PRESS CONFERENCE BY UNITED STATES BUREAU OF ALCOHOL, TOBACCO AND FIREARMS

The United States Bureau of Alcohol, Tobacco and Firearms this morning announced today’s opening at United Nations Headquarters of the first-ever International Conference on the Illicit Tobacco Trade.

Speaking at a Headquarters press conference, spokesperson Kathleen Kiernan of the United States Bureau of Alcohol, Tobacco and Firearms (ATF) -- the host of the Conference -- said that some 250 representatives from 145 World Health Organization (WHO) member States would be attending the Conference.  The Conference would discuss law enforcement, revenue and customs practices to reduce the global problem of illicit tobacco trade.

Also present at the press conference were Kenneth Bell, First Assistant, United States Attorney, Western District of North Carolina and Lead Prosecutor in United States v. Hammoud; Edgar Domenech, Special Agent in Charge of ATF's New York Field Division; and Robert Tobiassen, ATF Associate Chief Council, Alcohol and Tobacco.

According to World Bank estimates, governments around the world lose some $16 billion in revenue to tobacco traffickers, Ms. Kiernan said.  And according to conservative ATF estimates, the United States Government lost some $1.5 billion to $2 billion to tobacco traffickers.

Tobacco trafficking presented a two-sided problem for governments, she continued.  Tobacco traffickers not only deprived governments of tax revenue that could be used to fund health, social or other programmes to improve quality-of- life issues, but they also used their profits to fund criminal activities, including terrorism.

She offered, as an example of tobacco trafficking, a recent case in the United States against 18 tobacco traffickers from the Charlotte, North Carolina, area.  In that case, thousands of cartons of cigarettes had been illegally trafficked each month between North Carolina and Michigan.  A joint Iredell County Sheriff's Department, ATF and Federal Bureau of Investigations (FBI) investigation had revealed that at least two of the traffickers had funnelled proceeds from the operation to the Hezbollah in Lebanon.  They had also acquired electronic equipment, global positioning satellite systems, night-vision equipment, computers and programmes for the terrorist group.  The Government's case against the group had included evidence that one of the primary suspects, Mohamad Youseff Hammoud, was the leader of a Hezbollah cell operating within the United States. 

During the Conference, the international law enforcement community would consider best practices to prevent or counter such crimes, she said.  Participants would consider issues such as licensing, record keeping, labelling, cigarette tracking and tracing, border controls, information sharing, mutual assistance and international cooperation.  The goal of the Conference was to move the international community towards regulatory and enforcement arrangements to ensure that tobacco products were sold within lawful distribution channels, and that governments could collect the revenues needed to fund public programmes.

She said she was certain that the best practices identified during the Conference would advance the goals of the WHO's Proposed Framework Convention on Tobacco Control (FCTC).  The FCTC was a new international legal instrument to address issues such as tobacco advertising, agricultural diversification, illicit trade, taxes and subsidies.  The FCTC sought global solutions to address the rise and spread of tobacco consumption around the world. 

She thanked the WHO for its help in putting the Conference together, as well as the United States Department of Health and Human Services, the United States Treasury, State and Justice Departments and participating WHO member States.  Together they would move international law enforcement closer to standard guidelines to deny criminals easy profits and, in turn, provide a benefit to public health.

Would the Conference address the conflict between the concept of free trade and greater legislation to restrict the movement of a huge commodity that generated billions of dollars a year? a correspondent asked.

Mr. Tobiassen said the WTO had various international trade agreements that ensured that all legitimate products were traded in a non-discriminatory manner and that those products crossed international borders with the least restrictive measures.  The Agreement on Technical Barriers to Trade, for example, ensured that domestic products were not treated more favourably than imported products.  Any of the approaches identified as best practices would have to be consistent with each country's international obligations. 

A correspondent asked how cigarette smuggling had become such an easy crime.  Criminal organizations always took advantage of an opportunity to make a large profit, Ms. Kiernan said.  People took advantage of the chasm between high- and low-tax States.

