GENEVA (AP) -- Nations have crafted a draft treaty to fight a booming trade in illicit tobacco products that's costing governments as much as $50 billion a year in lost tax revenue, officials said Wednesday.
After four years of negotiations, U.N. officials said, some 136 nations ended those talks with a consensus draft agreement to crack down on tobacco smuggling. But there are notable holdouts to the negotiations — the United States, Indonesia and more than a dozen other nations — where the treaty would have no effect.
No one — even a major tobacco maker that says it supports the crack down called for in the new agreement — disputes the severity of the problem.
"The illicit trade is 90 percent more than what we're catching," said Ian Walton-George, a former European anti-fraud official who headed the international negotiations. "But those are finger-in-the-air estimates. Nobody really knows."
On Tuesday, Luxembourg customs authorities seized 38 tons of counterfeit cigarettes being flown into the European Union, likely from Dubai, officials said. The seized cigarettes — more than 25 million of them — were fake Palaces, a brand long targeted by counterfeiters and discontinued by its manufacturer.
The draft agreement sets new rules for controlling the global supply chain for tobacco such as requiring licensing of producers, brokers and warehouse keepers, said Walton-George, now a special adviser for the European Commission. He said it also would create a global tracking and tracing system for shipments.
It is to be taken up by 174 member nations in the U.N.'s World Health Organization when they meet in Seoul, South Korea, on Nov. 12-17.
"This is really a major public health step," said Dr. Haik Nikogosian, head of a global treaty to control tobacco, of which the new draft agreement would be part. The umbrella treaty — considered the world's first for a global public health issue — is administered by the Geneva-based U.N. health agency.
A Geneva-based alliance representing 350 groups that support stricter controls on tobacco said the draft agreement would help raise government taxes that could be used to further their cause. Poorer countries tend to lose more potential tax revenue to illicit trade in cigarettes, the Framework Convention Alliance said, which also undermines attempts to reduce tobacco consumption through price increases — the most effective way of curbing tobacco use.
"The illicit trade in tobacco feeds the worldwide tobacco epidemic by flooding markets with cheap products," said Paula Johns, who chairs the global alliance.
Nikogosian said tobacco companies, which were excluded from the negotiations, also generally opposed the efforts as more bureaucratic red tape and regulation. Walton-George said negotiators believed tobacco companies shouldn't have been given "any opportunity to influence this."
Public health activists claimed a measure of victory nonetheless in the fight against an illicit trade that WHO has estimated is taking away up to $50 billion a year in lost tax revenue from governments around the world.
John Stewart, an organizer for the advocacy group Corporate Accountability International, said negotiators representing their countries showed "huge resolve in terms of international cooperation to take on Big Tobacco" companies that fought hard against the negotiations.
But the companies also lose out to the illicit trade, the officials said.
British American Tobacco, the London-based maker of Lucky Strike, Pall Mall, Dunhill and other well-known cigarette brands, said companies were excluded from negotiations, but it disputed that the tobacco industry opposed a new treaty.
"We firmly believe that the only way to stop these smugglers, counterfeiters and tax evaders — who have links to weapons, drugs, people trafficking and organized crime — is for regulators, law enforcement authorities and the tobacco industry to work together," said BAT spokesperson Kate Matrunola.
She said the illicit trade in tobacco products that are counterfeit or don't conform to regulation and are smuggled across borders "damages our business, as well as government revenues, and we want to do everything we can to prevent it."
Most of the smuggling is undertaken by well-funded organized groups, Walton-George said, adding that even old mines are used as hiding places to make illicit tobacco products.
"It's the organized crime that's the real problem," he said. "It's 40-foot (12-meter) container loads of cigarettes that are being smuggled. You need an organization to do that."