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Cablegate: Who: Second Session of the Intergovernmental

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DE RUEHGV #0921/01 3091552
ZNR UUUUU ZZH
R 041552Z NOV 08
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 7380
INFO RUEHBR/AMEMBASSY BRASILIA 3182
RUEHWN/AMEMBASSY BRIDGETOWN 0138
RUEHBY/AMEMBASSY CANBERRA 6481
RUEHOT/AMEMBASSY OTTAWA 5654
RUEHSA/AMEMBASSY PRETORIA 4759
RUEHKO/AMEMBASSY TOKYO 6819
RUEHBS/USEU BRUSSELS
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 2853

UNCLAS GENEVA 000921

SIPDIS

E.O. 12958: N/A
TAGS: AORC PREL PGOV SOCI WHO
SUBJECT: WHO: SECOND SESSION OF THE INTERGOVERNMENTAL
NEGOTIATING BODY (INB2) ON A PROTOCOL ON ILLICIT TRADE IN
TOBACCO PRODUCTS UNDER THE FRAMEWORK CONVENTION ON TOBACCO
CONTROL (FCTC)

1. Summary. INB2 met October 20-25, 2008, in Geneva to
develop a protocol under the FCTC to combat illicit trade in
tobacco products. It was attended by representatives of 133
Parties to the FCTC, as well as 16 State non-Parties
(including the United States), two intergovernmental
organizations, and nine nongovernmental organizations
accredited as observers to the Conference of the Parties
(COP). Under the guidance of the Chair, Ian Walton-George of
the European Anti-Fraud Office, the INB accepted the
"Chairperson's text for a protocol on illicit trade in
tobacco products" as the basis for negotiations. The INB
also endorsed holding a third INB from 28 June to 5 July 2009
in Geneva and authorized a fourth INB in 2010, if necessary.
The INB requested the Secretariat to arrange for expert
reviews on a number of elements of the draft protocol, such
as the feasibility of an international system for tracking
and tracing, the relationship of the protocol to other
relevant international agreements, the treatment of sales via
the internet, and the relationship between illicit trade and
duty free sales. The INB also asked that WHO regional groups
be able to consult prior to INB3. End summary.

BACKGROUND

2. The FCTC is the first global public health treaty
negotiated under the auspices of the World Health
Organization (WHO) and is viewed by many countries as an
important basis for advancing tobacco control measures
internationally. The FCTC targets both the demand and the
supply of tobacco products by requiring Parties to adopt
measures on smoking prevention and cessation, the placement
of health warnings on packaging, restrictions on tobacco
advertising and sponsorship, prohibition on cigarette sales
to minors, establishment of clean indoor air controls, and
implementation of effective measures to combat illicit
tobacco trade, among others.

3. The FCTC entered into force on February 27, 2005, and has
been ratified by 160 WHO member States. The United States
has signed but not ratified the FCTC and participates in the
COP and related meetings as an Observer.

PROCESS

4. INB2 examined the Chairperson's text through the plenary,
two committees (A and B) that met concurrently, and a working
group that examined the scope and definitions of the
protocol. General obligations and institutional and
financial matters were discussed only in principle,
recognizing the need for more detailed discussions in the
future. The Parties also discussed the scope and the title
of the protocol and references to the primacy of public
health and to the linkage between illicit trade and the
tobacco industry. The U.S. did not participate in Committee
B or working group discussions. The reports produced by the
committees and the working group were discussed in plenary to
allow smaller delegations full participation before the INB
plenary approved the reports.

5. Committee A discussed issues contained in Part III of the
Chairperson's Text, which addresses "supply chain control"
such as licensing, customer identification and verification,
tracking and tracing, record-keeping, security and preventive
measures, and internet and duty free sales. This committee
also discussed selected provisions of Part IV of the
Chairperson's Text, including search and seizure, special
investigative techniques and destruction of confiscated
property.

6. Committee B discussed the remaining Part IV issues, such
as offenses, liability, and sanctions, and the Part V
(International Cooperation) issues of information sharing,
confidentiality protection, training, law enforcement
cooperation, jurisdiction, mutual legal and administrative
assistance, and extradition.

KEY ISSUES DISCUSSED

7. Track and Trace: The "make or break" issue for the
protocol is the establishment of a mandatory international


track and trace system. There was significant discussion on
the scope of such a system. A majority of delegations, led
by the European Community (EC), wanted such a system to cover
not only tobacco products but also raw tobacco and the
equipment (including parts) used to make the tobacco
products. (Note: the EC was silent on tracking and tracing
raw tobacco but wants to include "acetate tow," an ingredient
used to make cigarette filters that is made by only seven
manufacturers in the world.) A significant minority, led by
Brazil, wanted to limit the system to tobacco products.
Japan and many developing countries expressed concern that a
track and trace system would have to be based on very costly
and sophisticated technology. Developing countries added
that they would need financial and technical assistance as
well as "capacity building" to comply with a future protocol.
There was also significant discussion on whether the track
and trace system should be mandatory, based on minimum
international standards (EC), or only in a manner consistent
with domestic law (Canada and Japan). Moreover, for a track
and trace system to work, most countries favored imposing
"due diligence" and "know your customer" requirements on all
of the entities involved in the "tobacco growing,
manufacturing, and distribution chain." Tracking and tracing
was one of the areas where the Chairperson and the INB agreed
that further study by experts and working groups was required
prior to the next INB.

8. Licensing: There was consensus that licensing, or a
regulatory program that provides similar results, was
essential to a protocol. However, there was considerable
debate as to which entities should be licensed. There was
significant support for licensing on the broadest scale -
tobacco growers, leaf processors and dealers, manufacturers
of tobacco products and the machinery that makes them,
transporters, wholesalers, importers, and retailers. A large
number of Parties preferred excluding growers and retailers
from a mandatory system. Several delegations also favored
charging licensing fees with the resultant funds being
dedicated to public health measures. Other delegations
voiced opposition to requiring fees and to earmarking the
collected funds.

9. Internet and Duty Free Sales and Sales in Free or Foreign
Trade Zones: The vast number of Parties favored banning
internet and duty free sales of tobacco products. For the
first time in the negotiations, a significant number of
Parties voiced support for prohibiting the sale of tobacco
and tobacco products in free or foreign trade zones, while
others advocated prohibiting "any tax, regulatory or other
advantages that apply to free or foreign trade zones to
tobacco and tobacco products." Japan (internet and duty
free) and Barbados (duty free) explained that other measures
to control the sale of these products were available that
were not as drastic as complete and total bans. The EC asked
the Secretariat to provide a legal opinion as to whether
internet and duty free sales could actually be banned under
the rules of the World Trade Organization.

10. Relationship of the Protocol with Other International
Agreements: Part IV and the remainder of the Chairperson's
Text contain provisions "borrowed" from pre-existing
agreements, such as the United Nations Convention Against
Transnational Organized Crime (UNCTOC or Palermo Convention)
and the UN Convention Against Corruption. For example, the
"confiscation and seizure of assets" provision of the
Chairperson's Text is almost a verbatim copy of Article 12 of
UNCTOC. Australia and the United States voiced concern that
incorporating provisions from other agreements may raise
issues of treaty interpretation (not only with regard to the
protocol but the text of the "host" agreement), particularly
if such incorporation were not done "by reference" and
without first consulting with the governing bodies of the
incorporated agreements. The INB requested the COP
Secretariat to consult with the appropriate governing bodies
before INB3.

CONCLUSION

12. Chairperson Walton-George will present a report on INB2
at the COP3 meeting to be held in Durban, South Africa, on


November 17-22, 2008.

STORELLA

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