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U.S. Department of State

Diplomacy in Action

2010 INCSR: Chemical Controls


Bureau of International Narcotics and Law Enforcement Affairs
Report
March 1, 2010

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Summary

Chemicals play two essential roles in the production of illegal drugs: as starting chemical inputs for the production of synthetic drugs such as methamphetamine and MDMA (3,4-methylenedioxmethamphetamine more commonly known under the name of ecstasy); and as refining agents and solvents for processing plant-based materials such as coca and opium poppy into drugs such as cocaine and heroin. Chemicals used in synthetic drug production are known as “precursor” chemicals because they become incorporated into the drug product and are less likely to be substituted by other chemicals. Chemicals used to refine and process plant-based drugs are referred to as “essential” chemicals and can be readily replaced by other chemicals with similar properties. 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.

The United States and other nations continued to make progress in preventing diversion of precursor and essential chemicals in 2009. These efforts built on a variety of bilateral, regional and multilateral mechanisms, such as the United Nations and the Organization of American States.

Methamphetamine

Combating the supply of methamphetamine remains a top priority and cooperative efforts in 2009 forced drug trafficking organizations to adapt smuggling routes and adopt new production methods to obtain chemicals.

Reporting from a variety of sources, including the press and the United Nations, indicates that the global abuse of amphetamines may have stabilized in the West, including in the United States. However, potential abuse rate remains a serious concern and recent UN reports indicate that abuse may be rising in Asia. Moreover, production of methamphetamine remains high. The United States, particularly through our cooperation with Mexico, is targeting 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). 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—primarily through UN International Narcotics Control Board (INCB)-led task forces.

In 2009 Mexican authorities continued to make progress in implementing legislative and administrative changes that were enacted during the previous year to target methamphetamine production by large scale drug trafficking organizations. Mexico is seeking to counter a trend that began several years ago, as small-scale methamphetamine producers within the United States shifted to large “super-labs” in Mexico. This evolved, in part, due to effective U.S. domestic controls. These domestic U.S. controls include stronger regulation of retail sales of licit pharmaceutical preparations containing ephedrine and pseudoephedrine. These controls over the primary chemicals necessary for methamphetamine became effective at the national level for the first time in late 2006 under the Combat Methamphetamine Epidemic Act (CMEA). The CMEA also introduced a system of import and production quotas in 2008.

Mexico has enacted even more stringent controls than the US, determining 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 were required to deplete stores of products containing these chemicals by 2009. The use of these products is now illegal in Mexico. The Government of Mexico continued to demonstrate political commitment towards stemming the illicit diversion of chemicals required for methamphetamine production through enhanced law enforcement cooperation with the United States and through multilateral efforts such as the INCB-led Project Prism Task Force, Operation Ice Block. Operation Ice Block focused on the exchange of information, including pre-export notifications- of ephedrine and pseudoephedrine shipments.

Mexico has also stepped up law enforcement efforts within its own borders to target methamphetamine production. In June 2009, Mexican authorities reported the seizure of a large scale laboratory north of Culiacan, in Sinaloa that included a seizure of 49,640 liters of solution containing pharmaceutical preparations pseudoephedrine mixed with dextromethorphan, a cough syrup. Mexican authorities also seized 32,800 liters of chemicals from a complex methamphetamine production site in Durango in August 2009 that included 22 individual facilities on a 240 hectare site. The United States, in partnership with Mexico and the governments of Central America, Haiti and the Dominican Republic has also engaged in comprehensive, multi-year law enforcement cooperation strategy through the Merida Initiative. Assistance provided through this and complementary cooperative initiatives is increasing the ability of our hemispheric partners 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 may accelerate 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 legislative changes to keep pace with Mexico, and are stepping up surveillance and monitoring of these chemicals. Nicaragua added all pharmaceutical preparations containing ephedrine and pseudoephedrine to its list of controlled substances. Honduras adopted legislation to control all pharmaceutical preparations containing ephedrine and pseudoephedrine through prescriptions. Belize enacted a statutory instrument prohibiting the bulk importation of pseudoephedrine and ephedrine. Costa Rican judges, prosecutors, police and other regulatory and enforcement officials participated in a training seminar presented by a team of experts from the United States, Mexico and the UN.

Several other countries took action at the end of 2008 to target methamphetamine production and trafficking. In South America, Peru increased control measures on cold medicines with pseudoephedrine and Argentina increased controls on pharmaceutical preparations. China strengthened controls over compound preparations containing ephedrine. The United Kingdom also adopted stricter control measures on over the counter medications that include ephedrine and pseudoephedrine.

Chemical control figured prominently in the year long review of commitments made at the 1998 UN General Assembly Special Session on drugs and resulted in significant commitments at the Commission on Narcotic Drugs (CND) high-level session and the UN General Assembly special plenary 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 2009, 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 has joined with other international partners to expand operations against worldwide production of methamphetamine under the auspices of the INCB-led Project Prism. This project includes the exchange of pre-export information among law enforcement and regulatory officials to promote efforts to stop or seize illegal shipments of methamphetamine precursor chemicals. Given the successful results of Project Prism’s Operation Ice Block, a follow-on operation, Operation PILA, was initiated in 2009. This effort targets pharmaceutical preparations of ephedrine and pseudoephedrine and new smuggling routes. Operation PILA is in effect for a nine-month period from July 1, 2009, until March 31, 2010. From July to October 2009 10 tons of bulk shipments as well as 31.83 million tablets of ephedrine and pseudoephedrine were suspended, stopped or seized.

