Presentation on theme: "Tracing, Tracking & the Draft Illicit Trade Protocol"— Presentation transcript:
1Tracing, Tracking & the Draft Illicit Trade Protocol WithJohn W. Colledge IIIFebruary 8, 2012
2Introduction Patricia Lambert Director International Legal Consortium Campaign for Tobacco-Free Kids
3Questions and AnswersType your questions here throughout the webinar andwe will answer them at the end.
4John W. Colledge III Consultant on Anti-Illicit Trade Supervisory Criminal Investigator(Retired)Department of Homeland Securityandthe U.S. Customs Service
5Moderator Aaron Schwid Legal Advisor International Legal Consortium Campaign for Tobacco-Free Kids
6FCTC Article 15(2)“Each Party shall adopt and implement effective... measures to ensure that all unit packets and packages of tobacco products and any outside packaging of such products are marked to assist Parties in determining the origin of tobacco products, and... assist Parties in determining the point of diversion and monitor, document and control the movement of tobacco products and their legal status.”
7First session Fourth session Second session Fifth session Intergovernmental Negotiating Body (INB) on a Protocol on Illicit Trade in Tobacco Products (ITP)First session11 – 16 February 2008Fourth sessionSecond session14 – 21 March 201020 – 25 October 2008Fifth sessionThird session29 March – 4 April 201228 June – 5 July 2009
8Illicit Trade Protocol Supply Chain ControlLicensingCustomer ID and verificationTracking and TracingRecord KeepingSecurity MeasuresInternet Sales, free zones and duty-free salesOffensesSearch, Seizure, and DisposalInvestigations, Prosecutions, and PenaltiesInternational Cooperation, Reporting, and Administrative Issues
9What is “Tracking” & “Tracing?” Tracing is a post seizure or investigative tool used to reconstruct the flow of merchandise, including contraband, to its source.Ex: Controlled DeliveryTracking is a proactive crime prevention tool to follow merchandise while it moves through the supply chain.Ex: Computer detects anomalies
10Examples of Product Markings Firearms and Explosives
11Examples of Product Markings Alcoholic beverages
15Why Track & Trace? Safeguard high value merchandise. Protect public health and safety.Collect and protect revenue.Deter diversion, theft, and corruption.Provide investigative tools.Ensure product authenticity.
16Divergent Needs in Tracking & Tracing Systems Tobacco Industry InterestsProtect profitsDeter theftProtect trademarkGovernment InterestsCollect and protect revenue (taxes and tariffs)Interdiction – contraband seizureInvestigations and prosecutionsProtect public health and safetyDiscourage illicit trade and corruptionConflicting InterestsKnowledge is power. Who controls the process and information?Tobacco = $Tobacco industry’s historic and ongoing participation in illicit trade
17Comprehensive SystemTrace and Trace systems secure products moving through the supply chain.The product itself needs to be secured with advanced anti-counterfeiting systems at the start of production.Unique Identification Numbers alone are insufficient for securing each product and preventing illicit trade.Control and audit measures need to be in place at the points of sale to prevent illegal products from entering into legal circulation.
