The New Straits Times, April 16, 2000
By Prof Dzulkifli Abdul Razak
EARLIER this month, tobacco control advocates from both government and non-government organisations in the region met in Thailand.
Various issues were discussed, ranging from tobacco advertising to taxation, from the World Health Organisation's Framework Convention Tobacco Control (FCTC) to regional and international collaboration and networking in the fight to secure a smoke-free world.
Some new evidence about international tobacco smuggling was also discussed.
Admittedly smuggling takes place in almost every country. Price differences between countries is often cited as the main reason. For example, Thailand, because of its relatively more expensive cigarrette prices, has seen some Made-in-Malaysia cigarette brands being smuggled into the country.
Just last week (NST, April 8), for example, some 8,000 cartons of kretek cigarettes of various brands worth RM88,000 were reported to have been smuggled into the country by boat from a neighbouring country.
To many people, smuggling is no more than an economic nuisance created by a small group of crooks.
But smuggling is apparently part of a long and complicated story.
According to a prominent United Kingdom anti-smoking group, Action on Smoking and Health (ASH), one of Britain's largest tobacco companies has been "orchestrating, managing, and controlling cigarette smuggling in Asia and Latin America in the early 1990s".
This allegation was made by the director of ASH in evidence to the UK House of Commons Health Select Committee's inquiry into the role of the tobacco industry in causing smoking-related deaths. The London-based company is involved in illegal distribution through intermediaries, according to ASH.
Detailed documentary evidence came to light after months of researching the company's archives in Guildford, Surrey, it alleged.
ASH said this provided proof "without any shadow of doubt" that the company "employs agents to do the smuggling".
Examples of these can be obtained from a series of internal memos, accessible from the ASH website.
ASH's website contains around 150 of the company's internal documents, illustrating the extent of its involvement in cigarette smuggling in Asia and Latin America.
It also houses ASH's memorandum to the House of Commons Health Select Committee _ a 20-page document providing a clear and accessible account of global tobacco smuggling.
The meeting was also shown copies of a series of articles in the Guardian newspaper disclosing how the company exploited smuggling in Latin America and Asia to its benefit.
It reportedly used various euphemisms for example, DNP (duty not paid, in contrast to "duty paid" or "duty free") or merely as GT (general trade); or simply "transit" to refer to the usual source of smuggled cigarettes.
In denying the allegation, the company claimed that it has more to lose from smuggling.
One top official responded by ripping up the evidence presented and dismissing the session with the Health Select Committee as a "kangaroo court".
But ASH asserted that the company seemed to benefit since smuggling is a process of avoidance of taxation by diversion from the wholesale distribution chain.
This undermines tobacco taxation by lowering prices. This in turn could be used by the company to pressurise governments to reduce taxes, ASH said.
For instance, one internal document on the Thai situation noted that three major tobacco companies "are advocating market entry at 40 baht in order to demonstrate that legal business will be minimal, GT (general trade, euphemism for smuggling) will continue and therefore revenue lost. The belief is that the Thais will then reduce the duty."
The significance of this statement is clear as increased taxation is now recognised even by agencies like the World Bank in its 1999 report, as an effective strategy to reduce tobacco-related diseases and deaths.
The industry's dramatic denials are hardly suprising given the many previous attempts to discredit similar internal memos.
Indeed the industry has been shown to be "deceitful" to the extent of lying under oath when confronted with the fact that nicotine is an addictive substance.
On the contrary, as late as December last year, Hong Kong's highest court reaffirmed an earlier conviction of one top tobacco executive involved in a cigarette smuggling syndicate.
He was convicted in Hong Kong in June 1998 for accepting HK$33 million (RM17 million) in bribes between June 1998 and December 1993 in connection with cigarette smuggling.
With such evidence, it is becoming apparent that cigarette smuggling is no longer an isolated national problem involving small-time, poorly-managed syndicates bent on making some quick monetary gains.
In fact it is a looming global threat, one that likely involves giant tobacco companies employing smuggling as one of the many marketing tactics under the facade of legitimate corporate entities.
According to one analysis, in 1996 alone, "around one-third of all internationally traded cigarettes are smuggled, about 355 billion cigarettes".
"This fraction and the absolute amount of smuggled cigarettes have been steadily rising through the 1990s."
An article in the New Statesman remarked that "smuggled cigarettes, by evading import and sales taxes, are more affordable to a greater number of people, increasing corporate profits and luring generations of new smokers".
School caretakers worldwide have been warned to watch out for an increase of activity around the playground and bike sheds. In other words, there will be more teenage smoking and greater health consequences.
The seriousness of this new findings to healthcare cannot be overemphasised.
The World Health Organisation's Framework Convention on Tobacco Control (FCTC) is one initiative that could be regarded as a global response to tobacco smuggling _ a problem being recognised by the global community as a potential health threat.
FCTC is a promising intergovernmental treaty which is presently
considering including a proposed protocol on smuggling enumerating a number of co-ordinated measures to control this illegal activity at all levels.
In Malaysia, while cigarette smuggling is not a new phenomenon, the set of evidence arising from the internal documents highlighted by ASH is.
It has a wider implication not only in terms of economics but also the nation's uphill battle in controlling health consequences.
This means that action to curb smuggling goes beyond the problem of border patrols alone. It requires a more comprehensive tobacco control approach like one debated at international forum like the FCTC.
Malaysia, with a relatively long border, stands to benefit immensely from the FCTC, in particular to effectively control tobacco smuggling.
It is therefore in our interest to give our utmost support to WHO for a strong mandate to include the protocol on tobacco smuggling as part of the FCTC.