Supporting analysis of data and seizures reaffirmed that India was the primary source and Mexico the primary destination of ephedrine and pseudoephedrine shipments. It was determined that during the reporting period seventy percent of all suspicious shipments or diversions were in the form of pharmaceutical preparations (tablets). Building on information received from previous year, the operation also focused on trafficking and diversion of amphetamine-type stimulants in Africa and Southwest Asia. Increasingly Africa and Central America were shown to be transit points to the final sources in the Western Hemisphere. Data from this operation clearly identified new routes through Africa that included the Central African Republic and Kenya, as well as others through Syria and through European nations to Central America.

These cooperative 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. A 2007 CND resolution strengthened 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 have been provided by over 120countries and territories. The INCB uses these estimates to evaluate whether a chemical shipment appears to exceed legitimate commercial needs. The INCB 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.

In 2009, the United States increased efforts to focus on precursor chemical trafficking through and around the world’s largest supplier of opium, Afghanistan.

The United States continued to step up law enforcement pressure on traffickers seeking to obtain acetic anhydride, an essential chemical needed to produce heroin. Building on the success of INCB Project Cohesion Task Force-led Operation Dice(Data and Intelligence Collection and Exchange) and its follow-on operation DICE 2, the United States and other nations expanded last year’s efforts. The result was seizures, stopped shipments and identification of suspicious consignments involving over 100 tons of heroin chemicals.

The United States joined with other nations to promote the implementation 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. The Government of Afghanistan informed the INCB that there is no legitimate use for acetic anhydride in Afghanistan and seeks to block all imports of the substance to their country.

Despite international efforts, the United States is keenly aware that drug trafficking organizations are adapting by splintering and expanding their operations. A niche market has formed in some areas, and specialized middlemen now seek new routes and methods for precursor chemical smuggling and diversion methods.

Diversion of precursor chemicals from licit commerce, gray markets, and new smuggling routes are only a few ways drug trafficking organizations are adapting. Information from Operation Ice Block shows that West Asia and Africa are now key transshipment points to smuggle and divert chemicals. Because of China’s efforts to tighten legislative and administrative measures in order to monitor their legitimate chemical industry, traffickers have increasingly turned to suppliers in India. Law enforcement information and intelligence resulting from 2008’s Operation Ice Block indicate that India, one of the world’s largest licit import and exporters of ephedrine and pseudoephedrine, is now the primary source of ephedrine and pseudoephedrine used for worldwide illicit methamphetamine production. 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. The rise of alternative production methods of the predominant “ephedrine reduction” method is also concern. This issue has become a high-priority for the United States and the international community, and we will continue to push for greater international action to combat this threat in both bilateral and multilateral settings.

To counter evolving technologies and diversion and smuggling routes, the U.S. is in constant contact with its multilateral partners and the United Nations. Last year’s review of UN Special Session commitments offered and opportunity to update and expand areas of engagement. In 2010, the United States will support an effort to increase international controls on phenylacetic acid—a chemical increasingly substituted in methamphetamine production. The United States will continue to work with the INCB, specifically through Project Cohesion, to target acetic anhydride. The U.S. will also work with the UNODC Paris Pact cooperative efforts to target Afghan heroin.

In South America, INCB’s Project Cohesion focuses on monitoring the imports of potassium permanganate to the cocaine processing areas. Efforts to target this chemical have been much more difficult. However, the U.S. and other countries are seeking to use lessons learned under Operations DICE and DICE 2, and Project Cohesion to develop further insights for targeting potassium permanganate. 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.

Background

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.

Special Monitoring List: 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 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 through its conventions and resolutions 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 among 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 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 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 within the Western Hemisphere.

Diversion Methods

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. 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. This is less frequent. Instead, most diversion takes place due to the ability of criminals to exploit gaps in the regulatory frameworks 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. In parts of the developing world, traffickers often 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 obtain chemicals by bribing or blackmailing the employees of legitimate companies. In some cases they disguise the destination or nature of chemical shipments by mislabeling or re-packaging controlled chemicals as unregulated materials.

 

Image shows Routes of Diversion: International--Bulk Chemical Manufacturer to Chemical Producer to Transit Country A to Transit Country B to Country C or Importer/Exporter to Re-Exportation or to Distributor to End Users.


Traffickers also obtain precursors through theft, either from storage or during transit. Criminals have often employed violence to steal chemical supplies.

In the past year, transshipment or smuggling from third countries into drug producing countries has increased dramatically. This tactic is emerging as a key method in response to the increasing efforts of more countries to implement legislative and administrative controls to prevent diversion from legitimate commercial trade.

In 2008 and 2009 there has been a dramatic increase in criminal efforts to take greater advantage of finished pharmaceutical products. This includes extracting 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.

2009 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 cooperates closely with other governments through both multilateral and bilateral efforts. 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, providing the treaty framework and the venue for cooperation. In 2009, the INCB continued to serve as the focal point for the exchange of information that led to coordinated law enforcement operations.

The most notable of these was the extension of activities targeting amphetamine-type stimulants under Project Prism with Governments exchanging information through the INCB on legitimate trade and trafficking trends. INCB-coordinated Operation PILA, a time-bound voluntary operation focusing on the trade of ephedrine and pseudoephedrine, including pharmaceutical preparations and ephedra, tracked shipments to the Americas, Africa, Oceania, and West Asia. This operation included regulatory and law enforcement officials and is designed in accordance with the CND resolution for a nine-month period to gather intelligence on diversion of amphetamine-type stimulants (ATS), precursors, clandestine laboratories and links to trafficking organizations. Pre-export notifications (PEN online) served as a primary source of information.

