Chemicals play two essential roles in the production of illegal drugs: as active chemical inputs for the production of synthetic drugs such as methamphetamine and MDMA (3,4-methylenedioxmethamphetamine or Ecstasy); and as refining agents and solvents for processing plant-based materials such as coca and opium into finished drugs such as cocaine and heroin. Active chemical ingredients used in synthetic drugs are known as “precursor” chemicals due to the fact that they become part of the finished drug, whereas chemicals used to process plant-based drugs are referred to as “essential” chemicals. As a form of shorthand, both sets of chemicals are often referred to as “precursor chemicals,” and for the sake of brevity, this term is used interchangeably for both categories throughout this report.
Efforts by the United States and other nations to prevent diversion of precursor and essential chemicals reached unprecedented levels in 2008. Theses efforts built on a variety of bilateral, regional and multilateral mechanisms, such as the United Nations and the Organization of American States.
Reporting from a variety of sources, including the press and the United Nations, indicate that the global abuse of amphetamines may have stabilized, including in the United States. Nevertheless, production of methamphetamine remains unacceptably high, and the potential remains for abuse rates to increase again. The United States, working with Mexico, has sought to target methamphetamine production in this hemisphere through both bilateral enforcement efforts, as well as multilateral cooperation, including through the United Nations—and through the Organization of American States drug coordinating body (known as CICAD). Such efforts have included raising awareness of the issue to promote internal changes to target diversion and smuggling efforts, as well as coordination of information sharing to facilitate operations preventing or stopping diversion and/or smuggling.
In 2008 Mexican authorities enacted both legislative and administrative changes to counter the shift from small-scale methamphetamine producers within the United States to large “super-labs” in Mexico. This pattern evolved in part due to effective US domestic controls over the retail sale of licit pharmaceutical preparations containing ephedrine and pseudoephedrine, the primary chemicals necessary for methamphetamine. Regulations for the sale of such products in the U.S. became effective at the national level for the first time in late 2006 under the Combat Methamphetamine Epidemic Act (CMEA) and a quota system came into place in 2008.
The U.S. Government enhanced law enforcement cooperation with the Government of Mexico to target the production and trafficking of methamphetamine. For its part, the Government of Mexico continued to demonstrate political commitment towards stemming the illicit diversion of chemicals required for methamphetamine production. The Government of Mexico determined in September of 2007 that it would issue no further licenses for the importation of any amount of ephedrine, pseudoephedrine, and any product containing these chemicals. Sellers of ephedrine and pseudoephedrine products are required to deplete stores of products containing these chemicals by 2009, after which the use of these products will be illegal in Mexico.
The United States, in partnership with Mexico and the governments of Central America, Haiti and the Dominican Republic has developed a comprehensive, multi-year law enforcement cooperation strategy known as the “Merida Initiative.” The Merida Initiative will strengthen the institutional capabilities of the participating governments by supporting efforts to investigate, sanction and prevent corruption within law enforcement agencies facilitating the transfer of critical law enforcement investigative information within and between regional governments; and funding equipment purchases, training, community policing and economic and social development programs. This will help improve our partners’ ability to interdict methamphetamine and other illegal drugs, disrupt methamphetamine production and strengthen their ability to attack drug trafficking organizations controlling the trade. Also included in the Merida Initiative is assistance to enhance border controls in Mexico’s Central American neighbors, to prevent increased smuggling of precursor chemicals from Central America into Mexico—a trend that we believe is accelerating given the ban on ephedrine and pseudoephedrine imports into Mexico.
Fearing an influx of methamphetamine production and smuggling, several Central American countries have taken regulatory action or are considering legislation and stepped up surveillance and monitoring of these chemicals. For instance, Nicaragua added all pharmaceutical preparations containing ephedrine and pseudoephedrine to its list of controlled substances. Honduras is seeking to adopt legislation to control all pharmaceutical preparations containing ephedrine and pseudoephedrine through prescriptions. And in Belize, the Minister responsible for Supplies Control enacted a statutory instrument prohibiting the bulk importation of pseudoephedrine and ephedrine.
In 2008, Australia also enacted tighter controls over ephedrine and pseudoephedrine and South Africa amended legislation to control these substances.
Chemical control figures prominently in the year long review of review of commitments made at the 1998 UN General Assembly Special Session on drugs. Against this backdrop, the United States is seeking to further engage other Member States in targeting the chemicals used to produce narcotic drugs and psychotropic substances. In 2008, efforts by the United States to engage the United Nations and the International Narcotics Control Board (INCB) more actively on chemical control yielded significant seizures and the provision of information on methamphetamine and other synthetic drugs. International regulatory efforts to track the commercial flow of precursor chemicals were also given a boost. The United States promoted efforts to build on the 2007 Operation Crystal Flow, which focused on monitoring the shipment of precursor chemicals between the Americas, Africa, and West Asia and identified 35 suspicious shipments and stopped the diversion of 53 tons of precursor chemicals.
In 2008, the United States joined with international partners to bring new focus on precursor chemical trafficking. Specifically, under the INCB Task Force Project Prism, 54 countries participated in a time-bound operation, Ice Block, to prevent precursor chemicals from being diverted into the manufacture of illicit amphetamine-type stimulants. The results of this nine-month operation developed information on 2,057 transactions and led to 49 tons of ephedrine and pseudoephedrine suspended, stopped or seized.
These efforts are a product of a 2006 Commission on Narcotic Drugs (CND) resolution that requested governments to provide an annual estimate of licit precursor requirements and to track the export and import of such precursors, and a 2007 CND resolution to strengthen controls on pseudoephedrine derivatives and other precursor alternatives. The INCB Secretariat’s program to monitor licit shipments of precursor chemicals was further strengthened by the availability of the national licit estimates, which were provided by over 100 countries and territories. The INCB is using these estimates to evaluate whether a chemical shipment appears to exceed legitimate commercial needs, and also is using this data to work with the relevant countries that can block shipments of chemicals before they are diverted to methamphetamine production. The online Pre-export Notification System (PEN) is a critical tool in this regard. The United States will continue to urge countries that have not provided such commercial data to the INCB to do so, and consider providing technical assistance through the INCB to states that currently lack the technical expertise to develop national estimates.
Combating the supply of methamphetamine is critical, but chemical control is much broader than methamphetamine and other synthetic drugs. In 2008, the United States joined with international partners to bring new focus on precursor chemical trafficking through and around Afghanistan and its neighbors—the source of 93% of the world’s opium poppy, and the location of an increasingly high percentage of heroin production.
International seizures of heroin-producing chemicals had waned over the last few years, and the United States sought to reverse this drift in focus by increasing international attention to the issue in 2008. The United States joined with other nations to secure the adoption of Security Council resolution 1817/2008 that focuses on Afghanistan, and highlights the need for countries to cooperate in targeting trafficking in acetic anhydride used to produce heroin. Additionally, the United States gave strong support to Operation Dice (Data and Intelligence Collection and Exchange) under the INCB Task Force of Project Cohesion. The six-month operation filled in intelligence gaps related to the diversion of acetic anhydride and resulted in seizures, stopped shipments and identified suspicious consignments involving over 200 tons of heroin chemicals, including acetic anhydride and acetic acid.
Against this backdrop, the Government of Afghanistan recently informed the INCB that there is no legitimate use for acetic anhydride in Afghanistan and has indicated that it will not authorize any imports of the substance to their country.
Despite international efforts, the United States is keenly aware that drug trafficking organizations are increasingly adapting to the pressure from international cooperative efforts. And increasingly, specialized trafficking groups are splintering to fill a niche market and focus primarily as the middlemen supplying chemicals through smuggling or diversion efforts. Such efforts can be extremely profitable as the INCB-led Operation Crystal Flow indicated in 2007. Over 53 tons of ephedrine and pseudoephedrine were suspended, stopped, or seized and these chemicals were capable of producing approximately 48 tons of methamphetamine with an estimated street value of approximately $4.8 billion. Ddiversion from licit commerce, gray markets, and new smuggling routes are only a few ways drug trafficking organizations are adapting. There are signs that middlemen and traffickers are already exploiting new transshipment routes through Southeast Asia and Africa, to smuggle and divert chemicals. It also appears that in the past year, reflected to China’s efforts to tighten legislative and administrative efforts to monitor their legitimate chemical industry, traffickers have turned to India for their supply. Law enforcement information and intelligence resulting from 2008’s Operation Ice Block indicate that India is now the primary source of ephedrine and pseudoephedrine. There is also ample evidence that organized criminal groups ship currently uncontrolled chemical analogues and intermediates of ephedrine and pseudoephedrine for use in manufacturing illicit methamphetamine-type drugs. Alternative production methods instead of the predominant “ephedrine reduction” method is also a major concern. This issue has become a mainstream, high-priority of the United States and the international community, and we will continue to push for greater international activism to combat this threat in both bilateral and multilateral settings.
In addition to bilateral efforts, the U.S. will continue to encourage multilateral cooperation. The UNGASS review will provide opportunities to increasingly engage other Member States in cooperative efforts. Additionally, the United States will continue to work through the INCB, specifically following up on Operation Dice to target acetic anhydride. In South America, INCB’s Project Cohesion focuses on monitoring the imports of potassium permanganate to the cocaine processing areas. The lessons learned under Operation Dice and under Project Cohesion may provide further insights for targeting potassium permanganate, the most prevalent precursor chemical used to make cocaine. The U.S. is also considering additional ways in which it might increase cooperation with international chemical producers and transporters in the private sector in order to promote effective diversion-prevention practices.
Precursors and Essential Chemicals
Plant-based drugs such as cocaine and heroin require precursor chemicals for processing, and cutting off supply of these chemicals is critical to U.S. drug control strategy. International efforts have a longer track record in targeting the illicit diversion of the most common precursors for cocaine and heroin—potassium permanganate and acetic anhydride, respectively. Less than 1 percent of worldwide licit commercial use of these chemicals is required to produce the world’s supply of cocaine and heroin, and curbing supplies is an enormous challenge.
International Regulatory Framework for Chemical Control
Preventing the diversion of precursor chemicals from legitimate trade is one of the key goals of the 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Specifically, state parties are required under article 12 of the 1988 Convention to monitor international trade in chemicals listed under Tables I and II of the Convention. These tables of chemicals have been regularly updated to account for evolutions in the manufacture of illicit drugs, and state parties are required to share information with one another and with the International Narcotics Control Board (INCB) on international transactions involving these chemicals. The Convention further encourages state parties to license all persons and enterprises involved in the manufacture and distribution of listed chemicals, and subsequent resolutions from the UN Commission on Narcotic Drugs (CND)—the UN’s primary narcotic drug policy-making organ—have provided additional guidance to states on how to implement these obligations according to specific best practices. The underlying strategy is to closely monitor the trade in drug precursors and prevent transactions to suspicious customers.
In 1996, the U.S. supported a CND resolution that added a special monitoring list of chemicals that are not included in the Convention but for which substantial evidence exists of their use in illicit drug manufacture. Reporting requirements on these non-listed chemicals is voluntary under international law, but widely implemented in practice under INCB supervision. As with officially controlled chemicals listed in the Table I and II of the 1988 Convention, this special surveillance list is regularly updated to account for evolutions in drug production trends. Still, it takes time to get new near analogues of existing precursors listed and organized criminals vigorously exploit delays and gaps in the listings.
