JTI Signs Agreement to Combat Illegal Trade

Source from:  tr.itsmyiq.com Dec 17, 2007 12/18/2007

JT International (JTI) said today that it had signed a 15-year agreement with the European Commission and 26 member states of the EU that defined how they intended to co-operate in combating the illegal trade of cigarettes. The agreement calls for JTI to pay $400 million over 15 years to the Commission and participating member states for use in 'additional support' for anti-contraband and anti-counterfeit initiatives. And it precludes the bringing of lawsuits against JTI for civil claims arising out of alleged past conduct related to the illicit trade in cigarettes. The UK seems to be the only member state – the EU has 27 member states – not to have signed the agreement. "The fight against cigarette smuggling and counterfeiting is an important business priority for JTI," said Pierre de Labouchere, JTI's president and CEO. "Combining the resources and co-ordinating the efforts of both government and business is the only solution," he explained. In a press note posted on its website, JTI said that last year nearly five billion contraband cigarettes were seized within the EU and that this figure represented only what had been reported. The figure for seizures of counterfeit cigarettes was estimated to represent about 65 per cent of that total. 'The World Customs Organization (WCO) estimates that Europe as a whole accounts for 75 per cent of total cigarettes seized in the world,' the press note said. 'While a precise figure for counterfeit cigarettes is difficult to establish, it is clear that the production of fake cigarettes has increased dramatically over the last three years.' "This massive, sophisticated global business penalizes our legitimate customers and our consumers, who sometimes don't get what they pay for, while depriving governments of legitimate revenues," continued de Labouchere. The agreement is said to build upon a number of JTI initiatives that have been implemented over the years. Under its terms, the company will maintain and expand its current internal compliance programs that address the manufacture, sale, distribution and storage of cigarettes; it will facilitate investigations of reported breaches and suspicious transactions; continue JTI's certification of contractors and customers while ensuring transparent payment procedures for all transactions. Further, the agreement is said to provide for clear processes around seizures and close co-operation with the Commission, the European anti-fraud office and the law enforcement authorities of member states. 'In the field of tracking & tracing (T&T), where tools and solutions are rapidly emerging, JTI has taken a very methodical approach in identifying an optimal solution that is beneficial to all concerned parties,' JTI said in its press note. 'The company's initial goals are to be in a position to label master cases of cigarettes in a manner which will allow government officials to easily obtain key information relating to the manufacture, storage and sales of its products. In a second phase, JTI will extend markings to cartons – and if appropriate to packs. In the event products are diverted into the illegal market, a viable T&T solution will enable JTI and governments to co-operate more closely in getting to the source of such diversions and take immediate corrective actions.' The agreement's framework and timetable have been established so as to include the former Gallaher, which was acquired by JTI in April. Enditem