Given the successful results in 2008 of Operation Ice Block, a follow-on operation, Operation PILA, was initiated in 2009 to, inter alia, target pharmaceutical preparations of ephedrine and pseudoephedrine and new smuggling routes. Operation PILA will be conducted over a nine-month period from July 1, 2009, until March 31, 2010. From July to October 2009 10 tons of bulk shipments as well as 31.83 million tablets of ephedrine and pseudoephedrine were suspended, stopped or seized. Of the 10 tons, 7.73 tons were pharmaceutical preparations. The operation revealed that many of the suspicious shipments were destined for Mexico, with the leading source country shifting from China to India. This shift may be a result of new legislative and administrative efforts in China. This year, analysis of data and seizures indicated that India was the source and Mexico the primary destination of ephedrine and pseudoephedrine. A special emphasis was put on pharmaceutical preparations and on the trade in phenylacetic acetic with fewer controls that can be substituted to produce methamphetamine and the amphetamine phenylpropanolamine, P-2. Building on information received from last year, the operation also focused on trafficking and diversion of amphetamine-type stimulants in Africa and West Asia.

As the primary source of the world’s opium poppy and the 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. In 2009, under the auspices of the INCB-led Project Cohesion Task Force participants including the United States, agreed to continue efforts to target acetic anhydride, the key precursor necessary for producing heroin. This time bound voluntary operation continues to focus on the exchange of information on seizures and on identifying diversion and suspicious shipments of chemicals. Operation DICE –involved exchanging information through the INCB Secretariat’s online PEN system from 2008-2009. These cases involved over 135,000 tons of acetic anhydride with China and the United States being the largest exporters of this chemical. Analysis of seizures in a range of countries in Europe, the Middle East and East Asia identified definite patterns of diversion and trafficking. Traffickers are increasingly using new smuggling routes for acetic anhydride in Africa as well as seeking new distributors located in Africa, or Asia, to include Iran and Iraq. In 2009 shipments were stopped in Djibouti, Iran, Iraq, and Egypt, as well as in European countries and in Latin America. In several instances traffickers also exploited small European non-chemical export companies to obtain acetic anhydride. It was also evident that heroin precursors are being smuggled as well as diverted from legitimate trade.

This INCB operation received further political support in coordination with several other efforts, including follow-up to 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. The United Nations Office on Drugs and Crime (UNODC) under the Paris Pact law enforcement coordination mechanism also promoted expanded international cooperation between law enforcement agencies active in border control through and around Afghanistan. The INCB-coordinated Project Cohesion Task Force continued to foster 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 international law enforcement expertise in detecting chemicals. The United States and international partners have made progress in developing an infrastructure capable of achieving increased intelligence sharing, law enforcement cooperation and expansion of regulatory expertise in the region. Other multilateral efforts in the region complement these initiatives.

Potassium permanganate, the primary chemical used in producing cocaine, is an oxidizer that has many legitimate industrial uses. These include waste water treatment, disinfecting, and deodorizing. 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 INCB-led Project Cohesion Task Force focuses on monitoring the imports of potassium permanganate to cocaine processing areas. Developing an effective multilateral effort focused on potassium permanganate has proved difficult, and the INCB and others are encouraging countries in South America to make this a priority in 2010. In 2008-09 Project Cohesion Task Force participants expressed concern over the paucity of information pertaining to the trade of potassium permanganate in Latin America. Despite the lack of multilateral operations focusing on potassium permanganate, Colombia continues to report large numbers of seizures.

In Asia, methamphetamine production, transit, and consumption remain significant problems. To help stem production, trafficking, and abuse in East and Southeast Asia, in 2009 the United States supported bilateral and multilateral initiatives 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. IFCs contribute to developing host nation infrastructure and aid local law enforcement to fuse and share information to detect, disrupt and dismantle drug and drug-related national and transnational threats. The United States also has provided law enforcement training to a variety of countries, including training in 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 counternarcotics 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.

2009 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. The U.S. continues to work 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 2009, the INCB reports that more than 120 countries and jurisdictions (up from 100 in 2008) are now cooperating and providing voluntary reporting on their licit requirements for the aforementioned chemicals. The INCB 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 of 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 $700,000 in 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 to make 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 task forces of Project Cohesion and Project Prism to target precursor chemicals. The United States will promote implementation of the new mechanisms that have been enacted to foster the broader exchange of information and expertise pertinent to the control of methamphetamine and other synthetic drugs. 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 enable the INCB to fulfill its expanding role.

Through the CND the USG is supporting an effort to move phenylacetic acid from Table II to Table I of the 1988 UN Convention in order to increase surveillance, monitoring and control of this precursor chemical that can be used in the production of methamphetamine.

In this hemisphere, the USG will continue to 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 elevated 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 specific recommendations on chemical controls.

Over 50 participants from 17 CICAD Member States participated in the August 2009 Meetings of the Groups of Experts on Chemical Substances and Pharmaceutical Products in Lima, Peru. During the meeting of the chemical experts, member states proposed to revise and update the OAS/CICAD model chemical control regulations. They also proposed using the U.S. Centers for Drug Information (CDI) Program communications network as a forum for the exchange of information by the Groups of Experts on Chemical Substances and on Pharmaceutical Products. The Group initiated the drafting of a guide for an administrative and criminal framework for the control of materials and chemical substances; a manual of best practices for the development of regulatory controls on equipment used to produce synthetic drugs; another best practices guide to increase private sector involvement in the control of chemical substances and pharmaceutical products.