The regulatory framework codified by the United Nations is the most universally accepted and carries the broadest reach internationally, but it does not exist in isolation. Regional international bodies also have worked to complement the UN’s regulatory regime and implement its goals. In February 2004, the European Union (EU) enacted binding legislation to regulate chemical control monitoring between all of its 27 member states. External trade between the European Union and international actors has been similarly covered since January 2005. This EU legislation has been subsequently enhanced by additional implementing legislation, as well as by less formally-binding measures to promote voluntary cooperation with private industry to implement best-practices for preventing diversion. The United States and the EU have had an agreement in place to cooperate on chemical control issues since 1997, and policy coordination has taken place regularly through regular bilateral meetings alternating between Washington and Brussels. The EU also has actively collaborated with the U.S. on multilateral chemical control initiatives, including CND resolutions. The Organization of American States also is engaged on the issue of chemical control.
From the wide variety of chemicals that are needed for legitimate commercial and pharmaceutical purposes, a relatively small number also can be misused for the production of illegal drugs. Drug traffickers rarely produce these chemicals independently, as this would require advanced technical skills and a sophisticated infrastructure that would be difficult to conceal. Instead, criminals most often illegally divert the chemicals that they need from otherwise licit trade. Diversion from licit trade takes two main forms. First, the chemicals may be purchased from manufacturers or distributors. This can be done directly by traffickers or through unsuspecting or complicit third parties. Chemical producers also may be complicit in diversion schemes, but this is less frequent; most diversion takes place due to the ability of criminals to exploit gaps in the regulatory framework in place to monitor the trade in drug precursors and identify suspicious transactions. The supply chains for chemicals can be very complex, with several intermediary “traders” located between a manufacturer and an end user. This complex supply chain makes it more difficult for governments to pick the right point to intervene with regulatory control regimes and licensing.
International trade in precursor chemicals can be exploited by traffickers through a variety of means. Chemicals can be imported legally into drug-producing countries with official import permits and subsequently diverted—sometimes smuggled into neighboring drug-producing countries. Particularly in parts of the developing world, traffickers can simply pick the path of least resistance and arrange for chemicals to be shipped to countries where no viable regulatory systems exist for their control.
Criminals also employ stratagems to conceal their true identities and the controlled chemicals that they require. Often, traffickers conceal their identity by using front-companies or by misusing the names of well-known legitimate companies. They also may obtain chemicals by bribing or blackmailing the employees of legitimate companies, or by disguising the destination or nature of chemical shipments by mislabeling or re-packaging controlled chemicals as unregulated materials.
The second major form of diversion is through theft, from either storage or during transit. Criminals often have employed violence to steal chemical supplies. For example, in Mexico in July 2006, four guards were killed during a theft of 1,000 kilograms of ephedrine.Transshipment or smuggling from third countries into drug producing countries appears to be increasing, mainly in response to the increasing efforts of more countries to implement legislative and administrative controls to prevent diversion from legitimate commercial trade. Criminals also are taking greater advantage of finished pharmaceutical products by extracting their precursor chemical ingredients, particularly those containing pseudoephedrine, a key precursor for methamphetamine. Pharmaceutical preparations are not controlled by the 1988 UN Drug Control Convention, and can be traded internationally without being subject to the reporting requirements in place for raw or bulk chemicals.
2008 Chemical Diversion Control Trends and Initiatives
The United States continues to be at the forefront in promoting international chemical control efforts. The diffuse nature of the threat requires international cooperation and commitment, and to increase our impact, the United States continues to cooperate closely with other governments. The multilateral institutions that have long underpinned international drug control, principally the United Nations and its affiliated International Narcotics Control Board (INCB) are critical to this effort and strong allies. In 2008, the INCB coordinated several law enforcement operations that bore notable results.
The most significant INCB-coordinated operation was Operation Ice Block atime-bound voluntary operation focusing on the trade of ephedrine and pseudoephdrine, including pharmaceutical preparations and ephedra to shipments to the Americas, Africa, Oceania, and West Asia. The operation was designed in accordance with the CND resolution and was conducted over a nine-month period in order to gather intelligence on how the precursor for amphetamine-type stimulants (ATS) are being diverted into clandestine laboratory environments the links to trafficking organizations. Both regulatory and law enforcement authorities participated and the INCB was the focal point for exchanging information and the pre-export notifications (PEN online) served as a primary source of information. At the conclusion of the operation, participants met in New Delhi and agreed that the operation was successful in preventing precursor chemicals in the manufacture of illicit ATS and key drug traffickers.
With 54 participating countries more than 49 tons of ephedrine and pseudoephedrine--possibly capable of producing up to 44 tons of methamphetamine with a street value of $4.9 billion--were suspended, stopped, or seized. The operation revealed that many of the suspicious shipments were destined for Mexico. However, the operation also indicated a shift in the source of shipments from China to India. This shift may have resulted from new legislative and administrative efforts by China following last year’s INCB led operation Crystal Flow. Additionally, it was clear that Africa and Central America were increasingly used as transit points to the final sources in the Western Hemisphere. Portending even greater challenges for the future, traffickers appear to be seeking intermediates and non-controlled substances to circumvent controls.
As the source of 93% of the world’s opium poppy and location of an increasingly high percentage of heroin production, Afghanistan remains one of the world’s most challenging drug control environments on a variety of fronts, including precursor chemical control. Under the auspices of the INCB-led Task Force participants including the United States agreed to a time bound voluntary operation focussing on the exchange of information on seizures, identified diversion attempts and suspicious shipments of chemicals used in the illicit manufacture of heroin, particularly acetic anhydride. Operation Dice – Data and Intelligence Collection and Exchange involved exchanging information through the INCB Secretariat’s online PEN system over a six month period in 2008. These cases involved over 200,000 kg of chemicals from a range of countries in Europe, the Middle East and East Asia. The Operation was able to identify definite patterns of diversion and trafficking with a revelation of a number of unknown routings and source countries. It was also evident that heroin precursors are being smuggled as well as diverted from legitimate trade.
This operation emerged in coordination with several other efforts, including a political effort to engage the UN Security Council and to support the adoption of a resolution that focused on the need to target heroin production in Afghanistan, and raised the profile of target precursor chemicals used to produce heroin. This followed a series of meetings held in 2007/2008 by United Nations Office on Drugs and Crime (UNODC) under the Paris Pact law enforcement coordination mechanism to promote expanded international cooperation between law enforcement agencies active in border control through and around Afghanistan. At the operational law enforcement level, the INCB-coordinated law enforcement task force Project Cohesion continued to produce positive results in international law enforcement cooperation to seize smuggled shipments. Illicit smuggling of precursors in countries along Afghanistan’s opium supply chain remains a challenging problem due to widespread gaps in intelligence and limited specialized law enforcement expertise in detecting chemicals internationally. However, the United States and international partners have made substantial progress in developing an infrastructure capable of achieving future progress, particularly in the areas of sharing intelligence, promoting law enforcement cooperation and expanding regulatory expertise in the region. Other multilateral efforts in the region complement these initiatives.
The vast majority of illegal drugs entering the United States continue to originate from within the Western Hemisphere. Potassium permanganate is an oxidizer that has many legitimate industrial uses such as waste water treatment, disinfecting, and deodorizing. It is also the primary chemical precursor used in the production of cocaine. Its main illicit use is to remove the impurities from cocaine base. Potassium permanganate also can be combined with pseudoephedrine to produce methcathinone, a synthetic stimulant that is also a controlled substance.
In South America, the Project Cohesion Task Force focuses on monitoring the imports of potassium permanganate to the cocaine processing areas. In 2007 Project Cohesion Task Force, participants expressed concern over the paucity of information pertaining to the trade of potassium permanganate in Latin America. And, while the number of multilateral operations focusing on potassium permanganate has dropped off this year, there has been an increase in large numbers of seizures—particularly in Colombia. Moreover, Colombian authorities have indicated efforts to seize illicit laboratories in Colombia.
Methamphetamine production, transit, and consumption remain significant problems in Asia. To help stem production, trafficking, and abuse in East and South East Asia, the U.S. supported bilateral and multilateral initiatives in 2008 that included UNODC’s project to promote regional cooperation for precursor chemical control in the South East Asian region. The U.S. Department of Defense through Joint Interagency Task Force (JIATF) West also continues to support Interagency Fusion Centers (IFCs) in various partner nations throughout Asia. The mission of the IFCs is to contribute to developing host nation infrastructure and to aid local law enforcement to fuse and share information to detect, disrupt and dismantle drug and drug-related national and transnational threats. Our efforts have helped local enforcement officials to improve their investigative skills and encouraged cooperation across borders, a prerequisite for success in controlling this intrinsically international business. The United States also has provided to a variety of countries worldwide, law enforcement training, including basic drug investigations, chemical control, and clandestine laboratory identification (and clean-up) training. These relatively low-cost programs help encourage international cooperation with these countries in pursuing our common anti-drug and broader geopolitical objectives with the countries of the region, as well as undercut illegal drug producers that could eventually turn their sights on U.S. markets.
2008 also saw progress in the development of a more complete and systematic reporting regime covering the international trade in synthetic drug precursors. In 2006, a U.S.-sponsored CND resolution provided a way to institutionalize the process for collecting information on synthetic drug precursor chemicals. The resolution also requests countries to permit the INCB to share such information with concerned law enforcement and regulatory agencies. Over the past two years, the U.S. worked with the INCB and other international allies to urge countries to take steps towards implementation.
A prerequisite for implementing this is developing the considerable infrastructure of commercial information and regulation—not a simple task for many countries. However, at the end of 2008, the INCB reports that more than 100 countries and jurisdictions are now cooperating and providing voluntary reporting on their licit requirements for the aforementioned chemicals. The INCB has published the data collected in its annual report on precursor chemicals and updates the information regularly on its website. The data serves as a baseline for authorities in importing and exporting countries, facilitating verification on the chemicals and the quantities proposed in commercial transactions. Authorities can then determine whether importation is warranted – or, if no legitimate commercial use is apparent, whether pending shipments require additional law enforcement scrutiny.
To promote the full implementation of the CND resolution and support ongoing INCB activities, including Project Prism, the Department of State contributed $700,000 in Fiscal Year 2007, an additional $700,000 in Fiscal Year 2008, and a $700,000 contribution is planned for FY09.
The Road Ahead
The U.S. will continue to urge other countries to implement the provisions of the 1988 UN convention. Development of effective chemical control regimes is critical to implementation. Against this backdrop, countries will need to have in place the legislation to criminalize the diversion of precursors. Additionally, it is important to develop the administrative and procedural tools to successfully identify suspicious transactions, as well as making better use of watch lists and voluntary control mechanisms.
