Background

TRACIT was established in April 2017 and formally launched in New York in September 2017. It received endorsements from representatives of the American Department of Homeland Security, the UN Office of Drugs and Crime and the OECD.¹

Its first public event appears to have been a two-day conference in London on combatting illicit trade sponsored by the Financial Times and the Philip Morris campaign on illegal trade Impact.² As well as Tracit Director General Jeffery Hardy, the were several members of the PMI Impact panel: Suzanne Hayden, Alain Juillet, Paul Makin, Luis Moreno Ocompo, Navi Pillay and Jurgen Storbeck. PMI CEO Andre Calantzopoulos was also a guest speaker.

Membership

TRACIT’s website has fluctuated between disclosing and not disclosing its membership. As of July 2021, TRACIT’s membership page listed Philip Morris International (PMI) while British American Tobacco (BAT) and Japan Tobacco International (JTI) have been listed as members on a previous version of the webpage. Also previously listed as a project partner is Crime Stoppers International, which has tobacco company support.³⁴

Partners

TRACIT is partnered with several other similar organisations including the Anti-Counterfeiting Group and is part of the UN Global Compact (UNGC).⁵

Activities

Overview and tobacco funding

The organisation breaks its focus down into 12 sectors, of which one is tobacco. It says:

“Overall, for the tobacco industry the illicit trade in cigarettes results in lost revenue, reputational damage and loss of consumer trust, and increased costs in supply chain monitoring and the implementation of technologies that enable companies to track and trace their products.”⁶

TRACIT accepts sponsorship from tobacco companies to help in the production of reports and quotes uncritically from industry documents as part of its analysis. In its lobbying it will often share platforms with industry officials and their allies. For instance, in its introductory analysis of the the tobacco sector, TRACIT quotes from a KPMG report called Project Sun which was produced in 2015 and looks at the illicit cigarette market in the European Union, Norway and Switzerland. The report was produced on behalf of BAT, Imperial, JTI and PMI.⁷ Nowhere does TRACIT reference the multiple reports, supported by evidence, of the involvement of tobacco companies in the illicit trade.

In March 2019 TRACIT was awarded funding from PMI IMPACT – a $100 million initiative from Philip Morris International to support projects against smuggling. The award, one of 31 in a second round of funding worth $21 million in total, was for the:

“Development of a Global Illicit Trade Business Report, drawing upon private sector experiences and identifying solutions to supply chain vulnerabilities common to all forms of illicit trade. It examines transportation modalities, customs, free trade zones, human trafficking, criminal activity, financial fraud, and regulatory gaps. Findings will be shared with all stakeholders in response to their calls to significantly upgrade the availability and exchange of information.”⁸⁹

Work programmes

Global Illicit Trade Environment Index

The Global Illicit Trade Environment Index, released in June 2018, was produced by the Economist Intelligence Unit and evaluates 84 countries on their “structural capability to guard against illicit trade, highlighting specific strengths and weaknesses”. The objective is “to improve the knowledge and understanding of the regulatory environment and economic circumstances that enable illicit trade.¹⁰ It is a key report which, with its regional and country subsets and recommendations, is the foundation for TRACIT policy proposals and lobbying. The report’s sponsors include Philip Morris International (platinum sponsor), British American Tobacco, Japan Tobacco International and Crime Stoppers International (bronze sponsors).

Mapping impact of illicit trade and sustainable development goals

In an area which has seen increasing interest by tobacco companies, TRACIT maps the impact of illicit trade against the UN sustainable development goals. It released a report in July 2019.

The report has chapters for each of its sectors and how illicit trade has a negative impact on specific goals. For tobacco it lists the goals of good health and well-being; decent work and economic growth; peace, justice and strong institutions and partnerships for goals as being affected. Again, no mention is made in the chapter on any culpability that tobacco companies have for the illicit trade.¹¹

Involvement with UNCTAD

In July 2019, as part of its launch on the report, TRACIT co-hosted a meeting on illicit trade and the UN’s Sustainable Development Goals (SDG) in partnership with the United Nations Conference on Trade and Development (UNCTAD).¹² TRACIT Director General Jeffrey Hardy addressed the meeting with contributions from UN officials.¹³TRACIT’s engagement with the UN organisation reflects the attempts of tobacco companies to use third parties to ingratiate themselves with governments as partners in reducing illicit trade. Other UN organisations have been targeted by groups with close tobacco company affiliations such as Concordia and the International Chamber of Commerce.¹⁴

Regional and Country Activities

TRACIT has been active in a number of countries representing industry interests at governmental level backed by its own reports. The principal report is the Illicit Trade Environment Index from which various regional versions have been produced.