The Group of Experts on Pharmaceutical Products finalized a guide for the control of ephedrine and pseudoephedrine. The Group also continued work on developing an expanded guide on illegal Internet sales of drugs.

In 2009, 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. These seminars also provided law enforcement officers, customs officers, chemists, and regulatory/administrative officials with the knowledge, skills, and resources to safely and effectively conduct their chemical control activities. The U.S. supported a training seminar concerning chemical control and officer safety based on a methodology developed by OAS/CICAD’s Group of Experts on Chemical Substances. This five-day workshop was conducted in cooperation with the Government of Chile for 120 Chilean officials. The U.S. also supported two five-day regional chemical control workshops on chemical controls in Jamaica and St. Lucia.

Synthetic drugs such as methamphetamine and ecstasy, represent a growing threat to OAS/CICAD member states. Supported by U.S resources, Haitian and Dominican experts participated in a five-day seminar in Santo Domingo on synthetic drugs and their effects, the methods and precursor chemicals used to produce them, illicit laboratories and other issues related to these substances. The training activities related to chemical control and synthetic drugs serve to increase awareness among the participants regarding the threats that these substances pose for their communities and the importance of controlling them. Most important, they raise national awareness of the need to update national laws and regulations.

In 2009, with U.S. support, OAS/CICAD continued its series of seminars in response to the growing problem of illegal Internet sales of drugs. A program held in Colombia involved concerned experts from Colombia, Brazil, Ecuador, Panama and Venezuela. The second seminar in the Bahamas included officers from the Bahamas, Barbados, Grenada, Haiti, Jamaica and Trinidad and Tobago. A third seminar in Argentina involved participants from Argentina, Brazil and Chile. All of these seminars served to raise general awareness of the problem of the illegal sale of drugs via the Internet.

A key theme throughout the March 2009 High-level Commission on Narcotic Drugs was the showcasing of best practices and implementation of existing multilateral tools. During the year-long review and the negotiations of new commitments, the U.S. sought to highlight the increased use of unregulated substitute chemicals in synthetic drug manufacture; the need for all countries to develop the necessary legislation to establish strong chemical control regimes; and the importance of using the online PEN system. The United States is increasing cooperation with international chemical producers and transporters in the private sector in order to promote effective diversion-prevention practices. In 2009, the INCB published a draft code of conduct for the industry to promote ways to prevent diversion of chemicals. The U.S. is consulting with the EU and other nations on ways to develop follow-up activities to build on this outreach to promote efforts to implement voluntary measures and increased cooperation between the private and public sectors.

Major Chemical Source Countries and Territories

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.

The Americas

Argentina

As one of South America’s largest producers of precursor chemicals, Argentina is vulnerable to diversion of chemicals into the illicit drug market. Argentina continues to be targeted by traffickers in ephedrine, though a change in import requirements in 2008 eliminated a loophole that traffickers had exploited to bring in illicit ephedrine.

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). Decrees in 2008 and 2009 enhanced the role of the National Administration of Food, Medicine and Medical Technology (ANMAT) to play a role in monitoring precursor chemical trade. Argentina’s National Drug Plan includes steps to enhance criminal charges that can be used against persons diverting precursors toward illegal use.

Following changes in late 2008 enhancing government controls over the importation of ephedrine, legal imports for Argentina’s pharmaceutical industry were minor in 2009. This was an important improvement over 2007 and early 2008, when large imports of the substance were clearly linked to transshipment of the chemical to the U.S. and Mexico. However, the new law does not regulate pseudoephedrine, and there is evidence of continuing efforts by traffickers to illegally import ephedrine. With DEA support, Argentina continues to participate in Project Cohesion and the regional Operation Sin Fronteras (“Without Borders”). 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

Brazil has South America’s largest chemical industry and also imports significant quantities of chemicals to meet its industrial needs. Chemical control initiatives in Brazil have evolved since its initial 1995 law to control chemical products that could be used for cocaine production. Since the law was expanded in 2004, Brazil has the capability to control the illegal production, diversion or trafficking in 146 controlled chemical substances that could be used as precursors for drug production. Considered the most rigorous in Latin America, the law requires that approximately 22,000 companies that actively manufacture, import, export, or distribute listed substances to register with the DPF’s Chemical Control Division and pay yearly fees. These companies are required to file monthly reports online of their sales, purchases, and usages of chemicals. These procedures are managed through the DPF’s Chemical Products Control System (Sistema de Controle de Produtos Quimicos—SIPROQUIM), an internet-based system. The DPF Chemical Control Division has inspected 479 companies through the end of October and has seized 183.3 tons of controlled chemicals.

Additionally, there are twenty-two materials referred to as precursors that are controlled by the National Sanitary Vigilance Agency (ANVISA). This agency is regulated by the Health Ministry. The substances being controlled by ANVISA are finished pharmaceutical products that contain any one of the 146 controlled unfinished substances detailed under Brazilian law.

In addition to carrying out administrative and regulatory duties in chemical control, the DPF also conducted two enforcement interdiction operations in 2009. Operation Seis Fronteras (Six-Borders) is a South American regional chemical control and enforcement initiative that is supported by the DEA. These initiatives have been ongoing for ten years. Phase eleven took place between the dates of March 30—April 3, and between dates August 3-August 7, 2009 respectively.