As a critical objective, and in conjunction with the INCB and other Member States, the United States will continue to promote efforts through the INCB task forces of Project Cohesion and Project Prism to target precursor chemicals. The United States will work to promote implementation of the new mechanisms that have been enacted to promote the broader exchange of information and expertise pertinent to the control of methamphetamine and other synthetics. The U.S. will also urge countries to avail themselves of the PEN system to actively provide and exchange information on legitimate commercial precursor chemical shipments and estimates on legitimate commercial needs to the INCB, and to provide the necessary support to the to enable it to fulfill its expanding role.
In this hemisphere, the USG will work through the Inter-American Drug Abuse Control Commission (CICAD), the counternarcotics arm of the Organization of American States (OAS) to further cooperation against diversion of precursor chemicals. OAS/CICAD receives considerable U.S. funding to counter the trafficking and abuse of illegal drugs, including methamphetamine. Guided at the policy level by the CICAD Commissioners (delegates from 34 Member States in the region), the Supply Reduction Unit of CICAD carries out a variety of initiatives in this important field, and is supported by its Experts Groups on Chemicals and Pharmaceuticals, which usually meet annually.
The issue of precursor chemicals and the need to tighten controls in the Western Hemisphere has been upgraded via the OAS/CICAD’s Multilateral Evaluation Mechanism (MEM), through which the 34 Member States evaluate drug control progress and take initiatives to advance steps across the board against illegal drug trafficking. Through the MEM, countries have received many recommendations with respect to chemical controls.
Over 60 participants from 20 CICAD Member States participated in the August 2008 Joint Meeting of the Groups of Experts on Chemical Substances and Pharmaceutical Products in Lima, Peru. At this meeting, member states agreed to re-evaluate their use of the Precursor Export Notification System (PEN). Member states also recognized the 1988 Vienna Convention Article 12 list of chemicals and agreed to begin tracking the six main chemicals for both methamphetamine and cocaine. The Group of Experts on Chemical Substances produced several documents for consideration, including a guide for establishing a “fee-for-service” approach in chemical control; a Training Curriculum Outline for technical interdiction, operation and administrative monitoring, and judicial investigations; and a legal framework for the control of synthetic drugs. The group also plans to draft guidelines on the inspection and handling of chemical transshipments in port facilities; to increase public-private sector cooperation on chemical control issues; and to develop a mechanism for assessing legitimate national needs for chemicals and precursors. The Group of Experts on Pharmaceuticals focused on a guide for combating counterfeit pharmaceutical products, on issues related to the control of ephedrine and pseudoephedrine, and on the issue of internet drug sales.
In 2008, OAS/CICAD held several specialized training seminars aimed at building member state capacity to control chemicals that may be used in the production of illicit drugs and providing law enforcement officers with the knowledge, skills, and resources to safely and effectively conduct chemical control operations. The U.S. supported a five-day workshop on interdiction, handling, transport, storage, and final disposal of chemical substances in coordination with the National Narcotics Directorate of Panama for 50 Panamanian public and private sector authorities. The U.S. also supported a five-day regional synthetic drugs control workshop in Colombia in collaboration with the French government’s Inter-Ministerial Center for Counterdrug Training (CIFAD) for 30 customs and police officers from Central America and Colombia.
Further efforts to showcase best practices and to increase implementation of existing multilateral tools will be a key theme at the March 2009 high level Commission on Narcotic Drugs to review the ten year UNGASS commitments. The US is seeking to highlight the increased use of unregulated substitute chemicals in synthetic drug manufacture, and the need for all countries to develop the necessary legislation to establish strong chemical control regimes and to use the online PEN system. The United States is also seeking ways to increase cooperation with international chemical producers and transporters in the private sector in order to promote effective diversion-prevention practices. In response to the 1998 UNGASS, the INCB will soon publish a draft code of conduct for the industry to promote ways to prevent diversion of chemicals. The U.S. will consider follow-up activities to build on this outreach to promote efforts implement voluntary measures and increased cooperation between the private and public sectors.
The countries included in this section are those with large chemical manufacturing or trading industries that have significant trade with drug-producing regions, and those countries with significant chemical commerce susceptible to diversion domestically for smuggling into neighboring drug-producing countries. Designation as a major chemical source country does not indicate a country lacks adequate chemical control legislation and the ability to enforce it. Rather, it recognizes that the volume of chemical trade with drug-producing regions, or proximity to them, makes these countries the sources of the greatest quantities of chemicals liable to diversion. The United States, with its large chemical industry and extensive trade with drug-producing regions, is included on the list.Many other countries manufacture and trade in chemicals, but not on the same scale, or with the broad range of precursor chemicals, as the countries in this section.
Article 12 of the 1988 UN Drug Convention is the international standard for national chemical control regimes and for international cooperation in their implementation. The annex to the Convention lists the 23 chemicals most essential to illicit drug manufacture. The Convention includes provisions for the Parties to maintain records on transactions involving these chemicals, and to provide for their seizure if there is sufficient evidence that they are intended for illicit drug manufacture.
As one of South America’s largest producers of pre-cursor chemicals, Argentina is vulnerable to diversion of chemicals into the illicit drug market. Argentina is a party to the 1988 UN Drug Convention and has laws meeting the Convention's requirements for record keeping, import and export licensing, and the authority to suspend shipments. Presidential decrees have placed controls on precursor and essential chemicals, requiring that all manufacturers, importers or exporters, transporters, and distributors of these chemicals be registered with the Secretariat for the Prevention of Drug Addiction and Narcotics Trafficking (SEDRONAR). To date, however, its registry of precursor chemicals and chemicals users lacked enforcement provisions against illicit diversion of chemicals. In late 2008, the Government of Argentina was working to establish a more robust regulatory framework for precursor chemicals and to establish better coordination among key government agencies.
During the first eight months of 2008, the country’s lack of effective controls over ephedrine imports exposed it to a rapidly growing transshipment trade, according to press analysis and government sources. As demonstrated by the arrest of several Mexican nationals, the chemical was reportedly re-exported to Mexico and other destinations, with smaller amounts used to create synthetic drugs in Argentina in small-scale "kitchens." It follows that there are reports of an influx of Mexican Nationals involved in trying to source chemicals.
In September 2008 the GOA established a decree prohibiting the importation of the chemical ephedrine by pharmacies, one of the principal loopholes in regulations on ephedrine and a key channel for its diversion into illicit traffic. SEDRONAR, the MOJ, and the Ministry of Health will now oversee the importation of the limited amounts of ephedrine needed for the country’s pharmaceutical industry. Further regulatory changes are being developed. With DEA support, Argentina continues to participate in Project Cohesion and the regional Operation Seis Fronteras (“Six Frontiers”). Argentina also participates in “Operation Andes III,” a joint program sponsored by Interpol and the World Customs Organization (WCO) to coordinate the interdiction of precursor chemicals in South America.
Brazil has South America's largest chemical industry and also imports significant quantities of chemicals to meet its industrial needs.
The GOB's 2004 decree designed to control the illegal production, diversion or trafficking in controlled chemicals is perhaps the most stringent in South America. The decree established control of 146 chemical substances (precursors or known substitutes), and requires all companies that manufacture, import, export, or distribute any of the listed substances to register with the DPF. More than 25,000 companies have done so. Registered companies are required to file monthly reports of purchases, sales, usage, and current inventory of all controlled substances. In addition, companies that handle any of the 22 identified precursors are also regulated by Brazil's National Sanitary Vigilance Agency (ANVISA). Brazil routinely provides advance notice of pending international shipments of precursor chemicals to DEA and carries out its responsibilities under the 1988 UN drug convention on chemicals. Brazil is also a signatory to various international agreements which require the maintenance of records of transactions involving a list of precursor and essential chemicals.
The country also participates and supports the multilateral chemical control initiatives Project Cohesion, Project Prism, and the regional Operation Seis Fronteras. In conjunction with Project Cohesion, the Brazilian Federal Police have agreed to work with DEA to perform a study on the use of acetic anhydride within the country and its exportation from the country.
Canada is a destination and transit country for precursor chemicals used to produce synthetic drugs, particularly methamphetamine and MDMA (Ecstasy). The U.S. has worked closely with Canada in countering these threats, and the Government of Canada has made a serious effort to curb the diversion of precursor chemicals that are required for methamphetamine production for both domestic and US markets. Canadian law enforcement authorities also have worked productively with U.S. counterparts in joint law enforcement operations that have disrupted drug and currency smuggling operations along both sides of the border. U.S.-Canadian law enforcement cooperation and Canada’s efforts to strengthen its chemical control laws and enforcement have helped significantly to reduce the amount of Canadian-sourced pseudoephedrine discovered in clandestine U.S. methamphetamine labs. However, there is some evidence that Canada’s domestic production of methamphetamine and MDMA is increasing – a situation that will require continued careful monitoring on both sides of the border. The U.S. will continue to work closely with Canadian partners to identify and dismantle MDMA and methamphetamine laboratories.
Canada is a party to the 1988 UN Convention and complies with its record-keeping requirements. Canada participates in Project Prism, targeting synthetic drug chemicals, and is a member of the North American working group. Although it supports Project Cohesion and contributes on an ad hoc basis, it is not actively engaged in it.
Chile has a large petrochemical industry engaged in manufacturing, importation, and exportation of thousands of chemical products. Chile is a source of precursor chemicals used in coca processing in Peru and Bolivia. In 2003, Chilean law enforcement created specialized chemical diversion units and since the creation of these units, and with international law enforcement cooperation, Chilean precursor chemical seizures have increased. In 2007, regulations also were approved to implement a 2005 law that established new authorities to register and inspect companies that produce, use, import or export any of 65 types of legally produced chemicals that also are used in the production of illegal drugs. In March 2008, law enforcement groups seized over 4,000 kg of precursor chemicals in Iquique, the largest seizure to date in Chile. Companies that import, export, or manufacture chemical precursors must register with CONACE, maintain customer records, and are subject to CONACE inspections. Chilean law enforcement entities also have specialized chemical diversion units.
Mexico has major chemical manufacturing and trading industries that produce, import, and export most of the chemicals necessary for illicit drug manufacture. The Government of Mexico’s (GOM) initiatives in chemical regulation and law enforcement efforts aimed at methamphetamine traffickers have produced several positive outcomes in 2008. According to the Drug Enforcement Administration (DEA), the price for illicit precursor chemicals and finished drug products rose in 2008 and six methamphetamine laboratories were located and destroyed. Traffickers of methamphetamine are becoming increasingly frustrated by law enforcement actions and have sought nontraditional entry points to introduce essential chemicals and derivatives into Mexico. The 2007 arrest of one of the most significant alleged suppliers of precursor chemicals for the manufacture of methamphetamine (Zhenli Ye Gon) created a serious void in the supply chain, according to DEA. However, the traffickers have quickly regrouped and sought markets elsewhere, including Central American countries (where more limited laws/regulations in place) and South America countries (Argentina, Peru, Paraguay, and Colombia) have become new sources of pseudoephedrine precursors and/or in tablet form.
During 2008, Mexico had several significant seizures of pseudoephedrine tablets, including the September 17th seizure of approximately 5.6 million 60 mg pseudoephedrine tablets (approximately/140 kilograms) at the Benito Juarez International Airport in Mexico City, Mexico.
