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1 1 (September 2016)

handle is hein.amenin/aeiaaqx0001 and id is 1 raw text is: September 2016 Smoking Out Illicit Trade: How Some Policies Intended to Limit Smoking Drive Illegal Trade Roger Bate T he World Health Organization (WHO) states that smoking cigarettes is the largest cause of preventable premature death globally. The WHO Framework Convention on Tobacco Control (FCTC) entered into force in 2005 with an aim to lower the death toll. FCTC has adopted a policy of encouraging developing nations to follow the demand reduction strategy of mature markets in raising taxes and introducing and then expanding regulation on tobacco products. In many cases such policies result in the rise of illicit tobacco (either counterfeits or legally produced smuggled cigarettes), especially where policy changes are implemented rapidly and enforcement capacity is limited. According to KPMG, illicit tobacco makes up roughly 10 percent of the global cigarette market, and the figure is rising. This paper reports on a novel empirical assessment of smoker opinion and availability of illicit whites (smuggled legally pro- duced cigarettes), which shows a sizeable minority of smokers bought illicit whites in most cases because they are far cheaper. It is also established (across 10 cities) that illicit whites are easily available in most markets, even in the wealthy markets of London and Singapore. Low education levels are correlated with widespread illicit white availability. Reacting to the spread of illicit tobacco, WHO established the Protocol to Eliminate Illicit Trade in Tobacco Products (ITP) under the FCTC in 2012. While sound in principle, the ITP faces numerous challenges in implementation. The ITP's primary objec- tive is to control the supply chain of tobacco products, which necessitates a very high level of international and commercial coop- eration. The spillover effects of production and trade in tobacco require most if not all jurisdictions to share aims and ambitions; without that, coordination is likely to fail. Yet WHO has no expertise in trade policy or overcoming economic objections to health priorities. WHO also has zero experience in combatting organized crime, whose representatives will undermine coordination. ITP has some excellent guidelines, but it is incumbent on individual governments to control demand and police free trade zones (FTZs), where illicit activity of all kinds proliferates. Voluntary support for the protocol is patchy. For example, the UK, Russia, India, and China are parties to the Framework Con- vention, but have not ratified the protocol; the US is not even party to the convention (United Nations 2003). AMERICAN ENTERPRISE INSTITUTE

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