The DPF performed enforcement activities and mobile checkpoints in the Brazilian states of Rio Grande do Sul, Santa Catarina, Mato Grosso, Mato Grosso do Sul, Rondonia, Parana, Amazonas, and Acre.

DEA reports that the DPF arrested 76 suspects; seized 52 vehicles, 10 firearms, and $212,600 in cash; searched 7,281 subjects, 4839 vehicles, and 632 boats/airplanes during the operations. There were 25 companies inspected resulting in 21 violations cited. The DPF opened 26 new investigations for further follow-up inquiries.

Canada

Canada remains both a destination and transit country for the precursor chemicals used to produce synthetic drugs, particularly methamphetamine and MDMA (3, 4-methylenedioxymethamphetamine, or ecstasy). The U.S. continues to work closely with Canada in countering these threats, and the Government of Canada is making a serious effort to curb the diversion of precursor chemicals required for methamphetamine production for both domestic and U.S. markets. Canadian law enforcement authorities also have worked productively with U.S. counterparts in joint law enforcement operations that 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 continues to increase—which 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

Chile has a large petrochemical industry engaged in the manufacturing, importation, and exportation of thousands of chemical products. Chile has been a source of ephedrine for methamphetamine processing in Mexico. In 2009, Chilean authorities arrested and prosecuted individuals who purchased large amounts of ephedrine through a local chemical company and then covertly sent the ephedrine to Mexico using commercial mailing companies. Chile is also a source of precursor chemicals used in coca processing in Peru and Bolivia.

Chilean law enforcement entities have specialized chemical diversion units. Companies that import, export, or manufacture chemical precursors must register with CONACE, maintain customer records, and are subject to CONACE inspections. There is pending legislation in the Chilean Congress to expand the list of companies subject to inspection by government authorities. CONACE has also requested additional resources to hire more inspectors so it can provide stronger oversight and regulation of the petrochemical industry.

Mexico

Mexico has made significant changes that have had implications for its major chemical manufacturing and trading industries that once produced, imported, and exported most of the chemicals necessary for illicit drug manufacture. Several years ago, production of methamphetamine was on the increase in Mexico. Although such production continues, there are signs that traffickers’ efforts to smuggle and obtain precursors are being thwarted by Mexico’s efforts and assistance from other countries in the region. The country’s Federal Commission for the Protection against Sanitary Risk (COFEPRIS) responded to this issue by taking stringent steps to counter chemical precursor diversion. Previously, COFEPRIS placed restrictions on chemical importers, limited imports to only three ports, and required that pseudoephedrine in transit be kept under guard. The Government of Mexico went further in 2008, announcing the importation of pseudoephedrine and ephedrine would be banned completely. Sellers of pseudoephedrine products were given until the end of 2009 to deplete their inventory, after which use of these products would be illegal in Mexico. 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.

Seizures of both raw ephedrine and pseudoephedrine continue in Mexico and Mexican authorities reported seizures to the INCB that included some of the largest totals it has reported to date: 2.8 tons of raw pseudoephedrine, and 3.2 tons raw ephedrine at the end of 2008.

Mexico’s continued participation in the INCB initiatives, during the periods November 2008-October 2009, have had led to some progress in thwarting traffickers’ efforts to obtain bulk ephedrine and pseudoephedrine. The seizures from this operation provide information on how traffickers are now increasingly turning to pharmaceutical preparations (tablet form) and using new routes to obtain these substances. Seizures showed that shipments continue to originate in India, through a variety or routes through European countries, North America and Central America, and Argentina. Countries of origin included Argentina, Canada, Hong Kong, India, and the United Kingdom. However, seizures also indicate new patterns from India, through South Korea destined for Mexico.

Meanwhile, illicit methamphetamine production continues in Mexico. The INCB indicates that Mexican authorities reported the seizure of a large scale laboratory in Sinaloa that included a seizure of pharmaceutical preparations including pseudoephedrine, in June 2009. They also reported a seizure of a complex methamphetamine production site in Durango in August 2009 that included 22 individual facilities on a 240 hectare site. 32,800 liters of chemical associated with the methamphetamine manufacture process were seized.

The GOM is providing regional leadership, collaborating with and providing training to Central American officials. In 2009, Mexico became a participating member in the PRELAC initiative—Prevention of the Diversion of Precursor Chemicals in Latin America and the Caribbean. PRELAC is a European Commission/United Nations-led working group designed to strengthen the capacities of national administrative control authorities to prevent the diversion of precursor chemicals from the licit market into Latin America and the Caribbean. At the working group’s inaugural session in 2009, members agreed to focus on several initiatives including: establishing a web-based system of information exchange between all participating countries; standardizing precursor control mechanisms and legal frameworks; improving inspection and investigation techniques; developing synergies between the control agencies and chemical operators in both the public and private sector; and enhancing the effectiveness of customs administrations in the control of precursor chemicals. While the effort is in nascent stages, it could potentially enhance the GOM’s efforts to control precursor chemicals over the long term.

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.

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 6 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; the penalties for some chemical trafficking offenses involving methamphetamine 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 the task forces 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.

Asia

China

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. China was the fifth largest exporter of pseudoephedrine with exports of 39,302 kilograms in 2008 according to the Global Trade Atlas. Organized crime groups divert legitimately manufactured chemicals, especially ephedrine and pseudoephedrine, from large chemical industries throughout China to produce illicit drugs. The PRC continues efforts to prevent diversion and is a party to the 1988 United Nations (UN) Convention. The PRC produces and monitors all 23 of the chemicals on the tables included in the 1988 UN Drug Convention. China continues to closely cooperate with the United States and other concerned countries in implementing a system of pre-export notification for dual-use precursor chemicals. China strictly regulates the import and export of precursor chemicals. According to NNCC statistics, PRC authorities successfully investigated 170 cases on illegal trade and smuggling of precursor chemicals in 2008, and seized 1,113 tons of precursor chemicals (compared to 592 tons in 2007).