Asia

• Produced regional policy recommendations in 2018 for the region which in summary were: ¹⁵
• Association of Southeast Asian Nations (ASEAN) and Asia Pacific Economic Cooperation (APEC) play leadership roles on combatting illicit trade
• Establishing an antic-illicit trade coordinator and inter-agency task force
• partnerships with the private sector
• Protect Free Trade Zones from illicit traders
• Launch public awareness campaigns
• “rationalize tax policies and subsidies to ensure that they do not incentivize illicit trade, smuggling, adulteration and theft, by adopting simple, single tier specific tax structures, and accounting for various demand-related factors including overall consumption, price, income levels and the ensuing affordability of products.”¹⁵ The tobacco industry often uses these types of arguments regarding taxes, to prevent raises and further regulations. See Tobacco Tactics Price and Tax for more details on this aspect.
• Establish joint investigations on illicit trade/trafficking and criminal organisations
• Study the patterns of illicit trade flows
• Produced a regional version of its Global Illicit Trade Index.¹⁵ Among those who were interviewed for the Asia report were:
• Ali Salman, director of research, at Institute for Democracy and Economic Affairs (IDEA). The Malaysia-based think tank has lobbied against tobacco control measures and has received funding from tobacco companies
• Etienne Sanz de Acedo, CEO, International Trademark Association, which has Barry Gerber from Philip Morris International on its board.¹⁶
• Seth Hays, chief representative—Asia-Pacific, International Trademark Association

Myanmar

• Produced regional policy recommendations in 2018:¹⁷ The recommendations were similar to the report for Asia but also included:
• Tackle pervasive corrupt practices
• “Increase effectiveness of customs procedures to block the flow of illicit and parallel (grey) market products”
• Partnerships with international organisations such as World Customs Organization, Interpol and the European Anti-Fraud Office.
• Produced a regional version of its Global Illicit Trade Index.¹⁸

Latin America

• Produced regional policy recommendations in 2018:¹⁹. The recommendations were similar to the report for Asia but also included:
• Pursue law enforcement and customs cooperation through expanding the Pacific Alliance (Alianza del Pacifico) or “through projects sponsored by Ameripol, the InterAmerican Development Bank (IDB) or the World Customs Organization (WCO).”
• Intensify public-private coordination and uses examples from Argentina and Costa Rica (see below)
• Strengthen copyright protection enforcement
• fully adopt anti-money laundering regulations
• raise public awareness about the threat of illicit trade “to help shift public perception … that contraband is not a minor issue but a national security problem, with links to organized crime.”¹⁹
• In September 2019 TRACIT participated in the 7th INTERPOL Global Conference on Human Trafficking and Migrant Smuggling, in Buenos Aires.²⁰ This had 750 people attending from 97 countries.
• In June 2019 TRACIT was in Buenos Aires at the Regional Summit on Security and Illicit Trade hosted by the business newspaper’ “El Cronista”. The panels included discussions on public-private cooperation and the vulnerabilities of Free Trade Zones.²¹ Director-General Jeffrey Hardy particularly highlighted the need to curb illicit trade in Free Trade Zones. Philip Morris International had a strong presence at the event with representatives from its PMI Impact anti-illicit project as well as providing media support.²²

Argentina

• In June 2019 TRACIT highlighted how fighting illicit trade is essential for attracting investment and creating growth opportunities during a National Roundtable for Fair Trade hosted by the Argentina Medium Business Confederation (CAME). A press release from TRACIT said that Director-General Jeffrey Hardy “called on Latin American governments to rationalize tax policies that can incentivize illicit trade”.²³

Colombia

• Produced policy recommendations which repeated many of those from the Latin American policy report (see above).²⁴ In particular it says “Colombia should simplify its current structure following OECD standards + VAT and reduce the tax burden to decrease the current high incentives for the illicit market.”²⁴

The Ministry of Health of Brazil and the National Commission overseeing the implementation of the Framework Convention on Tobacco Control have provided solid arguments on this issue of taxation and these have become useful for the rest of the countries in the region, as well as Colombia.

“There is solid evidence that reducing tobacco tax is an inappropriate initiative to reduce illicit trade. Studies, including a recent World Bank review, point out that the main determinant of the illegal tobacco product market is not the difference in taxation of tobacco products between countries but the dominance of this market by organized crime factions, attracted by profitability and impunity, resulting from the soft penalties applied to this offense. In addition, countries that have reduced tobacco taxes to try to reduce illicit trade have experienced reduced tax collection, smoking growth, especially among young people, and no positive effect on smuggling. This was the case of Canada and Sweden in the 1990s. In Brazil, also in the 1990s, the Federal Revenue Service lowered taxes on cigarettes to limit smuggling. However, tax revenues fell, and illicit trade continued to grow”²⁵

• In October 2018 at a meeting in Bogota, TRACIT urged Colombia to work with the private sector to develop a comprehensive and effective anti-illicit trade program to curb illicit goods that harm legitimate businesses, workers, consumers and governments. Colombia ranks 43 out of 84 on TRACIT’s Global Illicit Trade Environment Index, primarily because of issues around transparency and governance of its Free Trade Zones (FTZs).²⁶

Costa Rica

• Produced policy recommendations which repeated many of those from the Latin American policy report (see above).²⁷ In addition it recommends strengthening the Comision Mixta de Lucha Contra el Comercio Ilicito, composed by representatives from the Ministries of Health, of Finance, of Home Affairs, from the Customs Office and the Police force. This Commission was created in 2014 and later on, representatives from the chambers of commerce and industry were added as members as well. ²⁸ Costa Rican Civil Society have exposed the conflict of interest of this Commission and made a formal claim to the government in 2016, given that the representatives of the industry come from the Costa Rican-American Chamber of Commerce (AmCham), whose members include British American Tobacco and Philip Morris International.²⁹
• In August 2018 TRACIT addressed government officials and industry stakeholders during a conference on Illicit trade, hosted by AmCham, which has tobacco industry members.³⁰ The conference featured a presentation on TRACIT’s Global Illicit Trade Environment Index, which ranks Costa Rica 46th of 84 countries evaluated on the extent they enable or prevent illicit trade. Gerardo Lizano, AmCham’s representative to the Comision Mixta de Lucha Contra el Comercio Ilicito, and Nogui Acosta, vice minister of income in the Ministry of Finance, spoke at the event.³¹

