South Africa signed the World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC) on 16 June 2003 and subsequently ratified it on 19 April 2005. At the national level, this international instrument is given effect through the Tobacco Products Control Amendment Act 63 of 2008.
 
The FCTC reaffirms the right of all people to the highest standard of health; hence South Africa’s Department of Health is considered the lead government agency on the FCTC and related matters. FCTC Parties may also establish Protocols aimed at supporting and giving effect to various provisions of the Framework Convention.  
After four years of negotiations, on 4 April 2012 the WHO’s Intergovernmental Negotiating Body (INB) agreed on the draft text of a Protocol to eliminate illicit trade in tobacco products, in support of Article 15 of the FCTC, at its fifth and final session in Geneva. A key feature is the role of international cooperation between Customs and other law enforcement agencies in combating illicit trade.
 
The text will be submitted to the FCTC Conference of the Parties (COP) at its fifth session in Seoul, Republic of Korea, in November 2012 for consideration and adoption. Once adopted, the Protocol – a new international treaty in itself – would become the first Protocol to the WHO FCTC.
 
To facilitate its preparations, South Africa established a national inter-departmental Working Group as a mechanism through which the country has been working towards implementing the FCTC and ensuring a coordinated national approach to related matters, such as the negotiation and implementation of FCTC Protocols.
 
The Working Group is led by the Department of Health and includes officials from the National Treasury for the financial implications, the Department of Trade and Industry to support policy determination and the South African Revenue Service (SARS) to focus on relevant Customs and Excise activities and controls.
 
As the frontline agency responsible for combating illicit trade, SARS is impacted directly by the FCTC and the draft Protocol. SARS has accordingly incorporated tobacco/illicit cigarettes as a focus area in both its Strategic Plan for 2012/13-2016/17 and the newly released SARS Compliance Programme.
 
SARS’s Tobacco Strategy that had been developed to combat, inter alia, the illicit trade in tobacco products, has also been adopted as the agreed approach by the country’s inter-departmental Working Group to address this challenge. The draft Protocol requirements on ‘Due diligence’ (Article 7) are already in place and SARS is the designated authority, also acting as an agent for the Health Department in administering the Tobacco Products Control Amendment Act.
 
The principles of the newly established SARS Preferred Trader programme, which is a foundation for full Authorized Economic Operator (AEO) implementation, are being extended to include excise manufacturing licensees. SARS has prioritized the tobacco industry to pilot the envisaged Excise Preferred Trader scheme.
 
On ‘Tracking and tracing’ (Article 8), SARS is reviewing the requirements of its current system, which involves the use of a so-called ‘Diamond Stamp’ to identify legitimately manufactured cigarettes. It is being aligned with a digital marking and verification system, in order to secure the supply chain against illicit trade in tobacco products. This systems overhaul will also meet the requirements insofar as ‘Record-keeping’ (article 9) is concerned. The SARS excise environment area will adopt a completely paperless principle; implementing existing Customs EDI and SARS E@syfile front-end solutions. SARS has already developed standards and concepts in this regard and has engaged service providers to collaborate on a possible solution.
 
Meeting the requirements around ‘Security and preventive measures’ (Article 10) will be achieved through the new Automated Cargo Management system (ACM) and the envisaged transit management system, which will serve to greatly minimize risk on an automated basis, supported by Customs and Excise legislation.
 
These systems will also support implementation of the South African Financial Intelligence Centre Act, 2001 in order to maintain an effective policy and compliance framework and operational capacity to oversee compliance and provide high quality, financial intelligence to fight crime, money laundering and terrorist financing.
 
Although there are existing transit controls, the new ACM and transit management system will also strengthen SARS’s capability to meet the requirements established for ‘Free Zones and international transit’ (Article 12). Stringent requirements are also in place in South Africa with regard to ‘Duty-free sales’ (Article 13), with such sales being permitted only for transit (in bond) or for export, through duty-free shops on exit and ship chandlers.
The main objective of the Protocol is to provide a global solution to the global problem of illicit trade in tobacco products. SARS is confident that coordinated efforts among relevant agencies in South Africa have ensured its timely preparedness for the implementation of the Protocol.
More information: LebepeN@dirco.gov.za