Some organizations that favoured tobacco controls believed the crime sometimes occurred at the wholesale level, and was not just an exploitation of differences in taxes, the correspondent said.  Where did the real problem lie?

Ms. Kiernan said the problem included both.  ATF was aggressive in pursuing violations wherever they occurred.  "Nobody is above the law as far as we're concerned, whether that is a member of the industry that we regulate or it's a criminal or terrorist organization", she said. 

ATF would pursue any credible leads that indicated violations of the law had taken place, Mr. Tobiassen added.  The problem was that profits could be made by moving products through illegal channels of trade.  The Conference would hope to identify the best practices that would enable governments to prevent illicit trade and ensure that tobacco products were distributed and sold through lawful distribution channels.  Governments could then better fund health programmes and more effectively prevent youth access to tobacco products. 

On the trade issue, WTO obligations recognized that governments could establish public health policies and trade rules that recognized those policies, he said.  Within the Agreement on Technical Barriers to Trade, a number of provisions recognized that governments might establish rules that advanced public health policies and protected consumers from being deceived.  The only question was that the rules be equally applied to domestic and international products so that there was a level-playing field in the trade.

Responding to a question on cigarette smuggling across the United States-Canada border, Ms. Kiernan said Canada was one of the United States’ strongest partners on the issue.  The Conference would provide the ideal forum to build the international coalitions that would make the difference.

A correspondent asked whether Conference would address health issues.

Ms. Kiernan said that question might better be raised at the WHO press conference, also scheduled for today.

Mr. Tobiassen said the Conference was bringing together experts from law enforcement, customs and the revenue community.  At the FCTC negotiations in Geneva, health officials customarily represented their governments.  Health officials at the FCTC could address health issues.  Health officials, however, were not best equipped to address issues such as illicit trade, smuggling and diversion.  What the United States was doing through the Conference was bringing together experts from the law enforcement, customs and revenue community to identify best practices.  At the end of the Conference, a report would be delivered to the FCTC negotiating body at its next meeting in October in Geneva.  At that meeting, delegates could consider whether best practices were viable and should be introduced in the Convention.  The Conference was indirectly related to health in that it would try to create an environment that ensured that public health policies were not undermined by illicit trade.

What was the rationale for inviting tobacco companies to the Conference? a correspondent asked.  The Conference would be open and transparent, Ms. Kiernan said.  It would bring together diverse elements such as law enforcement, non-governmental organizations, government agencies and the WHO to develop best practices and to help to ensure that revenue was collected and not diverted to terrorist and criminal organizations. 

Mr. Tobiassen said the issue involved many stakeholders and interested parties.  Fundamental fairness required that it be an open invitation.  While ATF had not specifically invited the tobacco industry and non-governmental organizations, it had given an open invitation to any interested party to participate. 

Asked to address the link between cigarette smuggling and the funding of terrorism, Mr. Bell said that in regard to United States v. Hammoud, there was a tie between smuggling of cigarettes from North Carolina to Michigan and the funding of Hezbollah.  Ten defendants had been charged with racketeering and conspiracy, the purpose of which was to provide funds to Hezbollah.  Two of the

10 defendants were specifically convicted of providing material support and resources to Hezbollah -- a designated foreign terrorist organization.  How much money, he could not say.  Hundreds of thousands -- if not millions -- of dollars in profits had been made from cigarette smuggling.  At least tens of thousands of dollars went to Hezbollah out of that.  It was a significant problem.  While the major point of the criminal organization was to enrich itself, a substantial portion went to a terrorist organization.

The ATF currently had some 500 investigations open across the country that were looking at the illegal diversion of tobacco, Ms. Kiernan said.

Mr. Domenech said further questions could be addressed to ATF press relations representatives in New York by contacting the Washington, D.C., Office at (202) 927-8500.