Dominican Republic

• Produced a country briefing based on its Global Illicit Trade Environment Index (see above).³² The report quoted Manuel Cabral as an expert on local markets for alcohol and tobacco products as saying “frequent and piecemeal changes in tax policy create distortions that ultimately the use of illegal products”. Cabral worked for Philip Morris International from the country from 2011 to 2017, ending up as director of corporate affairs for the Dominican Republic and Caribbean³³ Among those listed as sponsors and contributors to the country report were British American Tobacco, Crime Stoppers International, Japan Tobacco International, and Philip Morris International
• Produced policy recommendations which repeated many of those from the Latin American policy report (see above).³⁴
• In May 2019 TRACIT addressed government officials and industry stakeholders during a conference on Illicit trade. It was hosted by the Association of Industries of the Dominican Republic, the British Embassy and the British Chamber of Commerce of the Dominican Republic. The Chamber of Commerce has BAT subsidiary BAT Republica Dominicana and Imperial Tobacco subsidiary Tabacalera De Garcias.³⁵
• TRACIT’s Director-General, Jeffrey Hardy, called for more public-private partnerships saying they are “essential to the design and implementation of effective programs to prevent illicit, contraband and counterfeit products.”³⁶ Such partnerships could provide a means for tobacco companies to engage with governments and circumvent the Framework Convention on Tobacco Control article 5.3.

Ecuador

• Produced policy recommendations which repeated many of those from the Latin American policy report (see above).³⁷ It highlighted the need for “strong and proactive measures” in strengthening the protection of Free Trade Zones
• In November 2018, TRACIT addressed government officials and industry stakeholders during a conference on Illicit trade, hosted by Cámara de Industrias y Producción (CIP). The current vice- president of CIP worked previously as Corporate Affairs Director for Ecuador and Peru at Philip Morris International for 2 and a half years, before taking on her current position at CIP. ³⁸ The conference featured a presentation on TRACIT’s Global Illicit Trade Environment Index, which ranks Ecuador 60th of 84 countries evaluated on the extent they enable or prevent illicit trade. “The country serves as a major transit point for illicit goods in the region, including … illicit trade in tobacco…”³⁹

Panama

• In 2017, Ulrike Bonnier from TRACIT participated in a session exploring actions to combat human trafficking and other forms of illicit trades at the 38th Annual Crime Stoppers International Conference.⁴⁰ Crime Stoppers International regularly engages with the tobacco industry. Among the speakers at the Panama conference were Nicholas Otte and Arturo Fernandez from Philip Morris’s Illicit Trade Strategies and Prevention for Latin America and Canada region. The silver sponsor for the event was British American Tobacco.⁴¹

Europe

• Produced a regional briefing based on its Global Illicit Trade Environment Index (see above).⁴² Among those listed as sponsors and contributors to the country report were British American Tobacco, Crime Stoppers International, Japan Tobacco International, and Philip Morris International
• Produced policy recommendations for the region including rationalising tax policies, subsidies and tax exemptions, encouraging partnerships with companies and have stronger criminal penalties. It highlighted the 2016 Administrative Cooperation Arrangement between the European Anti-Fraud Office (OLAF) and the State Customs Committee of Belarus aimed at helping investigative cooperation between them, specifically on the illicit trade in tobacco products.⁴³

Serbia, Bosnia and Montenegro

• Produced a regional briefing based on its Global Illicit Trade Environment Index (see above).⁴⁴ Among those listed as sponsors and contributors to the country report were British American Tobacco, Crime Stoppers International, Japan Tobacco International, and Philip Morris International
• Produced policy recommendations for the region which echoed much of those in the Europe report (see above).⁴⁵

Middle East

• Produced a country briefing based on its Global Illicit Trade Environment Index (see above).⁴⁶ The report says:
  

  “illicit tobacco trade has steeply increased due to high excise taxes (accounting for about 27% of the market) and new regulations that standardize tobacco packaging can further increase the demand for counterfeit and illicit products.”

  This echoes industry arguments against plain packaging and tax increases. The evidence used to support this is a news story which is itself based on a PMI-funded study.⁴⁷

• Produced policy recommendations for the region which echoed much of those in the Europe report (see above).⁴⁸

United Arab Emirates

• Produced a country briefing based on its Global Illicit Trade Environment Index (see above).⁴⁹The report recommends the UAE sign and ratify the five illicit trade treaties including the WHO Protocol to Eliminate Illicit Trade in Tobacco Products. Among those listed as sponsors and contributors to the country report were British American Tobacco, Crime Stoppers International, Japan Tobacco International, and Philip Morris International
• Produced policy recommendations for the region including strengthening co-operation in the region, having tougher oversight of free trade zones, rationalising tax policies and subsidies and improving public awareness. ⁴⁹

Africa

Tunisia

• Produced a country briefing based on its Global Illicit Trade Environment Index (see above).⁵⁰The report says
  

  “Stopping tobacco smuggling, in particular, must be a top priority for policy makers given the significant fiscal leakages and the large profits that organized crime and armed militias in the region amass from the illicit tobacco trade.”

