Tobacco lobby and smugling in Mexico

In May 2004, Mexico ratified the Framework Agreement on Tobacco Control (CMTC). Today, 14 years later, anti-smoking public policies in the country remain on stand-by. Español

Guadalupe de la Torre
21 November 2018

Image: Wikimedia Commons. Public Domain.

While Mexican authorities pretend to be complying with the international treaty promoted by the World Health Organization, very little has actually been done to meet two fundamental principles of the agreement: the reduction of tobacco consumption and exposure to smoke. 

The most recent example of this inaction is the system of security codes implemented by the Tax Administration Service (SAT) to mark cigarette packs, behind which lurks the influence of the tobacco industry – a system that it is feared could repeat the story of Codentify, the self-regulating code system created by Philip Morris International. 

This shows that, in recent years, the steps taken by Mexican authorities to address tobacco-related problems have been far less than those taken by industry leaders to sidestep them. 

The figures do nothing but demonstrate the ineffectiveness of the anti-smoking measures implemented in recent years in Mexico. 

According to the latest estimates, the market share of the illicit trade in cigarettes in the country is 17%. This amounts to 6 billion pesos which are lost annually in tax evasion. 

In addition, it should be noted that after the passing of the General Law for Tobacco Control in 2008, the number of smokers in Mexico increased to 17 million.

This clearly contradicts the CMTC and the Illicit Trade in Tobacco Protocol, as it authorizes the tobacco industry to print its own codes and, therefore, to self-regulate.

To be noted too that according to a study by the University of Bath, two thirds of the cigarettes in the black market worldwide come from the tobacco companies themselves, thus confirming the role of the tobacco industry in tobacco smuggling. The figures clearly describe each actor’s role in this framework.

The examples showing the influence of the tobacco industry on public policies in Mexico are plentiful. 

One of the most salient cases is the interference of tobacco companies in the Chamber of Deputies to regulate harmful products.

It should be acknowledged that a Philip Morris representative was invited to participate in the Forum on Electronic Cigarettes and New Products Regulation in March, even though the participation of an industry leader in a debate in the Chamber of Deputies goes against the CMTC as it contravenes Article 5.3 of the agreement (which states that those ratifying the treaty must act to protect "public health policies against commercial interests created for the tobacco industry"). This is not, unfortunately, the only way in which Mexico is breaching the treaty.

In order to understand the strategy of the tobacco industry, it is enough to look into the question of the safety codes on the cigarette packs. 

The new measure arose from the Special Tax on Production and Services Bill (IEPS), which stipulates that producers, manufacturers and importers of cigars and other processed tobacco products should print a security code on each of the packs sold in Mexico. 

This security code not only allows consumers to check through an app the origin of the packs they purchase, but it also allows the SAT to track the products and obtain accurate information on the production to compare it with what has been declared. 

In this vein, the SAT can verify that the collection of taxes coincides with the declared levels of production and marketing. In theory, this is how the system should work. In practice, however, things are not so transparent.

At first sight, the news of the implementation of the security codes was welcomed by public opinion – that is, until the general administrator of the SAT Taxpayer Services, María Vanessa Rivadeneyra Navarro, announced that the tobacco companies are the ones in charge of printing the codes. 

This clearly contradicts the CMTC and the Illicit Trade in Tobacco Protocol, as it authorizes the tobacco industry to print its own codes and, therefore, to self-regulate. 

History seems to repeat itself, for it is not the first time that the tobacco companies manage to control the code system. In 2010, Philip Morris International (PMI) created its own system, Codentify, which is surprisingly similar to the system used in Mexico.

Although Codentify was created by PMI, the company decided to give its license free to three of its competitors. 

Together they began to exert pressure so that, worldwide, different governments adopted this system as a global tobacco tracking method.

Under another name, but under similar conditions, the code system shows that Mexico is still not facing up to  illicit trade. So, tax money is still being lost and contraband figures continue to grow.

This meant, in fact, total control by the tobacco companies over the process of traceability of tobacco products, which is something that should be strictly restricted to independent bodies.

Unfortunately, it seems that this pressure by the industry had an effect in Mexico, where the characteristics of the current code system are dangerously close to Codentify’s. 

In practice, this would give the tobacco companies secret access to controlling and manipulating information regarding the illicit tobacco trade which, it should be remembered, originates mostly from the tobacco companies themselves. 

By endorsing these practices, the Mexican authorities would be acting in breach of international norms and encouraging the problem they are presumably striving to end.

As the saying goes, not everything that glitters is gold. And behind the Mexican authorities’ flaunting of their allegedly innovative model, there lies a corrupt system. 

Under another name, but under similar conditions, the code system shows that Mexico is still not facing up to  illicit trade. So, tax money is still being lost and contraband figures continue to grow. 

Just looking at the figures is enough to realize that the make-up attempts have not paid off. Meanwhile, the tobacco lobby strolls through the corridors of the San Lázaro Palace, where Congress meets, knowing full well that they can still influence the authorities and continue to control Mexican anti-smoking policy.

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