There is a strong bilateral working relationship between USG and GOM authorities involving information exchange and operational cooperation. The two governments also cooperate to convey best practices to Central American countries that have become affected by the trafficking of precursor chemicals. Mexico is a party to the 1988 UN Drug Convention and has laws and regulations that meet the Convention's chemical control requirements.
In Mexico, chemicals, along with pharmaceutical controlled substances, are regulated by the Mexican Federal Commission for Protection Against Sanitary Risks (COFEPRIS). Since 2004, COFEPRIS has taken an aggressive, proactive role in identifying the problems with its current precursor chemical laws and implemented changes to remedy the situation.
Official GOM reports indicate that legal imports of pseudoephedrine, ephedrine, and its derivatives have fallen from approximately 216 tons in 2004 to less than 2 tons in 2008 – and only allowed to be brought in using 2007 import permits. The last permit was issued in November 2007 and was valid for 180 days. In 2008, the GOM imposed further measures to prevent the diversion of precursors and the manufacture of methamphetamine by implementing strict precursor chemical import quotas tied to estimated legitimate medical needs and internal chemical distribution controls. Over a period of time, COFEPRIS gradually diminished the authorized limits of imports to the point where no import permits were given for pseudoephedrine/ephedrine in 2008. The GOM implemented this reduction in part by forcing the pharmaceutical industry in Mexico to replace pseudoephedrine/ephedrine products with phenylephrine-a chemical that is difficult to use in the manufacture of methamphetamine. The USG continues to support GOM’s efforts to track shipments of precursor chemicals and controlled medicines through a National Drug Control System (NDS) database.
During 2008, Mexico provided extensive training and seminars to Central American law enforcement agencies concerning precursor controls. With Mexico leading the way, four countries in Central America, Belize, El Salvador, Honduras and Nicaragua passed Ministerial Agreements that restricted the importation or sale of pseudoephedrine/ephedrine products in tablet form. Bulk-form imports were already controlled through the 1988 Vienna Convention, but this new trend of control will make it difficult for traffickers to obtain the precursors they need to manufacture methamphetamine.
The United States
The United States manufactures and/or trades in all 23 chemicals listed in Tables I and II of the 1988 UN Drug Convention. It is a party to the Convention and has laws and regulations meeting its chemical control provisions.
The basic U.S. chemical control law is the Chemical Diversion and Trafficking Act of 1988. This law and 5 subsequent chemical control amendments were all designed as amendments to U.S. controlled substances laws, rather than stand-alone legislation. The Drug Enforcement Administration (DEA) is responsible for administering them. In addition to registration and record keeping requirements, the legislation requires traders to file import/export declarations at least 15 days prior to shipment of regulated chemicals. DEA uses the 15-day period to determine if the consignee has a legitimate need for the chemical. Diversion investigators and special agents work closely with exporting and receiving country officials in this process. If legitimate end-use cannot be determined, the legislation gives DEA the authority to stop shipments.
U.S. legislation also requires chemical traders to report to DEA suspicious transactions such as those involving extraordinary quantities, unusual methods of payment, etc. Close cooperation has developed between the U.S. chemical industry and DEA in the course of implementing the legislation. Criminal penalties for chemical diversion are strict; they are tied to the quantities of drugs that could have been produced with the diverted chemicals. Persons and companies engaged in chemical diversion have been aggressively and routinely subjected to civil and criminal prosecution and revocation of DEA registration.
The U.S. has played a leading role in the design, promotion and implementation of cooperative multilateral chemical control initiatives. The USG also actively works with other concerned countries, the United Nations Office of Drugs and Crime (UNODC), and the International Narcotics Control Board (INCB) to develop information sharing procedures to better control pseudoephedrine and ephedrine, the principal precursors for methamphetamine production. USG officials participate in a task force for both Project Cohesion and Project Prism. It also has established close operational cooperation with counterparts in major chemical manufacturing and trading countries. This cooperation includes information sharing in support of chemical control programs and in the investigation of diversion attempts.
China has one of the world's largest chemical industries, producing large quantities of chemicals that can be used for illicit drug manufacture such as acetic anhydride, potassium permanganate, piperonylmethylketone (PMK) and pseudoephedrine and ephedrine. The country is a party to the 1988 UN Drug Convention and has laws and regulations meeting or exceeding the Conventions requirements.
A November 2005 administrative law strengthening chemical control included provisions to control domestic chemical sales; previous laws and regulations focused solely on imports and exports. Chinese law regulates drug preparations containing precursor chemicals, but as medicines rather than regulated chemicals.
Despite adequate legislation, the size of China's chemical industry is not matched by a law enforcement structure adequate to effectively monitor all its production and domestic and international trade. The sheer scale of China’s chemical industry—nearly 80,000 chemical companies, according to one estimate—presents widespread opportunities for chemical diversion, and regulatory oversight remains a major challenge for China’s central authorities, particularly in some provinces. Although provincial police are taking a more active role to investigate illicit chemical transactions, the lack of officers assigned to investigate these potential diversions on a full-time basis may mean many suspect and clearly illicit transactions go unnoticed. It is also unclear whether sufficient controls exist to safeguard the storage and transit of precursor chemicals, and drug preparations containing them, across the country to guard against theft.
China is a major producer of licit ephedrine and pseudoephedrine, as well as ephedra, all of which can be used in the manufacture of methamphetamine. There are key indications from criminal investigations that large-scale illicit methamphetamine producers in other countries use Chinese-produced ephedrine and pseudoephedrine, to manufacture methamphetamine. Despite more aggressive efforts by Chinese authorities to stem the flow of these essential precursors through critical provinces such as Yunnan and Zhejiang, ephedrine and psuedoephedrine are still produced in super and mega-labs, in Burma or the Asia Pacific Rim nations, including Indonesia. Additionally, diverted Chinese precursor chemicals may be used to produce synthetic drugs in other countries as far away as Mexico, Belgium, and the Netherlands.
Chinese authorities continued to seize clandestine methamphetamine laboratories. In the past, the majority of the labs were discovered and/or seized in Fujian and Guangdong Provinces. Recently there have also been laboratories seized in northeast China, specifically Shenyang and Liaoning Provinces. On August 7, 2008, a special operations unit of MPS seized a methamphetamine manufacturing factory in Hui Zhou, China. Six suspects were arrested and nearly 1,700 kilograms of mixed liquid substance containing methamphetamine were seized.
China produces and monitors all 22 of the chemicals on the tables included in the 1988 UN Drug Convention. China continues to be a strong partner of the United States and other concerned countries by actively participating in the International Narcotics Control Board’s Pre-Export Notification (PEN) system, which monitors the shipping of dual-use precursor chemicals. Information is exchanged through Projects Cohesion and Prism and bilaterally. China is the Asian representative on the Project Prism Task Force. China is also a participant in Operation Iceblock, an effort to combat diversion of precursor chemicals for the production of methamphetamine. DEA has Diversion Investigator positions in its Beijing and Hong Kong offices. In July 2006, the Office of National Drug Control Policy (ONDCP) and the NNCC signed a Memorandum of Intent on behalf of their two countries to increase cooperation in combating drug trafficking and abuse.
India’s large chemical industry manufactures a wide range of chemicals, including the precursor chemicals acetic anhydride, ephedrine, and pseudoephedrine, which can be diverted for illicit drug manufacture. An INCB-led Task Force indicated that traffickers are now targeting India as the key source of ephedrine and pseudoephedrine for methamphetamine processing.
India is a party to the 1988 UN Drug Convention, but it does not have controls on all the chemicals listed in the Convention. The Government of India (GOI) controls acetic anhydride, N-acetylanthranilic acid, anthranilic acid, ephedrine, pseudoephedrine, potassium permanganate, ergotamine, 3, 4-methylenedioxyphenyl-2-propanone, 1-phenyl-2propanone, piperonal, and methyl ethyl ketone, all chemicals listed in the convention. Indian law allows the government to place other chemicals under control. Violation of any order regulating controlled substance precursors is an offense under the Narcotics Drugs and Psychotropic Substances Act, the key law controlling trafficking and is punishable with imprisonment of up to ten years. Intentional diversion of any substance, whether controlled or not, to illicit drug manufacture is also punishable under the Act.
The Indian Government in partnership with the Indian Chemical Manufacturing Association imposes controls on acetic anhydride, a key precursor chemical for heroin. Chemical manufacturers visit customers to verify the legitimacy of their requirements, and shipments are secured with specially fabricated sealing systems to prevent diversion. Domestic and export sales of acetic anhydride require a letter of no objection from the government.
India is one of only a few countries authorized by the international community to produce opium licitly for pharmaceutical use. India is the only country that uses the opium gum method. India already has a system of control to prevent diversion of ephedrine and pseudoephedrine. The NDPS (Regulation of Controlled Substances) Order, 1993, requires every manufacturer, importer, exporter, seller and user of controlled substances (both ephedrine and pseudoephedrine have been notified as controlled substances) to maintain records and file returns with the NCB. Every loss or disappearance of a controlled substance is also required to be reported to the Director General, NCB. Bulk exports of ephedrine and pseudoephedrine require a No Objection Certificate from the Narcotics Commissioner, who issues Pre-Export Notification to the Competent Authority in the importing country as well as to the International Narcotic Control Board (INCB). India has also been actively involved in operations like Project Prism which target precursors to manufacture ATS. India’s efforts in identifying and stopping suspicious transactions have been noted by the INCB in INCB’s Precursors Report, 2006. Despite its vigorous efforts to control precursor chemicals, India has been identified in a number of cases as the source of diverted precursor chemicals for a range of narcotic drugs, including methamphetamine and heroin.
India seized 395 kilograms of ephedrine up from 360 in 2007, and 1, 668 kilograms of acetic anhydride in 2008 up from 236 kilograms in 2007. Joint investigation by the DEA and NCB have shown the continuing use of the Internet and commercial courier services to distribute drugs and pharmaceuticals of all kinds from India to the U.S. destined for Mexico. Although ephedrine seizures within India were down in 2007, one seizure in the U.S. in September 2007 found 523 kg of ephedrine shipped through commercial carrier from India through the U.S. and destined for Mexico. The shipment was disguised as green tea extract. In the fall of 2005, Indian Customs seized five international mail packages that were found to contain a kg or more of Southwest Asian heroin destined for individuals in the United States, with controlled deliveries leading to the arrest of five individuals in the U.S.
India has been actively involved in international operations dealing with precursor control such as Project Cohesion and Project Prism and in October 2008 hosted the combined meeting of the Task Forces of Project Prism and Project Cohesion. India issues pre-export notifications (PEN) for export of precursors using the online system developed by the INCB. Law Enforcement Agencies in India continued to exchange information on a regular basis with Drug Law Officers (DLOs) based in India. The NCB and other drug law enforcement agencies continued their extensive cooperation with the U.S. Drug Enforcement Agency through its Country Attaché.
Indian-produced methaqualone (Mandrax) trafficking to Southern and Eastern Africa continues. Although South Africa has increased methaqualone production, India is still believed to be among the world's largest known clandestine methaqualone producers. Seizures of methaqualone, which is trafficked in both pill and bulk forms, have varied widely, from 472 kg in 2005 and 4,521 kg in 2006, 1 kg in 2007 and as of September 2008, 2,361 kg has been seized.
