Track and Trace

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Background

Tobacco tracking and tracing refers to a process of determining where a tobacco product was produced and following it through to its point of sale. Products are marked with a secure, unique ID so they can be tracked from their point of manufacture to the point where all taxes have been paid. If they then end up on the illicit market, they can be traced back to identify where the problem started and where they were originally manufactured.1

The Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol) is an international treaty, based on Article 15 of the Framework Convention on Tobacco Control (FCTC). Article 8 of the Protocol includes provisions for the establishment of a global tobacco tracking and tracing system whereby Parties to the Protocol develop their own track and trace systems that then interconnect via a global information sharing system.2 The Protocol aims to establish global cigarette tracking and tracing system by September 2023. The deadline is 10 years for other tobacco products.2 Due to the “irreconcilable conflict” between tobacco industry interests and public health interests, the Protocol states that Parties must not delegate any of their tracking and tracing obligations to the tobacco industry. Party authorities involved in track and tracing regimes should be in contact with the tobacco industry and its representatives “only to the extent strictly necessary”.2

Find out more about the Protocol and its requirements here: Protocol to Eliminate Illicit Trade in Tobacco Products.

Impact of tracking and tracing on the tobacco industry

The inclusion of a tracking and tracing system in the Protocol follows overwhelming evidence of historic tobacco company involvement in the smuggling of their own cigarettes, which evidence suggests is ongoing.1 To learn about why tobacco companies would facilitate the smuggling of their own products, see our page on tobacco smuggling.

Tobacco companies, therefore, have a vested interest in gaining control of and undermining the effectiveness of tracking and tracing systems. If an effective global system was to be implemented, tobacco companies could face increased tax payments and fines. They could even be subject to further litigation related to tobacco smuggling, if they were found responsible for their products ending up on the illicit market.3 When all cigarettes manufactured legally before being diverted onto the illicit market are fully taxed, then global tobacco consumption would inevitably fall. This would further decrease the industry’s profits.1

Tobacco industry attempts to undermine tracking and tracing

Previous TCRG research3 has outlined how the tobacco industry has attempted to interfere with the implementation of tracking and tracing implementation (or ‘track and trace’) , including using front groups to promote their own ineffective and inefficient technology, formerly known as Codentify (now the Inexto Suite). This has been heavily promoted to governments across the world. For example, in Kenya in 2012, British American Tobacco (BAT) unsuccessfully tried to influence a track and trace tender outcome in favour of the Codentify system through the use of a third party with close links to the tobacco company. For more details, see our page, Kenya- BAT’s Tactics to Influence Track and Trace Tender.

In 2016 the European Union (EU) ran a public consultation for the European Union’s track and trace system. TCRG research published in October 2020 found that the tobacco industry lobbied extensively for the EU to adopt a system controlled by the industry. Transnational tobacco company’s interests were repeatedly represented through consultation submissions by multiple trade associations, which were not always transparent about their membership. For example, Business Action to Stop Counterfeiting and Piracy, which has a history of lobbying against standardised packaging in Australia and the EU, made no mention of tobacco companies in its consultation submission or EU transparency register, despite its membership including BAT and PMI.  Of the 87 trade associations which submitted to the consultation, British American Tobacco (BAT) was identified as a member of 22 followed by Japan Tobacco International (JTI) (20), PMI (19) and Imperial Tobacco (IT) (17), with considerable overlap in membership.4

Later, in 2017, while the European Commission was finalising plans for the EU’s track and trace system, Inexto (which has owned the Codentify technology since 2016) met with EU Member State authorities, including, the Czech Republic’s national security printer.5 At the same time, representatives from Inexto and the major tobacco companies met to develop policy proposals related to tracking and tracing. Both Inexto and Philip Morris International (PMI) claimed that Inexto was financially independent from the tobacco industry. However, minutes from these meetings show that this was not the case.56

In 2019, Pakistan’s Federal Board of Revenue awarded a tracking and tracing tender to the National Radio and Telecommunications Corporation (NRTC). This company was buying its track and trace technology from Inexto.7 This decision led to a number of objections over the links between the NRTC and Inexto, including from the Pakistan National Health Association.8 After legal challenges from two other bidders in the process, the tender was later cancelled by the Islamabad High Court. This was due to an error in the NRTC’s application; the company had given a quote for its services that was below the amount it actually intended to charge.9

It is unclear exactly how many countries have used the Codentify/Inexto technology and the exact purpose they have used it for. As of 2018, its use has been documented in at least 35 countries.3 In 2016, the then head of the WHO FCTC Convention Secretariat, Dr Vera Luiza da Costa e Silva, described the system as  “essentially a ‘black box’” as “we don’t know what’s inside, but we do know that it’s managed and controlled by the tobacco industry”.10 To learn more about the system and concerns with it see our page on Codentify.