China is a major producer of licit ephedrine and pseudoephedrine. Many international law enforcement agencies believe that large-scale methamphetamine producers in other Asian countries and Mexico use Chinese-produced ephedrine and pseudoephedrine as a precursor. Numerous examples from criminal investigations confirm this suspicion. Diverted Chinese precursor chemicals may sustain synthetic drug production in other countries as far away as Mexico, Belgium, Indonesia, and the Netherlands. Although China enacted more stringent precursor chemical control laws in November 2005 and is engaged in multilateral and bilateral efforts to stop diversion from its chemical production sector, it has not yet found a way to effectively prevent diversion of precursor chemicals in its large chemical industry.

In November 2005, China passed an Administrative Law on Precursor Chemicals and implemented an Administrative Regulation on Narcotic Drugs and Psychotropic Substances. In the same month, China issued Provisional Administrative Regulations on the Export of Precursor Chemicals to Special Countries, strengthening the regulation of exports of 58 types of precursor chemicals to countries in the Golden Triangle. Twenty-three of these precursor chemicals were classified as more stringently controlled. In 2008, public security agencies throughout China recorded 6.15 tons of “ice” and tablets were seized.

China cooperates in international chemical control initiatives such as Project Cohesion, which targets the diversion of potassium permanganate and acetic anhydride, and Project Prism, which targets the precursor chemicals used in the illicit manufacture of amphetamine-type stimulants. With relation to Project Cohesion, China accounts for 70 percent of the worldwide seizures of potassium permanganate. China continued its participation in the ASEAN and China Cooperative Operations in Response to Dangerous Drugs (ACCORD).

China is a main source for natural ephedra, which is used in the licit production of ephedrine. China is also one of the world’s largest producers of ephedrine, licit synthetic pseudoephedrine, and ephedra products. China has a large pharmaceutical industry, and these products all have legitimate medicinal use, but they can also be used in the production of amphetamine-type stimulants (ATS). The PRC Government, supplemented by stricter controls in critical provinces such as Yunnan and Zhejiang, makes efforts to control exports of these key precursors. Despite these efforts, there is a widespread belief among law enforcement authorities in Asia and Mexico that large-scale production of methamphetamines—most notably in super and mega-labs in the Asia Pacific Rim and in Mexico—uses China-produced ephedrine and pseudoephedrine. Large-scale seizures of Chinese-made chemicals that have been diverted are almost commonplace in law enforcement investigations around the world.

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, although recently there have been laboratories seized in northeast China, specifically Shenyang and Liaoning province. On August 7, 2008, a special operations unit of MPS seized a methamphetamine manufacturing factory in Huizhou, China. The unit arrested six suspects and seized nearly 1,700 kilograms of mixed liquid substance containing methamphetamine.

Traffickers continue to use Guangzhou, Shenzhen, and Zhuhai in Guangdong province as transit and transshipment points for heroin and crystal methamphetamine exiting China. In addition, Xiamen and Fuzhou in Fujian province are major exit points.

Methamphetamine tablets trafficked from the Golden Triangle increased. In 2008, approximately 2.4 tons of methamphetamine tablets from northern Burma were seized in Yunnan province.

India

India is one of the top producers of ephedrine and pseudoephedrine. 2008 data from the Global Trade Atlas indicate that India is the top exporter of ephedrine (188,967 kilograms) and pseudoephedrine (462,761 kilograms).

India has implemented legislation and a system to prevent diversion of ephedrine and pseudoephedrine. However, information from Operation Ice Block indicates 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 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 Narcotics Control Board (NCB). Every loss or disappearance of a controlled substance must also be reported to the Director General, NCB. 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).

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 has also been actively involved in operations like Project Prism which target precursors to manufacture ATS.

India has also been actively involved in international operations dealing with precursor control such as Project Cohesion and Project Prism. 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.

Singapore

Singapore has a large pharmaceutical industry and is a major importer and exporter of both ephedrine and pseudoephedrine, precursors used in the production of methamphetamine. In 2008, data from the Global Trade Atlas indicates that Singaporte was the fourth largest exporter of both ephedrine—with 14,010 kilograms and pseudoephedrine –with 46,501 kilograms. The Global Trade Atlas also indicates that Singapore was the fourth largest importer of ephedrine—with 12,501 kilograms and the third largest importer of pseudoephedrine with 50,014 kilograms. 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 importer/exporters 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 Cohesion 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 U.S. 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.

South Korea

With one of the most developed commercial infrastructures in the region, South Korea (the Republic of Korea or ROK) is an attractive location for criminals to obtain precursor chemicals. The ROK produces and exports precursor chemicals such as acetone, toluene, and sulfuric acid. The ROK continued its international cooperation efforts to monitor and investigate transshipment cases, but most shipping containers never formally enter ROK territory and thus limits the ROK’s ability to intercept narcotics or precursor chemicals. Redoubled efforts by the Korean Customs Service (KCS) have resulted in increased seizures of methamphetamine. Most methamphetamine smuggled into the ROK comes primarily from China.