India is also increasingly emerging as a manufacturer and supplier of licit opiate/psychotropic pharmaceuticals (LOPPS), both organic and synthetic, to the Middle East, Pakistan, Bangladesh, and Afghanistan. Some of the LOPPS are licitly manufactured and then diverted, often in bulk. Some of the LOPPS are illicitly manufactured as well. Indian-origin LOPPS and other controlled pharmaceutical substances are increasingly being shipped to the U.S. DHS Customs and Border Protection intercept thousands of illegal "personal use" shipments in the mail system in the United States each year. These "personal use" quantity shipments are usually too small to garner much interest by themselves, and most appear to be the result of illegal Internet sales.
Singapore is a major importer of ephedrine, a precursor for methamphetamine. The quantities that remain in country are used primarily by the domestic pharmaceutical industry. To date, no domestic clandestine methamphetamine production has been detected in Singapore. Singapore’s position as one of the world’s largest importers of ephedrine and pseudoephedrine parallels the rapid growth of pharmaceutical and biomedical industries in the country. On a combined basis, the pharmaceutical industry currently accounted for nearly 8 percent of Singapore’s GDP in 2006, up from less than one percent in 2000. Singapore is also one of the largest distributors of acetic anhydride in Asia. Used in film processing and the manufacture of plastics, pharmaceuticals, textiles, and industrial chemicals, acetic anhydride is also the primary acetylating agent for heroin.
Singapore participates in multilateral precursor chemical control programs, including Operation Purple, Operation Topaz, and Operation Prism, and is involved in law enforcement initiatives developed under these projects to halt worldwide diversion of precursors to illicit chemical trafficking and drug manufacturing organizations. The CNB works closely with the DEA office in Singapore to track the import of precursor chemicals for legitimate processing and use in Singapore. CNB's precursor unit monitors and investigates any suspected domestic diversion of precursors for illicit use. Singapore is a party to the 1988 UN Drug Convention and controls precursor chemicals, including pseudoephedrine and ephedrine, in accordance with its provisions. It will not authorize imports of precursors until it has issued a "No Objection" letter in response to the exporting country’s pre-export notification. Pre-export notifications are issued on all exports; transshipment cases are treated as an import followed by an export. The Government of Singapore (GOS) conducts rigorous site visits on companies dealing with controlled chemicals to ensure awareness of the requirements and overall compliance.
With one of the most developed commercial infrastructures in the region, South Korea is an attractive location for criminals to obtain precursor chemicals. South Korea produces and exports precursor chemicals such as acetone, toluene, and sulfuric acid. The ROK authority’s ability to directly intercept the suspected transshipment of narcotics and precursor chemicals is limited by the fact that the vast majority of transiting shipping containers never formally enters ROK territory. Nonetheless, the ROK continued its international cooperation efforts to monitor and investigate transshipment cases. Redoubled efforts by the Korean Customs Service (KCS) have resulted in increased seizures of methamphetamine (12.8 kg.) transported by arriving passengers and through postal services at South Korea's ports of entry. Most methamphetamine smuggled into South Korea comes from China.
Taiwan's chemical industry has long been a driving force in boosting its economic development. Aided by both public and private sector investment, the industry has become competitive globally, exporting specialty industrial chemicals and resins for plastics production as well as importing solvents and cleaning materials for the high-tech electronics sector. On an international level, Taiwan has experienced problems resulting from chemical diversion and illicit drug trafficking, but has taken measures to prevent and monitor chemical diversion. Taiwan Customs and DEA are progressing in the implementation of a precursor chemical initiative. Although Taiwan is not a member of the United Nations and therefore cannot be a party to the 1988 UN Drug Convention, Taiwan authorities have taken measures to comply with the convention.
Of the twenty-two (22) chemical precursors listed in the 1992 additions to the UN Anti-Drug Convention, five (5) chemicals to include ephedrine and pseudoephedrine fall under the scope of the Executive Yuan's (EY) Department of Health. The other seventeen (17) precursor chemicals, including acetic anhydride and potassium permanganate are considered industrial raw materials, and are controlled by the Ministry of Economic Affairs' (MOEA), Industrial Development Bureau.
The MOEA provides specific guidance for reporting precursor chemicals as industrial raw materials for the prevention of diversion into drug manufacturing. It also provides related manufacturers and businesses with information concerning which items to report and procedures for reporting. Although Taiwan's Department of Health regulates the control of ephedrine and pseudo-ephedrine, pharmaceuticals containing these chemicals are not controlled.
Thailand's chemical control policy is established in the Emergency Decree on Controlling the use of Volatile Substances B.E. 2533 (1990). Government agencies responsible for chemical controls are the Thai Office of Narcotics Control Board (ONCB) and the Food and Drug Administration, which closely monitor the importation of precursor chemicals. Regular inspections are conducted of companies that import such substances, and every chemical shipment into Thailand is subject to review and selective unloading and search. Thai law provides for a maximum three-year jail term for individuals not complying with required reporting and tracking processes. Thai authorities are vigilant and effective in monitoring imports and the licit use of precursors, but despite strong efforts by the Royal Thai Government, limited quantities of certain chemicals--especially acetic anhydride, and ephedrine--surreptitiously transit Thailand to laboratories in Burma. Most precursor chemicals and substances that transit Thailand originate in Indonesia or Malaysia. Some of the chemicals, like acetic anhydride, are produced in Indonesia while others are brokered through Indonesian chemical houses and transported through Malaysia into Thailand and northward to Thai chemical houses in Chiang Mai or Chiang Rai. ONCB has the responsibility for detecting chemical and precursor diversion, interdicting illicit shipments and monitoring the activities of the chemical trading houses.
Chemical diversion control within the European Union (EU) is regulated by EU regulations binding on all member states. The regulations are updated regularly, most recently in 2005. The EU regulations meet the chemical control provisions of the 1988 UN Drug Convention, including provisions for record keeping on transactions in controlled chemicals, a system of permits or declarations for exports and imports of regulated chemicals, and authority for governments to suspend chemical shipments. The EU regulations are directly applicable in all 27 of its Member States. Only a few aspects require further implementation through national legislation, such as law enforcement powers and sanctions.
The EU regulations govern the regulatory aspects of chemical diversion control and set up common risk management rules to counter diversion at the EU’s borders. Member states are responsible for the criminal aspects, investigating and prosecuting violators of the national laws and regulations necessary for implementing the EU regulations.
The U.S.-EU Chemical Control Agreement, signed May 28, 1997, is the formal basis for U.S. cooperation with the European Commission and EU Member States in chemical control through enhanced regulatory co-operation and mutual assistance. The agreement calls for annual meetings of a Joint Chemical Working Group to review implementation of the agreement and to coordinate positions in other areas. The annual meeting has been particularly useful in coordinating national or joint initiatives such as resolutions at the annual UN Commission on Narcotic Drugs, and the review of the ten year commitments made at the 1998 UNGA Special Session on narcotics issues.
Bilateral chemical control cooperation continues between the U.S. and EU member states, and many are participating in and actively supporting voluntary initiatives such as Project Cohesion and Project Prism. In 2007, the EU established guidelines for private sector operators involved in trading in precursor chemicals, with a view to offering practical guidance on the implementation of the main provisions of EU legislation on precursor chemicals, in particular the prevention of illegal diversion.
Germany and the Netherlands, with large chemical manufacturing or trading sectors and significant trade with drug-producing areas, are considered the major European source countries and points of departure for exported precursor chemicals. Other European countries have important chemical industries, but the level of chemical trade with drug-producing areas is not as large and broad-scale as these countries.
Germany is a large manufacturer of pseudoephedrine and ephedrine used in its large licit pharmaceutical industry and exported to other countries. Germany is a party to the 1988 United Nations Convention against Illicit Traffic in Narcotics Drugs and Psychotropic Substances and implements its chemicals control provisions. Germany’s chemical control laws are based on EU law and the federal Precursor Control Act. Germany has a strong chemical control program that monitors the chemical industry as well as chemical imports and exports. Cooperation between chemical control officials and the chemical industry is a key element in Germany’s chemical control strategy. The restructuring of the EU precursor control regime in 2005 required amendments to German law. The amendments, which became effective on March 18, 2008, supplement three EU directives by regulating the monitoring of the precursor market by the authorities. These are essentially the regulations of the competence and cooperation of agencies as well as the legal basis for fees and criminal and administrative offenses.
The Federal Office of Criminal Investigation (BKA) and the Federal Office of Customs Investigation (ZKA) have a very active Joint Precursor Control Center, based in Wiesbaden, devoted exclusively to chemical diversion investigations.
Germany continues to cooperate closely with the United States both bilaterally and multilaterally, to promote transnational chemical control initiatives. A DEA diversion investigator from DEA’s Frankfurt office is assigned to Germany’s police/customs Joint precursor Unit in Wiesbaden. Germany supports international initiatives to control the diversion of chemicals (e.g., Operation Crystal Flow and Operation Iceblock, which is expected to enter its third phase in early 2009). Germany also participates in Operation Counter Curse, which targets the internet sales of precursor chemicals and glassware used in the manufacturing of MDMA. These projects are now coordinated with the International Narcotics Control Board’s Project Cohesion.
The Netherlands has a large chemical industrial sector that makes it an attractive location for criminals to attempt to obtain chemicals for illicit drug manufacture. There are large chemical storage facilities and Rotterdam is a major chemical shipping port. Currently, there are no indications that the Netherlands is a significant source for methamphetamine chemicals.
The Netherlands is a party to the 1988 UN Drug Convention and 1990 European Union Regulations. Trade in precursor chemicals is governed by the 1995 Act to Prevent Abuse of Chemical Substances (WVMC). The law seeks to prevent the diversion of legal chemicals into the illegal sector. Violations of the law can lead to prison sentences (maximum of six years), fines (up to 50,000 euros), or asset seizures. The Fiscal and Economic Information and Investigation Service (FIOD-ECD) oversees implementation of the law. The NR synthetic drug unit and the Public Prosecutor's Office have strengthened cooperation with countries playing an important role in precursor chemicals used in the manufacture of MDMA. The GONL signed an MOU with China concerning chemical precursor investigations. The Dutch continue to work closely with the U.S. on precursor chemical controls and investigations. This cooperation includes formal and informal agreements on the exchange of intelligence. The Netherlands is an active participant in the taskforce for the International Narcotics Control Board’s Project Prism. In 1994, the Netherlands established procedures to maintain records of transactions of an established list of precursor chemicals essential in the production of certain illicit drugs. They also renewed their agreement to cooperate on interdiction of narcotics through third-country transit routes, by exchanging, on a police-to-police basis, information such as IP addresses, telephone numbers and, where appropriate, financial information on a regular basis.
