FDFA Sponsors Meeting on “The WHO and Duty Free” -
Protocol on eliminating the illicit trade in tobacco products
The World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) was agreed in 2003 and came into effect in February 2005. Canada is a signatory to FCTC. Article 6 on reducing demand for tobacco products includes a clause allowing parties to restrict or prohibit duty free tobacco sales and/or allowance, but is non-obligatory. To date, no country has banned duty free tobacco sales and only a few restrict allowances.
In 2007, the WHO set up an Intergovernmental Negotiating Body (INB) to develop protocols on eliminating the illicit trade in tobacco products. At the second meeting of INB (INB2) in October 2008, tobacco control advocates lobbied for the prohibition of all duty free tobacco sales alleging sales contribute to illicit trade. INB3 will take place in June of this year in Geneva. The Chair’s draft text for consideration, published on April 23, 2009 reads as follows:
“Each party shall, within three years of the entry into force of this Protocol for that Party, implement effective measures to prohibit any tax, regulatory or other advantages that apply in free-trade areas from applying to tobacco, tobacco products or manufacturing equipment used in the manufacture of tobacco products, including tax-reduced and duty-free sales to individual customer.”
On April 27, 2009 the FDFA sponsored a meeting in Ottawa to discuss the implications of INB3 and to develop strategies for responding. Keith Spinks, Secretary General of the European Travel Retail Council (ETRC) attended and made a presentation on the current status of INB3, including their recommendation that the Canadian duty free industry take immediate action to meet with government representatives on this matter. Laurie Karson, Peter Brain and Gar Knutson (GR Consultant) attended on behalf of the FDFA. Also attending were Andre Bergeron on behalf of ACADFO (Association of Canadian Airport Duty Free Operators), and representatives of Nuance, Aer Rianta and Aldeasa Duty Free.
As a first step in responding to this issue, the FDFA is working with ACADFO to arrange meetings with Canadian delegates to INB3 before they attend the June WHO meeting. In addition to trying to determine the Canadian government’s current position on this, we will be making them aware of how the Canadian duty free industry operates, and noting the following key arguments outlined by ETRC (custom tailored for the Canadian situation):
- Duty Free in Canada is one of the most controlled retail environments.
- Shop operators are reputable companies, that selected, licensed and thoroughly monitored by the government of Canada.
- To suggest that such companies are associated with criminal activity by signing on to the INB3 draft wording is ridiculous and does not deserve consideration.
- If there are grounds for such allegations in certain countries, this is a matter for national regulatory authorities and is not justification for a global ban on duty free sales.
The FDFA Board will provide further updates to members on this important matter, as information becomes available.