Looking back over the year that was, three key developments stand out from the rest, as captured in this article.
2023 saw a bit of a surge in countries moving to introduce tax stamps and/or traceability systems for the first time, with some countries doing it, in part, to comply with the WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products. These ‘first time’ countries included Gambia, Lebanon, Angola, and Ethiopia.
As far as the 68 parties to the FCTC Protocol were concerned, though, as at September 2023, only slightly more than half of them had implemented track and trace systems, despite the fact that the deadline for doing this was… September 2023.
The main reason for the delay, as reported by Luk Joossens of Smoke Free Partnership, was that parties in the low and middle-income category (of which there are 24) were struggling with implementation, and that more technical assistance and financial resources were therefore needed to support these parties.
Luk also raised the concern that while most existing track and trace systems worked well at domestic level, they generally excluded the export market. This created massive gaps where unmarked, unmonitored products could be easily diverted into illicit channels. It was therefore going to be crucial for countries to extend their national tracking and tracing schemes to exports.
One example this year of how the ‘trending’ theme of sustainability was starting to seep into the authentication and traceability world, related to cannabis seed-to-sale tracking tags.
At the beginning of 2023, we reported that Metrc had launched paper-based, sustainable RFID tags to replace the current plastic ones. Following a pilot programme, the company was expecting to officially launch the tag in 2023, with a complete transition planned for 2024.
This initiative certainly didn’t come too soon, as we later heard that one of Metrc’s main clients, the state of California, had approved a bill to eliminate single-use plastic RFID tags.
Another ‘green’ influencer was the EU Digital Product Passport (DPP) directive, which started out life as a ‘battery passport’. While priority products to be attached with DPPs are batteries, textiles, and electronics, the idea is to extend them to most European products by 2030.
DPPs effectively consist of a unique 2D barcode linked to an online database. While their primary use is for sustainability and to enable a circular economy, TSTN contributor Alan Hodgson observed that DPPs rather resembled what we are doing in the tax stamp and traceability industry, which could run the risk of an overlap, with one system potentially displacing the other.
The concern here is that DPP legislation lacks provisions for ensuring the security of the 2D barcode against acts of cloning – which would not work for excisable products. Because of this and other issues, Alan advised our industry to keep a close eye on the progress of DPPs, and view them as both an opportunity and a threat.
In 2023, the ISO 22382 guidance standard for excise tax stamps came up for review. Ahead of this formal process, project leader Ian Lancaster spoke to revenue agencies and suppliers to learn their thoughts on the standard. This is what they had to say:
The standard needs to reflect technological advances in digital security printing, direct marking, integration with track and trace, the smartphone/network interface, unclonable functions and digital seals.
It needs to consider how emerging standards, including the EU DPP, might relate to tax stamps.
The word ‘excise’ should be removed from the title of the standard, because stamps are now also used for non-excise goods.
The current standard is too technically detailed and needs to focus more on high-level matters, with technical aspects moved to an annexe.
More specific guidance on different grades of security features are needed.
The drafting of the new standard will continue throughout 2024.
On behalf of Reconnaissance International, I would like to sincerely thank readers of Tax Stamp & Traceability News™ for their continued support of this unique newsletter. I wish you all the very best for a wonderful festive season and a happy and successful new year.
Nicola Sudan, Editor