The country remains an important producer of MDMA (Ecstasy), although the amount of this drug reaching the United States seems to have declined substantially in recent years. The Dutch Government has been proactive in meeting this threat. The successful five-year strategy (2002-2006) against the production, trade and consumption of synthetic drugs was endorsed by Parliament in 2007. According to the National Police, the number of Ecstasy tablets seized in the U.S. that could be linked to the Netherlands dropped significantly from 850,000 in 2005 to only 5,390 tablets in 2006. The National Crime Squad’s synthetic drug unit and the Public Prosecutor’s Office have strengthened cooperation with countries playing an important role in precursor chemicals used in the manufacture of MDMA. Many of the important Ecstasy precursor chemicals originate in China, and the Netherlands signed a Memorandum of Understanding with China concerning chemical precursor investigations in 2004. In 2005, the Dutch assigned a liaison officer to Beijing to promote closer sharing of intelligence on precursor chemical investigations.
The United Kingdom
The United Kingdom is one of world’s largest importers of ephedrine and pseudoephedrine, the key precursors for methamphetamine production. The UK strictly enforces national precursor chemical legislation in compliance with EU regulations. Several small clandestine methamphetamine laboratories have been seized in the UK. DEA’s London Country Office (LCO) continues to exchange information and training initiatives with several UK law enforcement agencies regarding the threat from methamphetamine.
The LCO has arranged for DEA “clandestine laboratories” training for the Serious Organized Crime Agency (SOCA) and the Metropolitan Police Services (MPS/New Scotland Yard). This training program instructs law enforcement officers in the safe and efficient manner of identifying, dismantling, and prosecuting criminals involved with an illicit methamphetamine laboratory.
Afghanistan produces 93% of the world’s opium. There are indications that the trend in processing heroin and morphine base by drug traffickers is increasing.
In Afghanistan, there is no domestic chemical industry, or legitimate use for acetic anhydride, the primary precursor chemical used in heroin production, and the chemicals required for heroin processing must come from abroad. The principal sources are believed to be China, Europe, the Central Asian states and India, but traffickers skillfully hide the sources of their chemicals by re-packaging and false labeling. and most shipments are smuggled in through the Central Asian states, the Persian Gulf, including Iran, Syria and Pakistan, after being diverted elsewhere. . (comment: Note that in 2008, Afghanistan informed the INCB that there were no legitimate uses for AA within the country, and GOA would therefore no longer issue permits for any import of AA.
Afghanistan is a party to the 1988 UN Drug Convention. However, it lacks the administrative and regulatory infrastructure to comply with the Convention’s record keeping and other requirements.
Afghan law requires the tracking of precursor substances but the MCN has not created an active registry to record data. Progress in this effort requires the establishment of new laws, a system for distinguishing between licit and potentially illicit uses of dual-use chemicals, and a specialized police unit to enforce the new system. UNODC has established a five-man unit at CNPA that is charged with tracking precursor chemicals. Limited police and administrative capacity hampered efforts to interdict precursor substances and processing equipment. Yet, recent cooperative international interdiction efforts under the INCB’s leadership have led to an increase in the number of identified diversion to Afghanistan, and large seizures have been reported there. In some cases where suspicious shipments in international trade have been identified, hundreds of tons of acetic anhydride have been prevented from reaching Afghanistan.
Burma’s overall decline in poppy cultivation since 1998 has been accompanied by a sharp increase in the production and export of synthetic drugs, turning the Golden Triangle into a new “Ice Triangle.” Burma is a significant player in the manufacture and regional trafficking of amphetamine-type stimulants (ATS). Drug gangs based in the Burma-China and Burma-Thailand border areas, many of whose members are ethnic Chinese, produce several hundred million methamphetamine tablets annually for markets in Thailand, China, and India, as well as for onward distribution beyond the region. There also are indications that groups in Burma have increased the production and trafficking of crystal methamphetamine, or “ice.”
Burma does not have a significant chemical industry and does not manufacture ephedrine and pseudoephedrine used in synthetic drug manufacture, or acetic anhydride used in the remaining heroin manufacture. Most of the chemicals required for illicit dug manufacture are imported and diverted or smuggled into Burma from China, Thailand and India.
Burma is a party to the 1988 UN Drug Convention, but it does not have laws and regulations to meet all its chemical control provisions. In 1998, Burma established a Precursor Chemical Control Committee responsible for monitoring, supervising and coordinating the sale, use, manufacture, and transportation of imported chemicals. In 2002, the Committee identified 25 substances as precursor chemicals, including two not in the 1988 UN Drug Convention (caffeine and thionyl chloride) and prohibited their import, sale or use in Burma.Production and export of synthetic drugs (amphetamine-type stimulants, crystal methamphetamine and Ketamine) from Burma continued unabated. Burma is a significant player in the manufacture and regional trafficking of amphetamine-type stimulants (ATS). Drug gangs based in the Burma-China and Burma-Thailand border areas, many of whose members are ethnic Chinese, produce several hundred million methamphetamine tablets annually for markets in Thailand, China, and India, as well as for onward distribution beyond the region. There are also indications that groups in Burma have increased the production and trafficking of crystal methamphetamine or “Ice”—a much higher purity and more potent form of methamphetamine than tablets. Concerns remain over Burma’s efforts to deal with the burgeoning ATS production and trafficking problem; According to UNODC and U.S. surveys, there are indications from many sources that Wa leaders replaced opium cultivation with the manufacture and trafficking of ATS pills and “Ice” in their territory, working in close collaboration with ethnic Chinese drug gangs.
Currently there is no accurate methodology for estimating the scale of methamphetamine production in Burma. However, it is clear that production of ATS is very extensive, and production of the crystalline form of methamphetamine “ice” is growing sharply. Burma should develop with regional partners a reasonable methodology for estimating the scale of methamphetamine production in Burma to assist with enforcement and regional drug control efforts. An estimate derived from consistent, repeatable methodology carried out each year would allow Burma to measure its success suppressing methamphetamine production within the country.
Most ATS in Burma is produced in small, mobile labs located near Burma’s borders with China and Thailand, primarily in territories controlled by active or former insurgent groups. A growing amount of methamphetamine is reportedly produced in labs co-located with heroin refineries in areas controlled by the UWSA, the Shan State Army-South (SSA-S), and groups inside the ethnic Chinese Kokang autonomous region. Ethnic Chinese criminal gangs dominate the drug syndicates operating in all three of these areas. Heroin and methamphetamine produced by these groups is trafficked overland and via the Mekong River, primarily through China, Thailand, India and Laos and, to a lesser extent, via Bangladesh, and within Burma. There are credible indications that drug traffickers are increasingly using maritime routes from ports in southern Burma to reach trans-shipment points and markets in southern Thailand, Malaysia, Indonesia, and beyond. The UNODC claims there is evidence that Burmese methamphetamine tablets are also shipped to Bangladesh, India, and Nepal. Heroin transits the Thai/Chinese borders over land. According to UNODC, the GOB seized eight methamphetamine labs in 2006 and five labs in 2007.
The GOB must take effective new steps to address the explosion of ATS production and trafficking from Burmese territory that has flooded the region by gaining closer support and cooperation from ethnic groups, especially the Wa, who facilitate the manufacture and distribution of ATS. The GOB must close production labs and prevent the illicit import of precursor chemicals needed to produce synthetic drugs. Finally, the GOB must stem the troubling growth of domestic demand for heroin and ATS.
Diversion and unregulated importation of precursor chemicals remains a significant problem facing Indonesia’s counter drug efforts. To date, Indonesian authorities have been unsuccessful in controlling the diversion of precursor chemicals and pharmaceuticals. Numerous large pharmaceutical and chemical corporations have large operations throughout Indonesia. In October 2007 1,000 metric ton of ephedrine was seized in connection with the Batam lab. The chemicals originated in China and India.
In an effort to more effectively control precursor chemicals and pharmaceutical drugs, the GOI reorganized the Ministry of Trade and Industry and the Ministry of Health. In 2004 the Ministry of Trade became a separate agency from the Ministry of Trade and Industry. Currently the Ministry of Trade is responsible for licensing of non-pharmaceutical precursor chemical imports. Similarly, in 2005, the Ministry of Health, assumed responsibility for the management of pharmaceutical precursor chemical licenses, from the National Agency for Drug and Food Control under the Ministry of Health. The National Agency for Drug and Food Control now only controls post-market or finished products of precursor chemicals.
Ministry of Health and Ministry of Trade accept, review, and approve precursor chemical import applications for pharmaceuticals and non-pharmaceuticals. The import applicants are categorized into Importer Producer (IP) and Register Importer (RI) but more commonly identified as IT, Importer Trader). All prospective applicants must submit a drug registration application to obtain market authorization.
As party to the 1988 UN Convention, Laos is obliged to establish controls on the 23 precursor and essential chemicals identified under Article 12 of that Convention. In practice, Laos' laws to implement this obligation are weak, and the institutional capability of its government to implement those laws is highly limited. Responsibility for regulating precursor and essential chemicals lies with the Food and Drug Administration of the Ministry of Public Health. In January 2005, that agency issued a decree imposing legal controls on 35 chemicals, including all of those which the 1988 UN Convention requires be subject to regulation. The Health Ministry also is responsible to issue licenses for the legal importation of very limited quantities of pseudoephedrine or ephedrine which are used (by government-owned pharmaceutical plants) for preparation of cold medications, which are available for sale in pharmacies without prescription (The Ministry is currently considering, but has not yet approved, one application for importation of 25 kilograms of pseudoephedrine by a Laotian Government-owned pharmaceutical plant.) Initially, officials of the Food and Drug office were assigned at major international entry points to Laos, but due to shortage of personnel and conflicting requirements, the Health Ministry withdrew these staff members and now conducts inspections of imported chemicals only upon request to visit an importer's warehouse or storage facility. The Ministry is not known to conduct any end-use inspection of any licensed imports or uses.
There are no other known significant licit imports of precursor chemicals, and no known domestic manufacturing capacity for them in Laos. Responsibility for enforcement of laws that prohibit the unlicensed importation, sale or use of controlled chemicals rests formally with the Lao Customs Service and the national police. As a practical matter, there appears to be relatively little communication between these law enforcement agencies and the Health Ministry office responsible for regulation.
Laos’ law enforcement and criminal justice institutions remain inadequate to deal effectively with the problems created by domestic sale and abuse of illegal drugs and international trafficking in drugs, chemical precursors and other contraband. This limited law enforcement presence in rural areas creates a vulnerability to establishment of clandestine drug production or processing activities. Laos does not currently possess the means to accurately assess the extent of production, transport or distribution of ATS or its precursors. There was a significant increase in seizures of ATS transiting through Laos to neighboring countries in 2008. The number of reported drug arrest cases rose in 2008 by 63 percent. There are persistent rumors of some methamphetamine laboratories operating in the northwest, but no confirmation.