• Produced policy recommendations for the region including strengthening co-operation in the region, having tougher oversight of free trade zones, rationalising tax policies and subsidies and improving public awareness. On the issue of taxation the report says:
  

  “excessive tax levels can reduce affordability of legitimate products and drive demand for illicit substitutes. Organized crime groups also may practice “tax arbitrage” to gain profits by smuggling products from relatively lower to higher taxed markets.”⁵⁰

  As in other TRACIT reports there is no mention of the involvement of tobacco companies in illicit activity.

South Africa

• In October 2019, TRACIT’s Director General Jeffrey Hardy addressed the 12th International Law Enforcement Intellectual Property Crime Conference in Cape Town. The conference was organised by INTERPOL, the International AntiCounterfeiting Coalition and South African Police Service.
• TRACIT used the conference to launch its policy recommendations for South Africa, including tackling illict tobacco which, according to a paper in Tobacco Control, is estimated to compromise a third of the market.⁵¹.⁵² TRACIT’s recommendations echoed those for its other country reports including tying activiy to achieve Sustainable Development Goals, tackling corruption, “rationalize tax policies”, promoting track & trace and similar technology and promoting private-public partnerships.⁵³ As examples of “valuable partners” it offers the American Chamber of Commerce in South Africa and the Consumer Goods Council of South Africa. The former has Philip Morris SA as a member,⁵⁴ while the latter has Soraya Zoueihid, the Area Director for British American Tobacco in Southern Africa, as a board member.⁵⁵

Staff

Senior Management

The senior management team is made up of the following people:⁵⁶

• Jeffrey P Hardy – Director-General. Hardy previously served as the Director of the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy. The group has consistently produced reports sympathetic to its tobacco industry members and lobbied against Plain Packaging measures. Hardy is founder and managing director of IDA Consulting, a management consultancy.⁵⁷ Hardy is listed in the EU lobbying register.⁵⁸
• Stefano Betti – Deputy Director General
• Louis Bonnier – Director of Programs. Co-author of the report on illicit trade and SDGs
• Ulrika Bonnier – Director of Programs. Co-author of the report on illicit trade and SDGs
• Suriya Padmanaabhan – Director of Programs
• Cynthia H Braddon – Head of Communications and Public Policy
• Esteban Giudici – Senior Policy Advisor

Directors

TRACIT gives its mailing address as One Penn Plaza in New York City, but it is registered in Fort Myers, Florida, as not-for-profit organisation under US tax code 501(c)(6). Its corporate filing on 19 April 2019 listed three directors: ⁵⁹

• Jeffrey Hardy
• David Benjamin
• Shelley Duggan. UK-based trademark lawyer who is a director at Proctor & Gamble. Duggan is chair of the Anti-Counterfeiting Group (ACG), a not-for-profit global trade association which tackles counterfeiting and is partner of TRACIT.⁶⁰ One of the founders of the ACG was British American Tobacco. It is no longer listed as a member but Philip Morris, Japan Tobacco International, Imperial Tobacco and the Tobacco Manufacturers’ Association all are.⁶¹

Advisory Council

The organisation’s Advisory Council is made up of independent experts providing advice in a personal capacity.⁶² Among its members are:

• Karl Lallerstedt, from the Confederation of Swedish Enterprise, contributed a chapter to a book on organised crime which grew out of a BAT-funded project.⁶³.
• Leonard McCarthy, founder of integrity and risk management firm LFMcCarthy Associates, prior to that an investigator at the World Bank.⁶⁴ McCarthy came to prominence as the head of South Africa’s Directorate of Special Operations, or so-called Scorpions, which investigated organised crime, including tobacco smuggling. The unit was disbanded in 2009.⁶⁵

Relevant Links

TRACIT homepage: https://www.tracit.org/

TobaccoTactics Resources

• Tobacco Smuggling
• Protocol to Eliminate Illicit Trade in Tobacco Products
• Tobacco-funded group TRACIT tries to influence tobacco control policy, 28 July 2020

References

The post TRACIT appeared first on TobaccoTactics.

Japan Tobacco International (JTI) is an international tobacco business owned by Japan Tobacco Group. The company was formed in 1999 when the Japan Tobacco Group spread into the international market by the acquisition of several companies around the world. In 1999, the Japan Tobacco Group bought the US multinational RJ Reynolds. In 2007, JTI bought another major tobacco manufacturer, Gallaher. ⁶⁶ JTI’s headquarters are in Geneva, Switzerland. ⁶⁷

JTI produces cigarettes, rolling tobacco, electronic cigarettes, snus and cigars. ⁶⁸ It also produces waterpipe tobacco through the acquisition of companies such as Al Nakhla Tobacco Company. ⁶⁹ JTI’s brands number over a hundred and include Winston, Mevius (previously called Mild Seven), Camel, LD, Glamour, Benson & Hedges, Silk Cut, and Amber Leaf and Old Holborn rolling tobacco in addition to two electronic cigarettes: Logic and Ploom. ⁷⁰

