WHO’s anti-smoking efforts fuel illicit trade
THE WORLD Health Organisation (WHO) meets next week in Washington DC to discuss the rise of illicit cigarettes, which are the result of WHO efforts to combat smoking. Smoking cigarettes kills millions every year and the WHO established the Framework Convention on Tobacco Control (FCTC) in 2005 to lower the death toll. The FCTC encourages developing nations to copy mature market policies of raising taxes and introducing and then expanding regulation on tobacco products.
As a result overall smoking has probably declined, but illicit cigarettes have flourished. Smuggling major brands from low tax areas, like North Carolina, to high tax areas, like New York, has been historically the main form of illicit trade. But as major cigarette manufacturers began working with national governments to secure supply chains, such trade has diminished. Its fast-growing replacement is a much harder form of trade to combat.
Illicit whites are legally manufactured cigarettes illegally imported into myriad markets. For example, dozens of companies in Paraguay and the United Arab Emirates (UAE) produce tens of billions of cigarettes each year, the vast majority of which are smuggled into other nations. My research team asked consumers in London and Buenos Aires whether they ever bought these products: roughly a fifth had.
In addition, we found that illicit whites were easily available in all ten cities we assessed. The poorer the city the more likely one could buy illicit whites. In richer cities, where customs and police prevent easy access to illicit whites, people are buying more raw tobacco and rolling their own.
Our results are in my paper, “Smoking Out Illicit Trade”, published this week. Perhaps the most interesting finding is that a significant minority of smokers are annoyed about high tax rates and happy to buy illicit products. Anti-tobacco policymakers seem to ignore that smokers are human actors. Many smokers may be addicts, but that does not mean they are stupid. Some rationally avoid paying high prices (often 3 or 4 times lower), even if doing so is illegal.
WHO anti-smoking advocates are also easy to ridicule. The WHO Syria representative recently suggested that Syria should prioritise tobacco control at a time of total chaos in the country. And the WHO praises Turkmenistan for its anti-tobacco policies and holds meetings in that country, one of the most oppressive on the planet.
It was inevitable and perhaps necessary that the WHO would react to the rise of illicit tobacco. It has established the Protocol to Eliminate Illicit Trade in Tobacco Products (ITP) under the FCTC in 2012. While in principle sound, the ITP faces numerous challenges in implementation. The primary objective of the ITP is to control the supply chain of tobacco products. The spillover effects of production and trade in tobacco requires most, if not all, jurisdictions to share aims and ambitions; without that, co-ordination is likely to fail.
Economic objections
Yet the WHO has no expertise in trade policy or overcoming economic objections to health priorities. It also has zero experience in combatting organised crime. And you can bet that crime organisations and the governments that protect them, such as Belarus, UAE, Paraguay and others, will undermine co-ordination.
ITP has some excellent guidelines, but it is incumbent on individual governments to control demand and prevent illicit production. Voluntary support for the protocol is patchy: The UK, Russia, India and China are parties to the FCTC but have not ratified the ITP; the US is not even party to the FCTC.
Studies of illicit activity demonstrate that illegal operations are highly dynamic and respond swiftly to deterrent measures. It is likely that only with the co-operation of the entire supply chain (including the major cigarette companies) will illicit tobacco be limited. However, FCTC rejects agreements with industry involvement. Cigarette producers and any group funded by them are explicitly excluded from implementation of ITP; this includes Interpol which received funding from Philip Morris. This is idiotic. Interpol knows more about illicit trade than any other government or private group.
The head of the FCTC says that allowing big tobacco to take part in any future agreements is like letting the fox into the hen house. But Margarete Hofmann, the policy director of the EU anti-fraud office, is critical of such thinking: “That would assume we have a hen house – we don’t,” she told reporters in March.
Even normally efficient and organised nations like Germany are having trouble combating organised criminals and tobacco smugglers. Simply put, the only really successful arrangements to control tobacco smuggling were undertaken between the European Commission and the major cigarette manufacturers, yet FCTC rejects this approach.
Meanwhile the illicit tobacco market is flourishing.