The tobacco industry has tried to control track and trace processes. It has also worked to have them overturned completely and replaced with ineffective measures. For example, in April 2019, the South African Revenue Service (SARS) launched a track and trace tender. This was extensively opposed by from the Tobacco Institute of South Africa (TISA). (This organisation no longer exists. At the time its membership included British American Tobacco South Africa, Philip Morris South Africa, Japan Tobacco International South Africa, and Imperial Tobacco South Africa).111213  TISA described the track and trace tender as a “rushed process” that would “impose excessive and impractical regulatory burdens on small retailers” and “only encourage retailers to sell illegal products”.14 After multiple delays, SARS cancelled the tender in May 2020. SARS Commissioner Ed Kieswetter later stated that South Africa’s illicit trade strategy “may or may not require track and trace”.15

TobaccoTactics Resources

TCRG Research

References

  1. abcStopping Tobacco Organizations and Products, Protecting Your Country’s Tobacco Track and Trace System From the Tobacco Industry, Policy Brief, undated, accessed December 2020
  2. abcWHO Framework Convention on Tobacco Control, Protocol to Eliminate Illicit Trade in Tobacco Products, accessed December 2020
  3. abcA.B. Gilmore, A.W.A. Gallagher, A. Rowell, Tobacco industry’s elaborate attempts to control a global track and trace system and fundamentally undermine the Illicit Trade Protocol, Tobacco Control, 2019, 28:127-140, doi.org/10.1136/tobaccocontrol-2017-054191
  4. A.W.A.G Gallagher, K. Evans-Reeves, A. Joshi, et al. Analysis of submissions to the EU’s public consultation on tobacco traceability and security features,  Tobacco Control, Published Online First: 06 October 2020.doi:10.1136/tobaccocontrol-2020-043875
  5. abA.W.A. Gallagher, A.B. Gilmore, M. Eads, Tracking and tracing the tobacco industry: potential tobacco industry influence over the EU’s system for tobacco traceability and security features, Tobacco Control, Published Online First: 22 September 2019, doi:10.1136/tobaccocontrol-2019-055094
  6. P. Teffer, Cigarette tracking rules risk being derailed by lobbyists, euobserver.com, 7 June 2017, accessed December 2020
  7. Stopping Tobacco Organisations and Products, How the Tobacco Industry is Successfully Undermining Tobacco Tracking and Tracing, Case Study, undated, accessed December 2020
  8. Staff Reporter, PANAH concerned over awarding contract to tobacco industry backed firm, The Nation, 3 November 2019, accessed December 2020
  9. S. Gagné-Acoulon, Pakistan Court Scraps Tobacco “Track and Trace” Contract, Organized Crime and Corruption Reporting Project, 13 May 2020, accessed  December 2020
  10. WHO Framework Convention on Tobacco Control, Dr Vera Luiza da Costa e Silva, head of the Convention Secretariat, sends her remarks to the High Level Conference: Combating tobacco industry tactics: state of play and a way forward, European Parliament, Brussels, 2 March 2016, WHO FCTC website, undated, accessed 03 December 2020
  11. Tobacco Institute of South Africa, Our Members, website, undated, archived 20 March 2019, accessed December 2020
  12. Tobacco Institute of South Africa, Our Members, website, undated, archived 20 April 2019, accessed December 2020
  13. Tobacco Institute of South Africa, TISA to be wound up, members to continue building on solid foundation laid, website, archived 17 January 2020, accessed December 2020
  14. Africa News Agency, Tobacco institute warns against ‘rushed’ system for tracking illegal cigarettes, The Citizen, 24 May 2019, accessed December 2020
  15. A. Mashego, SARS boss accused of bowing to big tobacco, City Press, 10 May 2020, accessed December 2020
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