The company’s business is extremely globalised. JTI sources its tobacco leaf from 33 countries, manufactures its products in 26 countries, and distributes its products in 130 countries. ⁶⁸ In 2020, the company reported on its website that it experienced a continuous profit growth with US$3,493 million adjusted operating profit and US$11,330 million in core revenue in 2018.⁶⁶ According to Euromonitor international, JTI’s 2020 share of the global cigarette market (by retail volume) was around 9%, (figure rounded).⁷¹ JTI claimed that its products represent 14% of the global market share that year.⁷⁰

JTI is working to expand its market of both traditional and newer nicotine and tobacco products. The company’s website emphasises this strategy: “achieving ever-greater quality and sustainability within our conventional products or developing new vaping products”. ⁷²

Employees or Board Members: Past and Present

The company’s executive committee has 18 members. Eddy Pirard, a Belgian national, was appointed as President and Chief Executive Officer in 2017.

Other members are: Koji Shimayoshi | Roland Kostantos | Vassilis Vovos | Howard Parks | Daniel Torras | Takehiko Tsutsui | Suzanne Wise | Bilgehan Anlas | Yves Barbier  | Antoine Ernst | Stefan Fitz | Marchant Kuys | Hiroyuki Miki |  John Fraser | Tom Greene | Rob Stanworth | Phil Livingston | Daniel Sciamma. ⁷³

Previous members: Pierre de Labouchere | Thomas McCoy | Martin Braddock | Paul Neumann | Fadoul Pekhazis | Michel Poirier | Bill Schulz | Takehisa Shibayama | Mutsuo Iwai | Paul Bourassa | Jörg Schappei | Frits Vranken | Wade Wright | Jorge da Motta | Andrew Newton | Kevin Tomlinson.

Affiliations

Memberships

In 2020, JTI declared membership of the following organisations on the European Transparency Register: Tobacco Europe | Business Europe | Japan Business Council in Europe | American European Community Association | Center for European Policy Studies | Kangaroo Group ⁷⁴

It had previously declared membership of: European Smoking Tobacco Association | European Cigar Manufacturers Association | Confederation of European Community Cigarette Manufacturers |British Chamber of Commerce in Belgium | Ambrosetti Club Europe | Public Affairs Council | Consumer Choice Centre |  EPICENTRE | EURACTIV | Forest EU.⁷⁵⁷⁶⁷⁷

In 2020, JTI also declared that it gave donations to organisations for which it had previously declared membership, including Forest EU, Consumer Choice Centre and EPICENTRE.⁷⁶⁷⁴

The company spent EU€800,000 – EU€899,999 in 2020 on activities covered by the register such as consultancy and membership fees, the same amount as in 2019.⁷⁶⁷⁴

JTI is also a member of the following lobby groups and trade associations: Tobacco Industry Platform | Associate Parliamentary Corporate Responsibility Group | European Smokeless Tobacco Council | Institute of Business Ethics | Tobacco Manufacturers’ Association (through its subsidiary Gallaher) | Confederation of European Community Cigarette Manufacturers.

Consultancies

JTI has extensively contracted consultancies to support its fight against plain packaging and graphic health warnings on tobacco packages. Examples of consultancies in this area:

• From 2008 to 2012, JTI commissioned Europe Economics (consultancy based in United Kingdom), to perform economic analysis on proposed Plain Packaging in the UK, first considered by the UK government in 2008 and 2010. Four reports, prepared based on Europe Economics work, warned that if plain packaging were implemented, it would lead to an increase in counterfeit and/or contraband tobacco that would harm UK tobacco industry employment and reduce tobacco excise tax revenue. It also stated that a display ban would materially impair innovation, and a plain packaging requirement would probably all but end product innovation in the tobacco sector, which it claimed was an important source of enhanced consumer welfare. ^{78 79}
• In 2015 and 2016, JTI commissioned Andrew Lilico, Principal and Executive Director of Europe Economics to develop two reports about the effectiveness of plan packaging and its relation to the declining tobacco prevalence in Australia. The two reports published in 2015 and 2016 argued that plain packaging had no statistically significant impact upon the decline of Australia’s tobacco consumption and prevalence. ⁸⁰
• In 2008, 2010 and 2013, JTI contracted Warren J. Keegan (Keegan & Company LLC, American consultancy), to develop reports in response to the UK Department of Health Consultation on the Future of Tobacco Control (2008), the European Commission’s Directorate General for Health and Consumer Affairs proposal to increase the size of health warnings on tobacco packaging (2010), and the European Commission’s proposal to increase the size of graphic health warnings on tobacco packaging (2013). The three reports prepared by Keegan argued that there is no reliable evidence to suggest that a ban on retail display of tobacco products or plain packaging would lead to a reduction in youth smoking uptake. Additionally, Keegan concluded that there is no single study constitutes reliable evidence in respect of the potential impact of larger health warnings on consumers’ smoking behavior. ^{81 82 83}
• In 2016, building on the work of Keegan & Company LLC, JTI commissioned David Midgley, Professor of Marketing, to review consumer research relevant to bans on the display of tobacco products in retail outlets. The review concluded that studies are not capable of reliably supporting a hypothesis that a point of sale display ban would have any impact on smoking initiation or cessation. ⁸⁴
• In 2010, JTI contracted Daniel Gervais, Professor of Law at Vanderbilt University, to prepare a report on the compatibility of plain packaging measures with the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) and the Paris Convention for the Protection of Industrial Property (the Paris Convention). The report listed how it will be challenging for countries to implement plain packaging while also fulfilling their commitment to TRIPS and Paris obligations. ⁸⁵
• In 2010 and 2016, Laurence Steinberg, Professor of Psychology, was commissioned by the law firm Freshfields Bruckhaus Deringer, LLP (instructed by JTI) to prepare reports on adolescent decision making and the prevention of underage smoking. One of the two reports’ conclusions was that the impact on adolescent smoking of changes in cigarette packaging or in the display of cigarette packages is likely to be very small at best. ^{86 87}
• In 2010, 2012 and 2013, Timothy M. Devinney prepared three reports for JTI. These reports argue that the evidence base used by the European Commission during its impact assessment of tobacco control measures, including plain packaging, did not provide a sound evidence base linking these measures to key outcomes, including reducing underage smoking initiation and increasing smoking cessation. ⁸⁸
• In 2015, Philippe Février, Romain de Nijs and Dorian Beauchêne, of the French consultancy MAPP, prepared a report for JTI that analysed the impact of implementing plain packaging on the tobacco sector economics in France. The report claimed that the implementation of standardised tobacco packaging in France would lead to a decrease in the French tax revenue. ⁸⁹
• In 2017, JTI contracted CanvasU, an Australian consultancy company to carry out a national survey in Australia to explore public opinion on the plain packaging policy implemented in 2012 (see: Plain Packaging in Australia). The CanvasU study included outputs that could be used to discredit governmental policies. For example, the report stated “80% of Australians believe the Australian government wouldn’t change or would be reluctant to change a preferred policy even if the evidence was weighted against it”; ⁹⁰ this wording could be used to raise concerns among public and decrease confidence in public health measures.