As of 2009, 25 precursor chemicals are controlled by Korean authorities. Both the Korean Customs Service (KCS) and The Korean Food and Drug Administration (KFDA) participate in Projects Cohesion and Prism. In addition, the KCS, KFDA and other Korean law enforcement agencies, such as the Korean National Police, participate in sub-programs of those projects, such as Data and Intelligence Collection (DICE) and the Information Sharing System (ISS). The KFDA closely monitors imports and exports of precursor chemicals, particularly acetic anhydride, and investigates shipments suspected of being diverted for illicit purposes. Permits must be obtained for all shipments and records of transactions are maintained for a minimum of two years. The KFDA works with governments of several Southeast Asian nations to verify documents and confirm the existence of importing businesses, and sends representatives to the region to investigate. Pending legislation will require manufacturers and exporters of precursor chemicals to register with the government, and will also provide education to Korean businesses to prevent them from unknowingly exporting such chemicals to bogus importers.

The U.S. and ROK authorities have jointly investigated multi-ton illegally exported shipments of acetic anhydride. Other precursor chemicals, including acetone, toluene, hydrochloric acid and sulfuric acid, are produced in large quantities within the ROK for in-country use and for export. In September 2009, prosecutors arrested a Korean suspect who allegedly attempted to smuggle 10 tons of acetic anhydride to Afghanistan through Pakistani agents who are suspected of having shipped 6.6 tons of acetic anhydride to Afghanistan in February.

Taiwan

Taiwan’s chemical industry has long been a driving force in boosting Taiwan’s 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-three (23) chemical precursors listed in the 1988 UN Drug Convention, five (5) chemicals to include ephedrine and pseudo-ephedrine 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

Thailand is a transshipment point and a net importer of amphetamine-type stimulants (ATS). Methamphetamine is smuggled from Burma across Thailand’s northern border for domestic consumption, as well as for export to regional and international markets. Additionally, traffickers move methamphetamine and some heroin from Burma through Laos and across the Mekong River into Thailand’s northeastern border provinces.

Drug smugglers travel south through Laos into Cambodia where they enter Thailand across the Thai-Cambodian border. Drugs are also transported from Burma through Laos to Vietnam and Cambodia for regional export. Thailand is a party to the 1988 UN Drug Convention.

The emergence of crystal methamphetamine or “ice” production in the Shan State of Burma is a serious concern to the Thai authorities. MDMA (ecstasy) trafficking is more common in Thailand. Ecstasy typically is smuggled into Thailand via commercial air carriers from Europe; the drug also is smuggled overland from Malaysia. Most ketamine is believed to transit from neighboring countries, especially Malaysia and Singapore. It is also smuggled into Thailand across the Thai-Cambodian border.

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 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—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.

Europe

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. Belgium and the United Kingdom are also included this year because of their large exports of ephedrine and pseudoephedrine.

Belgium

Belgium has a substantial pharmaceutical product sector. The country has limited manufacture of licit methamphetamine precursors and it is not a final destination for international shipments of these precursors. The illicit ephedrine diversion market is controlled by Mexican traffickers who purchase both legal (i.e., cold medicine and dietary supplements) and illegal ephedrine, and ship it to Mexico. It is then used to produce methamphetamine for distribution in the U.S. Increased regulations in the U.S. appear to have led to increased transshipments in Belgium and other Western European countries of ephedrine and other methamphetamine precursors through their countries. The Belgian authorities reported the seizure of 13,400,000 ephedrine pills in 2 incidents during 2008. Data for 2009 is unavailable. Belgian authorities cooperate with the U.S. on international controlled deliveries (ICD) to the destinations, or by seizing the shipments.

Germany

Germany continues to be a leading manufacturer of pharmaceuticals and in 2008 was the second largest exporter of pseudoephedrine with exports totaling 333,500 kilograms. All types of precursor and essential chemicals are manufactured and/or sold by the vast German chemical and pharmaceutical industry. 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. Although Germany’s developed chemical sector makes the country susceptible to precursor chemical diversion, German legislation tightly controls the movement of chemicals throughout the country. 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 led to required amendments to German law. The amendments, which became effective in 2008, supplement three EU directives by regulating the monitoring of the precursor market by the authorities.

The Federal Center for Drugs and Medical Devices is responsible for authorizing the import, export or transit of all precursor chemicals in Germany. Germany works closely with the USG on chemical control issues, including exchanging information and cooperating both bilaterally and multilaterally, to promote transnational chemical control initiatives. Germany also works closely with the UN’s International Narcotics Control Board (INCB), including on UN chemical control operations, such as Projects Cohesion (targeting potassium permanganate and acetic anhydride) and Project Prismtargeting amphetamine-type stimulants).

The Netherlands

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. Trade in precursor chemicals is governed by the 1995 Act to Prevent Abuse of Chemical Substances. 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 Netherlands is an active participant in the INCB/PRISM project’s taskforce. In 1994, the Netherlands established procedures to maintain records of transactions of an established list of precursor chemicals essential in the production of some 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 Dutch continue to work closely with the U.S. on precursor chemical controls and investigations.

The country remains an important producer of MDMA (ecstasy), although less appears to be destined for the United States than in previous years. The Dutch Government has been proactive in meeting in seizures and law enforcement efforts and according to the National Police, the number of MDMA (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, which makes the MOU singed with China in 2004 an important element of enforcement cooperation. 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 exporters of ephedrine according to Global Trade Atlas data. In 2008, the UK exported 9,000 kilograms of ephedrine—making it the fifth largest exporter of this precursor that can be used for methamphetamine production. The UK strictly enforces national precursor chemical legislation in compliance with EU regulations and is a party to the 1988 UN Drug Convention. 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.