Malaysia is increasingly being used as a regional hub for methamphetamine production. International drug syndicates are increasingly turning to Malaysia as a regional production hub for crystal methamphetamine and MDMA (Ecstasy). Narcotics imported to Malaysia include heroin and marijuana from the Golden Triangle area (Thailand, Burma, Laos), and other drugs such as amphetamine type stimulants (ATS). Since 2006, Malaysia has also been a location where significant quantities of crystal methamphetamine are produced. This trend continued in 2008, with a large methamphetamine laboratory seized in Southern Malaysia, and frequent police reports of ethnic Chinese traffickers setting up labs in Malaysian authorities seized an operational methamphetamine laboratory in 2008, and had numerous other successful investigations, confiscating large quantities of methamphetamine, ketamine, and MDMA (Ecstasy). ATS production has shown a marked increase since 2006 and Malaysian authorities admit that international drug syndicates are using Malaysia as a base of operations. All methamphetamine labs seized in Malaysia since 2006 were financed by ethnic Chinese traffickers from Singapore, Taiwan, Thailand, or other countries. In 2008, a lab was seized in Malaysia in which the chemists were from Mexico.
Crystal methamphetamine, locally known as "shabu," continues to be the drug of choice in the Philippines. Methamphetamine is clandestinely manufactured in the Philippines. Precursor chemicals are smuggled into the Philippines from the People's Republic of China, India, and Thailand. Chinese and Taiwanese drug trafficking organizations remain the most influential foreign groups operating in the Philippines and control domestic methamphetamine production. Methamphetamine producers continue to compartmentalize production in diverse locations to prevent detection and to allow drug syndicates to produce large quantities during a production cycle. This sophisticated technique is employed by Chinese and Taiwanese drug trafficking organizations and may indicate a departure from the previous mega-lab production technique, which relies on quick production to avoid detection. Philippine authorities are also investigating five significant domestic trafficking organizations.
Chinese criminal organizations continue to establish and operate many methamphetamine clandestine laboratories. There are widespread reports that methamphetamine is produced in laboratories in areas controlled by separatist rebels, who use profits to fund their operations. There is also anecdotal evidence that rebel fighters take methamphetamine to combat lack of sleep and inadequate food intake, as well as to enhance aggression and withstand pain. Law enforcement investigations revealed that the Abu Sayyaf Group (ASG) and elements of the Moro Islamic Liberation Front (MILF) are directly involved in the smuggling, protection of methamphetamine production, and transportation of illegal drugs to other parts of the country and across Southeast Asia. The Philippines is a source of methamphetamine exported to Australia, Canada, China, Japan, Malaysia, South Korea, and in relatively small quantities to the U.S. (including Guam and Saipan).
Significant successes included a series of seizures of clandestine laboratories and warehouses in Luzon, Visayas, and Mindanao. Authorities seized 1471 kilograms of methamphetamine, valued at $17.6 million, and 10 kilograms of ketamine, valued at $1 million (at $106 per gram) in 2008; In May 2008, Philippine authorities seized 744 kilograms of methamphetamine that was smuggled by "go-fast" boats in Subic Bay, northwest of Manila. The estimated potential street price of the methamphetamine was $8.9 million (at $12,000 per kilogram). In July 2008, law enforcement authorities dismantled a large clandestine laboratory in northwest Luzon that could potentially facilitate the production of 180 tons of methamphetamine.
Because Bolivia does not have a large chemical industry, most of the chemicals required for illicit drug manufacture come from abroad, either smuggled from neighboring countries or imported and diverted. Precursor chemicals are shipped to Bolivia from Chile, Peru, Brazil, and Argentina. The Bolivian Special Counternarcotics Police (FELCN) Chemical Control Group, Grupo de Investigaciones de Substancias Quimicas, works with the Vice Ministry of Social Defense and Controlled Substances to control access to precursor chemicals and investigate diversion for illicit purposes. Following the closure of the South American Chemical Corporation in Oruro, a Bolivian sulfuric acid producing company, there was a significant increase in drug producers obtaining sulfuric acid from the unregulated auto battery market. In 2008 FELCN units seized 443.8 MT of solid precursor chemicals and 1,390,807 liters of liquid precursor chemicals. There are regulations in place to control the sale of pure ephedrine but they are not effectively enforced. Pseudoephedrine can be easily obtained in markets but there is little evidence of domestic methamphetamine production.
Currently, there are approximately 4,500 chemical companies in Colombia authorized to handle precursor chemicals for legitimate use. Chemical companies must have governmental permission to import or export specific chemicals and drugs. Pre-notification to “Fondo Nacional de Estupefacientes” (National Dangerous Drug Fund, equivalent to the U.S. Food and Drug Administration) is required to export chemicals from Colombia. No companies in Colombia have governmental authorization to export ephedrine or pseudoephedrine, key precursors in the production of methamphetamines. However, Colombian companies can and do import these precursors, which are necessary for the production of cold medications and other legitimate products. The Government of Colombia (GOC) controls legal importation to correspond to legitimate national demand. The GOC cooperates fully with the International Narcotics Control Board (INCB) and other multilateral chemical control initiatives. It provides annual estimates of licit chemical use to the INCB in accordance with international obligations.
Controlled chemicals are camouflaged and clandestinely imported into Colombia with false or misleading information. In many instances, the alleged importing “company” does not exist, is out of business, or has no actual involvement in importing the products. Many chemicals are also diverted by a small number of corrupt employees at large Colombian chemical companies, whose management has no knowledge of the illegal activities. Highly desired chemicals, such as potassium permanganate, are imported into Colombia by taking advantage of the Colombian National Police (CNP) and Colombian Customs’ lack of knowledge regarding scientific synonyms for controlled chemicals. Chemical traffickers and clandestine laboratories also use non-controlled chemicals, such as N-propyl acetate, to replace controlled chemicals that are difficult to obtain. Since there are no restrictions on non-controlled chemicals, these are diverted with impunity, and appear in large quantities at clandestine labs. Chemical traffickers also recycle chemicals in order to decrease their need to constantly divert precursor chemicals. Along with this practice, traffickers are recycling the chemical containers, making it difficult to trace their origin.
The CNP has a 45 person special investigative unit dedicated to national and international enforcement of precursor chemical control laws. The seizure and interdiction of precursor chemicals used to produce cocaine and heroin have been steadily on the rise. In 2008, the GOC seized over 3 million gallons and 4 million kilograms of precursor chemicals.
Peru is a major importer of other precursor chemicals that are used in cocaine production, such as acetone and potassium permanganate. Many tons of these chemicals are diverted from legitimate channels to clandestine cocaine-production laboratories. Peru also produces some precursor chemicals such as sulfuric acid and calcium oxide that are used for processing coca leaf into cocaine base.
The PNP Chemical Investigations Unit (DICIQ) initiated Operation Chemical Choke, a multi-faceted initiative focused on chemical company audits, interdiction efforts, and liaison with industry and regulatory agencies. Its major objective has been to stop the illicit diversion of acetone, sulfuric acid, and hydrochloric acid. The total combined PNP efforts resulted in multi-ton seizures totaling almost 470 metric tons of these chemicals in 2008.
In 2008, Peru participated in Operation Seis Fronteras, which supports investigation and interdiction efforts against chemical trafficking and illicit diversion of controlled chemicals used in manufacturing cocaine and heroin. Operation Seis Fronteras targets and focuses on several different areas to include; regulatory inspections/audits of suspect chemical distributors, enforcement operations along rivers where chemicals are transported and potentially targeting suspected criminal organizations involved in the diversion and movement of illicit chemicals. Of the total seizures during the year, the Peruvian National Police Chemical Interdiction Group was responsible for the seizure of 63.7 metric tons of all types of precursor chemicals, as well as ensuring asset seizures of $2,914,155.43 and the arrests of 49 violators-traffickers.
The GOP continues to work on developing a chemical users’ registry, which is needed to fully implement the precursor chemical control law. The GOP 2008 budget includes, for the first time, funds to be used by different Ministries to stop the diversion of precursor chemicals.
Recent efforts in reducing and preventing methamphetamine production through a global campaign to prevent diversion of precursor chemicals are producing significant results. The United States continues to work in close cooperation with two international entities that have played a critical role this regard: the United Nations (UN) Commission on Narcotic Drugs (CND) and the International Narcotics Control Board (INCB). The CND is the central policy-making body within the United Nations system dealing with drug-related matters. The INCB is an independent, quasi-judicial body that monitors the implementation of the three United Nations international drug control conventions.
Amphetamine-type Stimulants (ATS) will be one of the top five issues under discussion at the decade review of the 1998 UN General Assembly Special Session commitments the CND in March 2009. During the year-long review process the ATS issues received unparalleled support from all nations and the final meeting is expected to endorse commitments that include bolstering implementation of key resolutions and activities including:
-- a U.S.-sponsored 2006 CND resolution that requested governments to provide an annual estimate of licit precursor requirements and to track the export and import of such precursors;
-- a resolution drafted by the United States and the European Union that strengthened controls on pseudoephedrine derivatives and other precursor alternatives.
-- the INCB Secretariat’s program to monitor licit shipments of precursor chemicals through its Pre-Export Notification (PEN) online system which was further strengthened this year by the availability of national licit estimates. (The INCB is using these estimates to help relevant countries evaluate whether a chemical shipment is suspicious. Countries can then take steps to block such shipments before they are diverted to methamphetamine production and to undertake other investigative and law enforcement action, as appropriate.)
Section 722 of the CMEA amends Section 489(a) of the Foreign Assistance Act of 1961 (22 USC Section 2291h) by requiring the following information to be included in the annual International Narcotics Control Strategy Report (INCSR):
-- The identification of the five countries, not including the United States, that exported the largest amounts of pseudoephedrine, ephedrine and phenylpropanolamine (including the salts, optical isomers, or salts of optical isomers of such chemicals, and also including any products or substances containing such chemicals) during the preceding calendar year.
-- An identification of the five countries, not including the United States, that imported the largest amounts of these chemicals during the preceding calendar year and that have the highest rate of diversion for use in the illicit production of methamphetamine (either in that country or in another country). The identification is to be based on a comparison of legitimate demand for the chemicals--as compared to the actual or estimated amount imported into the country. It also should be based on the best available data and other information regarding the production of methamphetamine in the countries identified and the diversion of the chemicals for use in the production of methamphetamine.
An economic analysis of the total worldwide production of pseudoephedrine, ephedrine, and phenylpropanolamine as compared to legitimate worldwide demand for the chemicals.In addition, Section 722 of the CMEA amends Section 490 (a) of the Foreign Assistance Act of 1961 to require that the countries identified as the largest exporters and importers of these chemicals be certified by the President as fully cooperating with U.S law enforcement or meeting their responsibilities under international drug control treaties.
The Department of State, in consultation with the Department of Justice, is required to submit to Congress a comprehensive plan to address the chemical diversion within 180 days in the case of countries that are not certified.
Section 723 of the CMEA requires the Secretary of State, acting through the Assistant Secretary of the Bureau of International Narcotics and Law Enforcement, to take such actions as are necessary to prevent the smuggling of methamphetamine into the United States from Mexico. Section 723 requires annual reports to Congress on its implementation.
Ephedrine and particularly pseudoephedrine are the preferred chemicals for methamphetamine production. Phenylpropanolamine, a third chemical listed in the CMEA, is not a methamphetamine precursor, although it can be used as an amphetamine precursor. In 2000, the FDA issued warnings concerning significant health risks associated with phenylpropanolamine, and as a result, manufacturers voluntarily removed the chemical from their over-the-counter medicines. A limited amount is imported for veterinary medicines, but there is little data available on its production and trade. Since phenylpropanolamine is not a methamphetamine precursor chemical, and in the absence of useful trade and production data, this section provides information only on pseudoephedrine and ephedrine.
