Held from 23-24 October in Quezon City, Philippines, the
National Tobacco Administration’s (NTA) global anti-illicit trade summit aimed
high, but like many similar efforts, fell prey to familiar pitfalls.
Launched with an address from Filipino President Ferdinand
Marcos Jr, the forum brought together hundreds of stakeholders to address the
country’s rising illicit tobacco trade. Yet, the event’s inclusion of local and
international tobacco companies – which violates Article 5.3 of the World
Health Organisation’s (WHO) Framework Convention for Tobacco Control (FCTC)
–severely undermines its legitimacy, as the industry’s insincere participation
at such conferences has long served to mask its illicit trade complicity.
Leveraging a network of private companies, such as Inexto,
Atos and Dentsu Tracking, Big Tobacco continues to circumvent WHO rules on
industry-independent tobacco control, with its playbook of manipulation on
display in Europe and across the Global South. Encouragingly, governments of
emerging economies are increasingly countering the industry’s attempts to
derail anti-smuggling interventions – a stance from which EU policymakers
should take inspiration.
Illicit trade’s
noxious global impact
According to the WHO, illicit tobacco accounts for one in
every ten cigarettes smoked worldwide, with this trade’s roughly $40 billion
valuation likely a major underestimation given the EU illicit market alone now
exceeds $20 billion. Every year, the illicit trade deprives governments of this
considerable sum in excise tax revenue, significantly hindering public health
systems’ capacities to respond to the grave risk posed by tobacco products.
Moreover, with its cheaper prices and ease of access,
illicit tobacco encourages higher smoking rates – particularly for young people
and low-income communities – translating into an additional 164,000 premature,
entirely avoidable deaths annually and a societal cost ten times greater than
the tax revenue it generates, according to a White Paper produced by MEPs and
tobacco control experts.
As the World Bank has rightly emphasised, “illicit trade
weakens the effect of tobacco excise taxes” – the single most effective tobacco
reduction tool – while providing Big Tobacco with ammunition to “misinform
public opinion and unduly influence public policy,” namely by falsely
attributing illicit trade growth to tax hikes.
Foundations of Big
Tobacco manipulation
The roots of this harmful policy influence run deep.
Indeed, leading civil society actors such as the University of Bath’s Tobacco
Control Research Group (TCRG) have long cited the “overwhelming evidence of
historic tobacco company involvement in the smuggling of their own cigarettes”
to pad their profits amid a tightening regulatory environment, and, by
extension, the industry’s “vested interest in gaining control of and
undermining” anti-smuggling track and trace systems.
Consequently, the FCTC and its Protocol to Eliminate
Illicit Trade in Tobacco Products, strictly prohibit Big Tobacco’s presence in
track and trace, instead requiring state actors to establish and control
systems supported by industry-independent technology providers.
In its efforts to swerve FCTC requirements, Big Tobacco
has mobilised private companies to promote and facilitate government
implementation of the Philip Morris International (PMI)-developed track and
trace technology, Codentify – a system which blatantly violates FCTC and
Protocol provisions.
Demasking
industry’s trojan horse, Inexto
Over the past decade, Swiss company Inexto has been a
central pawn in the tobacco industry’s machinations. After Big Tobacco’s
unsuccessful attempts to influence the Protocol in Codentify’s favour via the
Digital Coding and Tracking Association (DCTA) – an industry front group
comprised of PMI, British American Tobacco (BAT), Imperial Brands and Japan
Tobacco International (JTI) designed to portray the system as
industry-independent to government prospects – the DCTA sold Codentify to
Inexto in 2016.
Predictably, Inexto – many of whose then-senior
executives, including CEO Philippe Chatelain, helped develop Codentify while
employed at PMI – has since claimed its independence from the tobacco industry
and WHO compliance in order to implement the system in countries such as
Lithuania, in partnership with fellow industry avatar Atos, a French IT
firm.
However, these claims have failed to convince leading
tobacco control players, from the WHO to expert researchers from the University
of Bath’s TCRG. Former head of the FCTC Secretariat, Dr Vera Luiza da Costa e
Silva, has notably described Inexto’s track and trace system as “essentially a
black box,” adding that “we don’t know what’s inside, but we do know that it’s
managed and controlled by the tobacco industry” – a powerful indictment
supported by minutes of meetings between Inexto and PMI.
Global pressure
mounting against front companies
In 2017, Inexto’s ties with PMI led to its exclusion from
a public track and trace tender in Argentina over market corruption concerns,
marking only the beginning of the company’s tender controversies. In 2020,
Inexto’s contract with Pakistan’s public authorities was cancelled due to its
clear tobacco industry links, a bold governance stand that Inexto has
unfortunately managed to evade in countries with less stringent regulatory
environments.
Anti-tobacco organisations in Côte d’Ivoire and Burkina
Faso have raised similar collusion concerns believed to have facilitated the
implementation of Inexto’s WHO-noncompliant system in a region of Africa where
the industry-fueled illicit trade funds criminal and militant groups hindering
stability and development. While authorities in the former have selected a
robust track and trace system after Dentsu Tracking’s lack of independence and
technical shortcomings forced its tender withdrawal, Burkina Faso is yet to
root out Inexto’s presence and implement an independent system capable of
cutting off a major funding source for local terrorist organisations.
More recently, the tobacco control fight has fared better
in Ethiopia, where Inexto was dismissed from a track and trace tender in
October over its failure to comply with the Protocol and prove its financial
independence from the tobacco industry. Indeed, Inexto greatly exceeds the
WHO’s limits, with the company openly
acknowledging Big Tobacco companies account for 70% of its revenue – a
reality that tobacco control experts flag as a clear indication of financial,
technological and governance dependence on the tobacco industry, and by
extension, a questionable inclination to report illicit activity.
Despite Inexto’s fundamental weaknesses, the EU continues
to look the other way. Along with Inexto, Swiss firm Dentsu Tracking, Atos and
its four subsidiaries remain key players in the EU’s ineffective track and
trace system, despite their deep ties to Codentify, while Inexto and Dentsu
have recently solidified their partnership with a joint bid agreement for a
marking tender in Lithuania. What’s more, Dentsu aims to deploy its technology
across Africa, ignoring the Global Alliance for Tobacco Control’s warning that
the EU system’s lack of independence and technical flaws make it unsuitable for
global implementation in Protocol Party countries.
Turning the tide
While the Protocol’s roll-out is showing signs of
progress, only roughly half of Party countries have established track and trace
systems, with inadequate financial resources and expertise continuing to hinder
effective implementation. To meaningfully combat the global illicit tobacco
trade as industry-linked firms manoeuvre to gain ground in the other half,
countries must unite behind an unyielding commitment to industry-independent
tobacco control policies.
By involving the tobacco industry against the WHO’s clear
requirements, the Filipino government’s recent summit embodied the
vulnerabilities of the global anti-smuggling combat and the fundamental
conflict between commercial and public health objectives. Moving forward, real
progress demands that governments reject this influence, implement transparent
systems and rigorously uphold WHO FCTC and Protocol standards. Wavering now
would undermine a cohesive, international response to a plague that transcends
borders.
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