Think tanks, front groups and third party

The Tobacco Control Research Group of University of Bath has previously asked JTI about its funding of the think tanks active in the smoking and health debate in the UK. The company replied: “Please note that we do not wish to participate in your research”. ⁹¹

However, other sources show that JTI has previously donated to organisations all over the world including: Digital Coding & Tracking Association | Atlas Network | Consumer Choice Center | International Chamber of Commerce |  Institute of Economic Affairs | Institute for Democracy and Economic Affairs (Think Tanks page)| Institute for Democracy and Economic Affairs in Malaysia⁹² | Japan’s Smoking Research Foundation. ⁹³

Additionally, a review by TakeAPart, an initiative of the Campaign for Tobacco-Free Kids, showed that JTI has previously donated to Retailers Against Smuggling | International Trademark Association | Americans for Tax Reform | Cato Institute | Institute for Democracy and Economic Affairs | Adam Smith Institute | Austrian Economics Center | Center for Liberal Democratic Studies | Center for Social and Economic Research | Ekonomichna Pravda | Hibernia Forum | Tax Payers’ Alliance | Ukrainian Economic Freedoms Foundation | Forest EU | Kangaroo Group.⁹⁴

Tactics

Claiming a public health role

In the European Transparency Register, JTI declares public health as one of its fields of interest.⁷⁶⁷⁴JTI argues that it should participate and engage in the process of regulation. ⁹⁵ The company claims benefiting public health through its strategy of introducing “reduced risk products”, ⁹⁶ and fighting illicit trade in tobacco products. ⁹⁷ However, JTI continuously opposes public health policies to control tobacco use. ⁹⁸ JTI claims that the decisions of the Conference of Parties to the WHO Framework Convention on Tobacco Control (FCTC) are excessive and controversial tobacco control measures. ⁹⁹

Undermining public health policies

In 2020, JTI developed new product variants to replace menthol cigarettes as a way to circumvent the EU ban on menthol and other ‘characterising flavours’, which came into force in May that year. These included menthol flavoured cigarillos and cigarettes containing “distinctive blends” of tobacco. These new cigarettes were promoted under the logo “menthol reimagined”, alongside  JTI’s newer tobacco and nicotine products. ¹⁰⁰ For more information see Menthol Cigarettes: Industry Interference in the EU and UK.

In addition to the numerous consultancies commissioned by JTI to lobby against graphic health warnings and plain packaging, in 2018 the company started a global campaign against plain packaging stating that it is raising awareness of excessive regulation.¹⁰¹This campaign is called “The Future of Brands” and, in addition to advocating against plain packaging, it invites other industries to join the campaign (including food and  alcohol) before similar regulations affect them. ¹⁰¹

During the COVID19 pandemic, it was reported that Zambian farm workers risk their health for Japan Tobacco International.¹⁰² While the public health advice was clearly mandatory mask-wearing, children and women working in tobacco farms were left without enough masks or guidance on the proper way to wear them. The STOP initiative reported that “JTI is trying to paint itself as part of the solution to the COVID-19 pandemic with so-called corporate social responsibility acts that support other parts of its supply chain, like donations to support independent retailers in the UK. But it seems to have forgotten about the women and children who risk their health to fuel the company’s profits in the midst of a pandemic”¹⁰²

Targeting women and girls

JTI contributed to a systematic campaign, run by major tobacco companies, to promote tobacco use among women. JTI brought out limited edition ‘V-shaped’ packs of Silk Cut in 2011, within the same period that British American Tobacco introduced Vogue Perle, and Philip Morris launched Virginia S by Raffles. ¹⁰³ JTI tried to take advantage of the growing female smoker population and launched the Glamour cigarettes that target women in a number of countries. ¹⁰⁴ It was also reported that JTI has previously used marketing techniques targeting schoolgirls and mothers. ¹⁰⁵

For more information see our page on Targeting Women and Girls.

