congo and Somalia. Leading tobacco products manufacturer British American Tobacco says the government loses upwards of Sh1 billion annually in revenue because of the sale of fake cigarettes.

Cigarettes are among products that are commonly pirated.

According to the latest survey by the Kenya Association of Manufacturers, the local industry losses upwards of Sh50 billion in sales annually while about Sh19 billion in taxes do not reach the government as a result of the illicit trade. The Industrialisation ministry has put on notice traders dealing in counterfeits following the appointment of an anti counterfeit watchdog that has powers to prosecute cheats in a new move that is intended at putting brakes on fake products. Trade in counterfeits, according to the Economic Survey 2009, is among the key constraints to the local manufacturing sector that posted low growth of 3.8 per cent in 2008 compared to a 6.5 per cent growth in 2007.

The intergovernment protocol to be discussed in Geneva is expected to mandated governments to crack down on traders in illicit tobacco products. Such products may include cigarettes whose duty has not been paid or counterfeited products.

Fake cigarettes

The Geneva meeting has been organised by the World Health Organisation’s Framework Convention on Tobacco Control and will be attended by representatives of various governments including Kenya.

Mr Collin Denyer, a senior investigations manager at tobacco giant BAT, told an anti counterfeit meeting in Nairobi late last year that the Kenya government was losing upwards of Sh1 billion in revenue because of sale of fake cigarettes.

“Counterfeited cigarettes especially from Asia are stealing 13 per cent of tobacco market in east Africa. Pirates pocket Sh100 billion each year and this money could be used in other illicit activities such as terrorism in the region” said Mr. Denyer.

There are fears that proceeds from the sale of the counterfeited products could also be used in funding international organised crime and terrorism. British American Tobacco which has had several of its top selling brands knocked off and sold in several markets across east Africa and the UK.

The cigarettes maker estimates that counterfeiters pocket in the upwards of Sh100 billion each year from the sale of imitated cigarettes across east Africa.

“Counterfeited cigarettes especially from Asia are stealing 13 per cent of the tobacco market in east Africa. Pirates pocket Sh100 billion each year and this money could be used in other illicit activities such as terrorism in the region,” Mr Denyer said.

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