30What is Radio Frequency Identification (RFID) Generic term for a system that transmits the identity of an object wirelessly using radio wavesRFID transmits a unique serial numberCost-prohibitive at the pack level (for now)(http://www.aimglobal.org/technologies/rfid/what_is_rfid.asp)(http://www.ictrfid.com/)
31Examples of Current Tax Stamps Digital Tax Stamp –Massachusetts, USASICPA Securink CorporationPhilip Morris InternationalSwitzerland
32Examples of Current Tax Stamps Canada SICPA excise stamp
33Data Requirements in the Draft Illicit Trade Protocol Date and location of manufactureManufacturing facilityMachine used to manufacture tobacco productsProduction shift or time of manufactureFirst customer dataThe intended market of retail saleProduct descriptionAny warehousing and shippingThe identity of any known subsequent purchaserThe intended shipment route, destination, point of departure and consigneeThis data is collected and maintained bygovernment agencies in your country!Article 7, Draft ITP
34Examples of Other Useful Data Linked to a Comprehensive System Brand nameTrademark holderHarmonized tariff schedule numberCustoms Duties and payment recordTaxes paid and payment recordPreviously reported stolen, destroyed, seized or returned to the manufacturerImportation for destruction, date and location of intended destruction. (usually the trademark holder)
35Current Enhanced Systems National SystemsAlbaniaBrazilCanadaDominican Republic*Ecuador*Germany*Guatemala*JamaicaKenyaKosovoKyrgyzstanLebanon*MoroccoNational Systems(continued)Panama*Peru*Portugal*SpainThailandTurkeyUkraineSubnational SystemsCalifornia (USA)Massachusetts (USA)(*Codentify® - Developed and patented byPhilip Morris International
36History of ITP Article 7 and the INB Experts group (2006).Developed the concept.Established definitions.Major ITP Article 7 IssuesChanging concepts and definitions.Marking packs and cartons.Existing National and regional systems.Marking other tobacco products.Relationship with ITP Article 5 – Licensing.Data fields.Tobacco industry or government controlled systems.Global information sharing focal point.
37What is “Tracking” and “Tracing” in ITP Article 7 “Tracking” means systematic monitoring by competent authorities or any other person acting on their behalf…“Tracing” means the re-creation by competent authorities or any other person acting on their behalf…Article 7, Draft ITP
38Tracking and Tracing ITP Article 7 Unique, secure and non-removableCodes or stampsAll unit packets, packagesCigarettes – within five yearsOther Tobacco Products – within ten years
39Required Key Elements for ITP Article 7 Covert Codes – Invisible with encoded information that can be decoded by specialized readers. A visible unique code can be copied and when applied on an illegitimate product suggests legitimacy that is misleading.Codes at Unit Pack Level – Origin information of products can be compromised by switching of master case contents. Unit pack is the unit of taxation as well as sale. Relevant security information needs to be put at pack level.Real-Time Information Access – In the fast moving environment of cigarettes, delay in detection of illicit trade will result in ineffective control. Real-time visibility is critical to enforcement.Best Available Technology – Currently secure track and trace systems using covert codes are operational in several countries.
40What is “Consensus”? Tentative agreement on the text ITP Article 7 is not final until the entire draft Protocol is final“Nothing is agreed until everything is agreed.” Ian Walton, INB Chair.INB delegates must be prepared to lobby and negotiate any possible changes that could occur related to ITP Article 7
41Major Unresolved Issues Who controls the systems? Industry, Governments, vendors?Tracking RequirementsGlobal Information Sharing Focal Point
42Industry Control and Influence of Systems “Obligations assigned to a party shall not be performed by or delegated to the tobacco industry.” ITP Art 7 (12)Previously signed “legally and binding” cooperation agreements between the governments and tobacco manufacturers
43Tracking Systems Tracking is defined, but not fully developed ITP should prioritize tracking on the same level or higher than tracingMany existing systems are described as T&T systems, but they are really only tracing systems
44Global Information Sharing Focal Point Not clearly defined in the ITP draftMake queries or requests to Global Information Sharing Focal PointExchange relevant dataBased at the WHO in GenevaGovernment controlled data and systems – not industry controlled
45A Possible Solution for the Global Information Sharing Focal Point NLETS. orgNational Law Enforcement Telecommunications System nlets.org
46What System Does My Country Need? Government-controlled system free of the tobacco industry.A system that is based upon governmental needs of revenue (including customs), police and prosecutors.A system that is based on how tobacco flows to local market, considering manufacturing, free zones, imports, exports and illicit tradeSystem that integrates other taxed products such as alcoholic and other beverages.Costs passed to the tobacco industry or users, external financing, funding arrangements with security system vendors.
47ConclusionTracking and tracing was intended to aid in the collection and protection of government revenues, not tobacco industry trademarks and profits.It is not necessary to wait for a finalized ITP.Tracking and tracing will not solve all your problems.There are many myths surrounding tracking and tracing – educate yourself!
48Tracing, Tracking & the Draft Illicit Trade Protocol Questions and Answers
49For more information, go to: Thank You.For more information, go to:or