Targeting kids and minors

A study by the Campaign for Tobacco-Free Kids revealed that tobacco companies, including JTI, pay social media influencers on social media platforms to advertise tobacco products. This marketing strategy exposes kids to advertising and promotes tobacco use among young social media users. It was also reported that JTI brands Winston and Camel were seen around schools in eight countries. ⁹⁴ JTI stands against evidence-based public health interventions and claims that “Extreme measures, such as plain packaging of tobacco products, display bans or other proposals based on the attractiveness of tobacco products, will not eliminate smoking by minors, or cause minors to stop smoking”. ⁹⁹

Involvement in smuggling

JTI uses illicit trade as pretext to fight tobacco control public health policies. JTI claims that “excessive” tobacco regulation creates environments in which the black market thrives. The company states that public health interventions such as higher taxes create appealing profit margins for criminals, while plain packaging is a gift to counterfeiters, making cigarette packs very easy to copy. ¹⁰⁶

In 2011, the Organised Crime and Corruption Reporting Project (OCCRP) unveiled the results of a major investigation into JTI Involvement in Smuggling. The report shows very serious issues such as the involvement of the company’s distributor in smuggling, cases where JTI stayed idle when informed about suspected smuggling situations, and even expanding its business by collaborating with an alleged smuggler. ¹⁰⁷

Despite the research suggesting involvement by the tobacco industry in smuggling, and against the WHO FCTC and its Protocol to Eliminate Illicit Trade in Tobacco Products that prevents their Parties from engaging with tobacco industry unless necessary, JTI signed voluntary memoranda of understanding with 42 countries and trained more than 580 law enforcement and customs officers around the world on counterfeit recognition in 2016 alone. ¹⁰⁸

JTI portrays itself as a victim of illicit tobacco trade. The company launched an anti-illicit tobacco campaign in the United Kingdom called “Don’t Be Complicit In Illicit”. It engages in and monitors European Union policies on anti-illicit trade. It funds, alongside other tobacco companies, the Retailers Against Smuggling, an Irish organization that organises retailers’ efforts to prevent illicit trade in the country. It also contracted, alongside other tobacco companies, a KPMG study that reported that one in every ten cigarettes consumed in the European Union in 2013 were illicit. ⁹⁴

For more information see our page on JTI Involvement in Smuggling.

Violating national and international law

There have been a number of reported cases that suggest that JTI has violated national tobacco laws in a number of countries. In 2018 the Bangladesh Anti-Tobacco Alliance demanded punitive action be taken against JTI, in Bangladesh, for violating the national tobacco control law by distributing free, JTI-branded merchandise including cigarettes, T-shirts, mobile phones, rice cookers, ceiling fans, umbrellas with their logo at points of sale. ¹⁰⁹ In Singapore, JTI was fined SG$15,000 (US$10,700) in 2020 by the Singaporean government for distributing cigarettes without a license against the obligations of the national tobacco law. ¹¹⁰

A United Nations’ report released in 2019, linked JTI to companies that risk contributing to violations of international human rights and humanitarian law. The report listed Japan Tobacco in Myanmar as one of the companies that have a joint venture with the Myanmar Economic Corporation (MEC), one of the two major conglomerates and holding companies operated by the Burmese military. The companies identified in the report are tied to Myanmar’s military that has used its own businesses, foreign companies and arms deals to support operations against the Muslim minority ethnic group of Rohingya people in the country. ^{111 112} JTI responded to the United Nations Independent Fact-Finding Mission on Myanmar by a letter stating that: “it is incorrect to state that Japan Tobacco in Myanmar has a joint venture with MEC”. ¹¹³ The United Nations’ report made minor corrections after representations following its publication. The update stated: “None of the information received requires the Mission to change or alter any of the main findings or recommendations of its report”. ¹¹⁴

Additionally, as Japan is a Party to the WHO FCTC, it was reported that the state ownership of JTI with the huge financial revenue of the company influencing the country’s policies contradicts the Article 5 of the treaty that mandates Parties to protect their public health policies from commercial and other vested interests of the tobacco industry. ¹¹⁵

Lobbying officials and MPs

JTI, similar to all major tobacco companies, uses political spending to lobby governments to serve its business goals. In 2018, JTI spent approximately US$85,000 in the USA on lobbying activities. ¹¹⁶

Tobacco Industry Hospitality for UK Politicians: JTI has been the most active tobacco company in offering UK politicians hospitality, with politicians accepting JTI-sponsored tickets to various events, including the Chelsea Flower Show, Glyndebourne Opera Festival, Cricket Test Matches at the Oval, the Rugby World Cup, and a rock concert. ¹¹⁷

Brussels Lobbying: Until January 2011, JTI’s Brussels office was headed by Thierry Lebeaux, who previously worked for the PR company Citigate Dewe Rogerson. ¹¹⁸ His successor was Paolo Bochicchio. ¹¹⁹ In his prior role, Bochicchio was the EU Government Affairs Director for the European Plastic Converters (EuPC). ¹²⁰ As mentioned in the section named “Affiliation” in this page, in its lobbying register declaration, JTI declares it lobbies European institutions through a number of organizations.

