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Global deal agreed to fight tobacco smuggling

By Jack Kim

SEOUL (Reuters) - Global health officials agreed a deal on Monday to fight smuggling of tobacco products, a trade which robs governments of more than $40 billion in revenue each year and undercuts efforts to reduce smoking.

The measures include making it mandatory for member governments to license manufacturers and for tobacco packaging to be marked so the products can be tracked.

The agreement came at a meeting of the 176 member states to the World Health Organisation (WHO)'s Framework Convention on Tobacco Control in the South Korean capital Seoul and follows more than five years of negotiations.

"The protocol gives the world an orderly, rules-based instrument for countering and eventually eliminating a very sophisticated international criminal activity," WHO Director General Margaret Chan told the conference.

"Illicit trade is bad for health because it circumvents measures like taxes and price increases that are known to reduce demand."

Roughly one in 10 cigarettes, or 600 billion, are smuggled each year by organized gangs, experts say.

A study by the independent non-profit International Tax and Investment Center based in Washington said approximately 11 percent of the world cigarette market is illicit, resulting in annual loss in government revenue of more than $40 billion.

"There is evidence that the proceeds of the illicit trade in tobacco products funds both international criminal organizations

A network of civil society groups, the Framework Convention Alliance, called to pact a major step in curbing the illegal trade in tobacco products.

"The illicit trade in tobacco feeds the worldwide tobacco epidemic by flooding markets with cheap products and keeping tobacco taxes low," it said.

However, some countries where major tobacco companies are based, notably the United States, will not be subject to the anti-smuggling agreement because they have not ratified the original pact.

Industry giants Philip Morris International and British American Tobacco have previously said they would back a pact with effective measures against illicit trade.

(Editing by Jonathan Thatcher)

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