Track and trace (T&T) technology is becoming a staple in many industries. Most recently, international diamond producer De Beers unveiled a pilot initiative utilising T&T technologies to digitally monitor diamonds as they make their way from the mines to the international market. The move is expected to be a game changer, setting a precedent for the reform of supply chains the world over.
Measured by the value of its gems, De Beers is the world’s largest diamond producer. Therefore, ensuring the ethical sourcing of the company’s stones is critical to securing consumer confidence.
The stakes are high, since to fail in this regard would cause another massive international scandal of which De Beers has had many. Yet De Beers is far from alone in realising the advantages of emerging T&T technology. In fact, the range of applications across various industries is practically endless. In August last year, IBM announced a collaboration with a number of food suppliers in a bid to track contaminated food and intervene before the sale stage. Major wholesalers Dole, Golden State Foods, Kroger, McCormick and Company, Nestlé, Tyson Foods, Unilever and Walmart have all signed on to the initiative.
In healthcare, track and trace has the potential to be lifesaving. For example, challenges in international supply chain management mean some 50% of vaccines are spoiled resulting from disruptions in the cold chain before reaching desperate patients or frustrated doctors.
New capacity for end-to-end traceability turns the product timeline on its head, dramatically improving access to working vaccines where they are needed most.
De Beers’ proactive move is a strategic one, a lesson learned in ethical consumerism after revamping its image as one of the most-hated companies in an industry notorious for human and environmental degradation.
But as T&T becomes the gold standard for quality, as well as ethical and legal guarantees across a range of markets, there is one industry resolutely refusing to play ball: Big Tobacco. After decades of manipulating public opinion and fighting tooth and nail to delay lawmakers, after millions of lives destroyed by smoking’s harmful effects and billions spent on dishonest advertising campaigns, Big Tobacco is embarking on its most audacious gambit yet: legalizing the cigarette smuggling trade.
And is using European regulations mandating the implementation of track and trace to achieve it.
Pretending to track without tracing
The illicit trade in cigarettes has taken a costly toll on public finances, with governments worldwide losing $40 billion in annual revenues. Add to the equation the numerous public health challenges and connections to organised crime that the trade engenders and it’s easy to understand why international action under the aegis of the World Health Organization was needed to address the issue. After having ratified the Framework Convention on Tobacco Control (FCTC) in 2005, and its first protocol to eliminate the illicit tobacco trade in 2016, the EU is now seeking to introduce a tracking system to combat region-wide cigarette smuggling.
Data shows that the bulk of smuggling occurs via packs produced by companies in partnership with some of the major producers themselves, including British American Tobacco (BAT), Philip Morris, Japan Tobacco and Imperial. These “illicit whites” are cigarettes that are legally produced but illegally distributed. For instance, between 2007 and 2012, Imperial Tobacco cigarettes were the most prominent “illicit white” cigarette seized in the EU. This should not come as a surprise, seeing how Big Tobacco has long been complicit in the illicit (or parallel) cigarette trade.
A prime example is BAT, which in 2014 was fined £650,000 by HM Revenue and Customs for flooding the Belgian market in a bid to divert products to the UK.
BAT pled its own innocence, citing the impossibility of tracking products once delivered into the hands of consumers. Sadly, this was not even the first time. In 2000, the company was found to have “condoned tax evasion and exploited the smuggling of billions of cigarettes to boost sales”, knowing they would be traded on the black market.
With such duplicity, it is easy to understand why cigarette manufacturers are staunchly promoting an industry-controlled T&T system, rather than an independently developed and monitored one.The aim is to preserve profits from tax evasion, and to ensure that when products are seized by authorities, the tobacco industry alone will be in a position to authenticate them.
Through active lobbying, the industry managed to soften the European Commission’s plans for T&T just enough to make their own system, Codentify, partially eligible. Never mind that Codentify blatantly violates FCTC provisions due to control and transparency obstacles. The FCTC aims to establish a global tracking system of the worldwide cigarette supply chain and specifies that any tracking system has to be controlled independently of the industry. Developed by Philip Morris International (PMI), Codentify fails on all accounts. Intent on pushing Codentify through at all cost, industry spokespeople were quick to point out the system’s supposed newfound compliance with FCTC transparency requirements after it was sold to Lausanne-registered firm Inexto – despite its registered address being a short drive from the PMI headquarters.
Only the European Parliament could put an end to this charade. Indeed, the EP will soon be asked to validate the last set of rules published by the Commission. One MEP, Younous Omarjee, has recently tabled a motion to oppose the system, which will be voted on by the environmental and public health committee on February 20th.
Emerging track and trace technology is paving the way forward for better consumer protection in a host of industries. The fact that De Beers, as the leader in the diamond industry, has jumped at this development should be a wake-up call for industries and businesses the world over. However, the tobacco industry is still bent on prioritising illicit profits over consumer well-being.
Worse still, the fact that tobacco firms are complicit in smuggling their own goods in a bid to evade taxes and public health restrictions means that the fight to reform industry-wide tracking measures is set to be a protracted one.
