oecd, 2nd task force meeting on charting illicit trade - vanessa neumann
DESCRIPTION
This presentation by Vanessa Neumann was made at the 2nd Task Force Meeting on Charting Illicit Trade held on 5-7 March 2014. www.oecd.org/gov/risk/charting-illicit-trade-second-task-force-meeting.htmTRANSCRIPT
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ASYMMETRICA
TRENDS & PROBLEMS IN ITTPPRESENTED TO THE OECD TASK FORCE ON CHARTING ILLICIT TRADE
PARIS, 6 MARCH 2014
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ITTP in OECD Countries
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ITTP: Definitions
ITTP = Illicit Trade in Tobacco Products
3 Types of ITTP:
• Counterfeit: fakes of licit brands
• Contraband: licit brand cigarettes that are diverted from proper distribution channels and smuggled into other markets
• Illicit Whites: factory overproduction for the express purpose of smuggling
‘C&C’ = ‘counterfeit & contraband’ (used to distinguish from illicit whites)
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ITTP: Size & Harms
Greater harms to consumer health: toxins and external contaminants
Harms to brand integrity: loss of confidence in brand holder
EU alone lost $12.5 billion in tax revenues in 2012
Replacing ITTP with licit would result in an additional $31.3B in tax revenue worldwide
Illicit averages 11.6% worldwide:
16.8% in poor countries
9.8% in high-income countries
$81 billion a year (acc. to Transcrime) funds criminals and VEOs!4
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CTP of ITTP
In Sahel, same routes for drugs and tobacco
Hezbollah: Operation Smokescreen & Operation Tobacco Road
PKK: smuggles into Iraq in same route used by Husseins
Real IRA fed by Belarussian smuggling gangs
2nd to heroin for Taliban!5
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Supply Chain Problems
Key inputs feed both C&C and illicit whites
Key inputs are a choke point: only 5 companies, all of them in OECD countries
INTERPOL explicitly states: “lack of oversight in cigarette components funds organized crime”
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Supply Chain Due Diligence
A clearinghouse is needed to: • Regulate: risk-based due diligence to prevent adverse impact • Punish & Reward: brands can promote their CSR; non-compliant are
named-and-shamed • Educate: help consumer make informed choices; studies to legislatures
and law enforcement • Coordinate: diverse international actors & authorities
Based on OECD’s ‘Conflict Minerals’ Guidance • Demand-driven: Guidelines for Multinational Enterprises • Judicial framework: UNTOC, RICO, counter-terrorism, White House
Strategy to Combat Transnational Organized Crime • Tri-partite solution: government, industry & NGOs
Organizations like Centre for Transnational Accountability may represent the new model to conduct cross-industry due diligence
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