The Global Trade Atlas (GTA), compiled by Global Trade Information Services Inc., (www.gtis.com), provides export and import data on pseudoephedrine and ephedrine collected from major trading countries; however, 2007 is the most recent year with full-year data, It is important to note, however, that the data, including previous year data is continually revised as countries review and revise their data in subsequent years. GTA data have been used in the following tables.
Obtaining data on legitimate demand remains problematic, but it is more complete for 2007 than in any previous year. However it is still not fully sufficient to enable any accurate estimates of diversion percentages based on import data. There are still significant numbers of countries which have yet to report their legitimate domestic demand to the INCB on a regular basis. Also, some countries and regions do not report trade in ephedrine and pseudoephedrine when it is incorporated into a finished pharmaceutical product, such as a tablet or gel cap, due to concerns that this type of information infringes on commercially sensitive information. Further challenges also include governments that may not be able to ascertain this data if, for example, they do not subject pharmaceutical preparations to national control, or if a different ministry with different or less stringent means of oversight regulates preparations versus bulk chemicals. These circumstances prohibit reasonable estimates about the trade in the end products that form a very large share of legitimate worldwide demand for methamphetamine precursors.
Even in the case of the reporting on licit market requirements for ephedrine and pseudoephedrine, the governing UN resolutions are not mandatory, but rather urge countries to cooperate by making available information on domestic demand and trade in pharmaceutical products. The trend in this direction has been positive; since the passage of the 2006 CND resolution that the U.S. spearheaded, over 100 countries and jurisdictions of the 183 signatories to the 1988 Convention have reported import requirements to the INCB for the bulk chemicals, ephedrine and pseudoephedrine. Before 2006, only a nominal number of countries did so, and these rare communications were scattered and not provided on any systematic basis.
A further challenge to analyzing the data is that countries have not made any attempt to reconcile the trade data and their own reporting of licit requirements.
The economic analyses required by CMEA, is not possible because of insufficient data. However, more data is available this year than in any previous year. The United States will continue to push in both diplomatic and operational forums – in both bilateral and multilateral settings – to urge countries to provide reporting on their licit domestic requirements for methamphetamine precursor chemicals to the INCB. We are working with the INCB and with authorities in the reporting countries themselves to secure explanations for any anomalies between reported imports and reported licit domestic requirements. We also will seek to support efforts to provide developing countries with the expertise and technical capacities necessary to develop such commercial estimates, as this often requires a regulatory infrastructure that is currently beyond the means of some governments in question. Efforts to support the implementation of prior resolutions and global commitments has been a key USG objective in preparations for the high level Commission on Narcotic Drugs to review the 1998 UNGASS commitments. This report provides export and import figures for both 2006 and 2007 in ephedrine and pseudoephedrine to illustrate the wide annual shifts that can occur in some countries, reflecting such commercial factors as demand, pricing, and inventory buildup. GTA data on U.S. exports and imports have been included to indicate the importance of the United States in international pseudoephedrine and ephedrine trading. Complete data on the worldwide production of pseudoephedrine and ephedrine are not available, because the major producers will not release them publicly for commercial, proprietary reasons.
The following data are for 2006 and 2007 and provide an indication of the volatility of the trade in pseudoephedrine and ephedrine. We are using the 2007 data this cycle of review to identify the major participants in the trade in ephedrine and pseudoephedrine.
The worldwide aggregate volume of ephedrine exports that was reported by the Global Trade Atlas increased from 255,734 kilograms to 303,159 kilograms by 18.5 percent. This overall increase included increases by almost every exporter with the exception of Switzerland where exports dropped from 2,485 in 2006 to 641 kilograms in 2007. Exports of ephedrine from the United States increased from 596 in the 2006 level to 5,821 kilograms in 2007 and are more in line with the 2005 level of 5,542 kilograms.
For pseudoephedrine, the aggregate volume of worldwide exports showed an even greater increase to 1,132,665 kilograms from the previous year 2006 of 722,444, by 56.8 percent. The top five exporters of pseudoephedrine were Germany, India, China, Taiwan and Singapore. The past two years—2006 and 2005—the top five exporters were India, Germany, China, Taiwan, and Switzerland. Almost every country that reported showed an increase in exports with the most dramatic rise in exports in Germany from 229,700 to 546,400 kilograms in 2007, a 137.8 percent increase. Singapore edged out Switzerland from the top five. Exports from the United States as the seventh largest exporter did drop from 36,715kilograms to 14,714 kilograms.
Shifts in trade of pseudoephedrine have also resulted in a change in the top five importers for 2007 that now include Switzerland, Singapore, Indonesia, Thailand, and the United Kingdom. Only, the United Kingdom’s imports dropped significantly from 140,600 to 33,300.kilograms.
Mexico included in last year’s top five dropped off the list. And, data supports that Mexico’s declining volume was again dramatic in 2007 —down from 43,428 kilos in 2006 to 11, 502 in 2007. As noted previously in this report, Mexico stopped issuing licenses for imports of ephedrine, pseudoephedrine, and products containing these chemicals in November 2007.
In contrast, however, the United States imports more pseudoephedrine than all five of the top importers together with imports of 312,209 kilograms in 2007 up from 171,195 kilograms in 2006.
The aggregate imports from the top five importers this year significantly increased their imports of pseudoephedrine from 789,849 kilograms in 2006 to 862,768 kilograms in 2007. However, these aggregate total figures remain far below the 2005 levels of 1,201,629 kilograms. We have no way of knowing if the current increase in volume is an anomaly due purely to vagaries of the commercial market. Another possibility is that this increase may have been due to companies attempting to obtain more of the chemical in advance of the quota system called for in the CMEA. Additional annual reporting will be required to determine whether this data points to an upswing sales or represents a temporary statistical variance.
The accuracy of this trade data also should be viewed with a great deal of caution; clearly, some countries have less sophisticated infrastructures and methodologies at their disposal than others for measuring the volume and commodities of legitimate trade. Furthermore, although this data can be useful for determining overall trends in legitimate trade, it cannot accurately identify trends in smuggling or diversion involving conscious subterfuge. In the case of Mexico, where the government has aggressively cracked down on precursor chemical diversion and limited the flow of trade in such chemicals, increased smuggling of chemical precursors through Central American countries and across Mexico’s southern border is already occurring. At the same time, however, a recent seizure of five tons of pseudoephedrine destined for Tanzania and onward to Mexico, suggests that traffickers are attempting to continue methamphetamine production in Mexico.
Trade data also fails to reflect illicit smuggling that has been detected by such law enforcement and other official reporting in Africa, the Middle East and other parts of Asia. During the INCB-led Operation Crystal Flow in 2006-07, it was observed that China was the origin of shipments to African destinations and India, to a lesser extent was a source country either directly or via Europe to the Americas. However, Operation Ice Block, a more recent time-bound operation agreed by the Project Prism Task Force, has indicated several key shifts in the methamphetamine production and trafficking in 2007-08. Forty –nine tons of ephedrine and pseudoephedrine were suspended, stopped, or seized during the nine month operation in 2008 that focused on gathering intelligence data. Of the 49 notifications, 22 shipments were either declared as going to or likely to be destined for Mexico. Moreover, a distinct shift towards India as the major source country with shipments to newly targeted countries in both Africa and Central America. Africa remains a major transit and diversion point for trafficking in diverted precursors and Europe emerged as a major transshipment point for precursor and pharmaceutical preparations destined to North and Central America.
Another key conclusion was that operations targeting ephedrine and pseudoephedrine resulted in efforts by traffickers to seek non-controlled substances such as l-phenylacetylcarbinol to circumvent controls.
Available trade data is silent on legitimate commercial sales of commodities, including the substitutes. Similarly, in Burma, there is no available trade data to account for the massive scale of methamphetamine production that reportedly continues within that country.
Other sources of information from the United States, the United Nations and other governments have indicated that considerable quantities of chemicals are being smuggled across Middle Eastern and Southeast Asian borders without any corresponding record in official trade data. Iran, Syria, and Egypt for example, have reported licit national requirements for pseudoephedrine (40 metric tons, 50 metric tons and 58 metric tons, respectively) that would place them among the top five importers worldwide, but no trade data for pseudoephedrine is available for these countries that could be used to verify whether these volunteered estimates are accurate.
Based on the available data, it may be possible to speculate that the trade in ephedrine and pseudoephedrine appears to be diversifying, and is less concentrated along traditional routes in major trading countries. The estimates that are now being provided to the INCB regarding legitimate national requirements can provide a tool for governments to get a sense of imports and exports, and we will continue to watch these trends carefully. The United States will work closely with the INCB and with its international partners to further refine the methodologies used to determine these estimates and urge for additional voluntary reporting from States. Many countries, including the United States, have faced challenges in preparing these estimates. All nations, especially large importers and exporters such as the United States, should take steps to ensure that these estimates are as accurate and useful as possible.
Table: Annual legitimate requirements reported by Governments for four precursor chemicals (and their preparations, as relevant), based on latest available data
(status: 17 Dec 2008)
|Australia||20||15||5 500||1 200||1||60|
|Brazil||2 370||13 875||6 500|
|Canada||3 000||5||20 000||0||0|
|China||140 000||110 000|
SAR of China
|7 525||0||8 625||0||0||0|
SAR of China
|Czech Republic||72||10||1 980||2 671||0||0|
|Democratic People's Republic of Korea||2 300||10|
of the Congo
|Dominican Republic||200||1 500|
|Egypt||12 000||58 000||3 900|
|El Salvador||150||1||1 000||1 500|
|Falkland Islands (Malvinas)||1||1|
|Germany||4 000||20 000||1||3 046|
|Indonesia||9 896||32 505|
|Israel||43||2 130||1 905|
|Jordan||1 000||35 000||64 000|
|Malaysia||400||400||15 400||15 400|
|Nigeria||3 849||5 823|
|Pakistan||22 000||48 000|
|Papua New Guinea||1||200||0||0|
|Republic of Korea||15 950||32 500|
|Republic of Moldova||60||90|
|Russian Federation||1 500|
|South Africa||20 000||0||20 000||0||0||0|
|Spain||1 117||7 135||0||100|
|Sweden||54 500||2 000||1 621||23 553|
|Syrian Arab Republic||1 000||50 000|
|Turkey||2 000||23 000|
|United Arab Emirates||200|
|United Kingdom||350 008||1 020||60 009||25 000||30||15|
|United Republic of Tanzania||950||500|
|United States of America||140 260||516 645||0||65 093|
|Venezuela||1 000||20 000|
Notes: The names of non-metropolitan territories and special administrative regions are in italics.
A blank field signifies that no requirement was indicated or data are not submitted for the substance in question.
Zero signifies that the country has no licit requirement for the substance.
Quantities reported below 1 kilogramme have been rounded up and are reflected as 1 kg.
P signifies that import of the substance is prohibited.