Intimidating governments with litigation or the threat of litigation

JTI uses litigation as a tool to challenge public health interventions. The Campaign for Tobacco-Free Kids on their TakeAPart initiative’s website lists some examples of JTI usage of litigation: ⁹⁴

• Australia, 2012: JTI, British American Tobacco (BAT), Philip Morris International (PMI), and Imperial Tobacco (now Imperial Brands), brought legal challenges against Australia’s plain packaging See Australia: Challenging Legislation for more detail. The High Court in Australia ruled in same year that plain packaging law was constitutionally valid. ¹²¹
• Thailand, 2014: JTI Thailand challenged a proposed increase of graphic health warnings on tobacco packaging to 85 percent of the package surface. The Supreme Administrative Court ruled in favour of the implementation of the intervention.
• Ireland, 2015: JTI Ireland threatened Irish Ministers with legal action if they failed to promise that no further steps will be taken to enact the draft plain packaging law. The government went forward and implemented plain packaging.
• France, 2016: JTI, BAT, and PMI brought six legal challenges against France’s plain packaging regulations; all six challenges were later dismissed by the French high court.

Corporate Social Responsibility activities

Similar to other tobacco companies, JTI uses “corporate social responsibility” (CSR) activities to gain the appearance of respectability. Such activities are prohibited by the WHO FCTC as they manipulate public opinion. In 2015, JTI declared spending JP¥8967 million on community investment programmes in 64 countries. ¹²² For more information on how tobacco companies use CSR as a company strategy, see our page on CSR Strategy.

A prominent example that clearly shows how such activities are exaggerated and used for marketing purposes is JTI’s “Employment Project”. This project is advertised on JTI’s website as a major initiative by the company that was launched in response to the economic crisis in Spain in 2012. However, in 2020, after 8 years of the project, it is reported on the company’s website that the project provided only 19 full-time jobs in addition to 6 part-time jobs. The way the project is portrayed in the company’s website is that it has huge social output and contribution to solving the implications of Spain’s economic crisis. ¹²³

In their efforts to look responsible and to cover the harms of deforestation caused by excessive wood use during tobacco curing, the tobacco industry claims a role in saving environment by supporting afforestation programmes. ¹²⁴ From 2007 to 2014, the Japan Tobacco Group partnered with Total LandCare, NGO, to fund reforestation programmes in Tanzania and Malawi. ¹²⁵ To read more about how the tobacco industry using donations to environmental programmes and charities to greenwash its business, visit our Greenwashing page

In 2000, JTI launched a scholarship program for journalists that has been running on annual basis since then. This training gives journalists opportunities to meet EU officials formally and informally. By 2020, over 250 journalists had joined this program, which is administered by the British Romanian Chamber of Commerce. ¹²⁶

Discrediting proven science

As mentioned earlier in the section called “Consultancies”, JTI has extensively contracted consultancies to support its fight against plain packaging and graphic health warnings on tobacco packages. The outputs of these commissioned works consistently criticise evidence-based studies that show the effectiveness of plain packaging as an effective public health intervention for tobacco control.

JTI has also funded anti-regulation publications. JTI has paid EU€10,000 to commission a special edition of Euractiv entitled “Regulating Consumers?”. ¹²⁷ More on how the tobacco industry supports self-regulation in favour of formal intervention can be found on our page on EU Better Regulation.

In 2019, JTI used a study on illicit trade in Malaysia to support its position against a tax increase on its products. Although this study was funded by JTI, the company did not disclose this information to the government. ¹²⁸

In 2002, it was revealed that the writer and philosopher Roger Scruton, who wrote a pamphlet by the IEA attacking the World Health Organisation in 2000 for its campaign against tobacco, was on the payroll of JTI. ¹²⁹ See Attacking the WHO.

Partnership with governments

As discussed above, JTI presents itself as a company that has a role in public health. Giving the obvious conflict of interest, any involvement of tobacco industry including JTI in the public health dialogue is banned by the WHO FCTC. However, JTI engages with many governments all over the world in policies dialogue in areas of customs control, illicit tobacco trade, and taxation. ⁹⁴

Newer Nicotine and Tobacco Products

As the harms from conventional products have become better understood, and tobacco control measures have been put in place, the cigarette market – from which tobacco companies make most of their profits – has started to shrink. To secure the industry’s longer-term future, transnational tobacco companies (TTCs) have invested in, developed and marketed various newer nicotine and tobacco products.¹³⁰

• See Newer Nicotine and Tobacco Products: Japan Tobacco International for more information.

External Link

• Japan Tobacco International company website

TobaccoTactics Resources

• Japan Tobacco Group
• Targeting Women and Girls
• JTI Involvement in Smuggling
• Tobacco Industry Hospitality for UK Politicians
• Australia: Challenging Legislation
• Newer Nicotine and Tobacco Products: Japan Tobacco International

References

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