In 2006, the UK reclassified methamphetamine from a Class B to a Class A drug—the same category as cocaine and opiates. The change has lengthened penalties to seven years in prison or an unlimited fine for possession, and up to life in prison for dealing. Ecstasy consumed in the UK is believed to be manufactured in the Netherlands or Belgium; but some tablet making sites have been found in the north of England. Most illicit amphetamines were imported from continental Europe, but some were manufactured in the UK in limited amounts. While the UK government made the “date rape” drug GHB illegal in 2003, GBL, a close chemical equivalent of GHB, remained uncontrolled. In August 2009, UK Home Secretary Alan Johnson announced that the UK intended to classify both GBL and BZP (Benzodiazepine), another “party drug” as Class C soon. As part of this review the UK also intends to ban synthetic cannabionoids, which are chemicals that are sprayed on herbal smoking products. Often referred to by its street name, “SPICE” has become readily available in the UK. Synthetic drugs continued to originate from Western and Central Europe; amphetamines, Ecstasy, and LSD were again mainly traced to sources in Belgium, the Netherlands, and Poland, with some supplies originating in the UK. The makers rely heavily on precursor chemicals made in China. The UK intercepts the most amphetamine in Europe. Since 1998, the UK has seized more than 17.8 metric tons. The annual prevalence rate of 1 percent for amphetamine use in 2007/08 in England and Wales is one third of the level one decade ago, but in Scotland annual rates of amphetamine use increased from 0.5 percent in 2000 to 2.2 percent in 2006.

Major Illicit Drug Manufacturing Countries

Asia

Afghanistan

Afghanistan produces most of the world’s opium. There are indications that the trend in processing heroin and morphine base by drug traffickers is increasing. However, there is no domestic chemical industry, or legitimate use for acetic anhydride, the primary precursor chemical used in heroin production. 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. (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.)

Large quantities of precursor chemicals used in heroin production are illicitly imported into Afghanistan. According to UNODC, markets and processing facilities are clustered in areas that border Iran, Pakistan and Tajikistan. UNODC has reported that trafficking routes for opiates (which are exported) and precursor chemicals (which are imported) are largely similar.

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. And this year, the Government of Afghanistan did not report statistics to the INCB in accordance with Article 12, so the Board was unable to confirm amounts seized.

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 helped 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 including 14,000 liters of acetic anhydride in 2008

Burma

Despite Burma’s overall decline in poppy cultivation since 1998, a dramatic surge has taken place in the production and export of synthetic drugs. 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. Burma is a significant player in the manufacture and regional trafficking of amphetamine-type stimulants (ats).

Most of the chemicals required for illicit dug manufacture are imported and diverted or smuggled into Burma from China, Thailand and India.

The Golden Triangle, where the borders of Burma, Thailand and Laos converge on the Mekong River, is now dotted with drug labs producing synthetic drugs for the Asian market. Drug gangs, primarily ethnic Chinese based in the Burma-China and Burma-Thailand border areas, produce several hundred million methamphetamine tablets annually. These are destined 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, known as “ice.”

Currently there is no accurate methodology for estimating the scale of methamphetamine production in Burma. However, it is clear that production of ATS is extensive, and production of the crystalline form of methamphetamine “ice” is growing sharply. Most ats and heroin 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 United Wa State Army (UWSA), the Shan State Army-South (SSA-S), and groups inside the Kokang autonomous region.

However, Burmese law enforcement officials have achieved some successes, including increased seizures including a nearly thirteen-fold increase in the seizure of methamphetamine tablets and sharp upward spikes in the amounts of precursor chemicals seized. Most notably, there are increased signs of GOB cooperation with foreign law enforcement partners. 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, and prohibited their import, sale or use in Burma.

Indonesia

Diversion and unregulated importation of precursor chemicals remains a significant problem facing Indonesia’s counternarcotics efforts.

Increased law enforcement efforts by the Government of Indonesia appear to be pressuring drug trafficking organizations to change their operations. In the recent past, Indonesian enforcement encountered and destroyed large clandestine MDMA (Ecstasy) and methamphetamine “Super Laboratories.” In 2009, clandestine laboratory operations appear to be much smaller, possibly in response to Indonesian law enforcement efforts. There are also indications that laboratories are being moved outside large metropolitan areas to rural areas where law enforcement is not as prevalent.

Illicit methamphetamine production originates from diverted pseudoephedrine imported into Indonesia from China. Smaller-sized laboratories are becoming much more prevalent in Indonesia than the super labs. Laws to control the diversion of illicit drug precursors such as pseudo ephedrine are still lax, but beginning in 2010, enforcement agencies will have more authority to regulate the importation of precursor chemicals. However, the diversion potential remains with the numerous legitimate large international pharmaceutical and chemical corporations that operate throughout Indonesia.

The scale of amphetamine type stimulant (ats) and Ecstasy manufacturing in Indonesia is already large, and the country may potentially displace Europe as the supply source for Ecstasy in the region.

Iranian drug trafficking organizations smuggle large amounts of methamphetamine into Indonesia via Iranian couriers. On October 19-20, 2009 alone, Indonesian customs seized approximately 50 kilograms of methamphetamine from Iranian traffickers. In late 2009, Indonesian Customs has been making seizures of methamphetamine from Iranian traffickers once per week.

These syndicates secure precursor chemicals from China. Previously, production syndicates relied upon chemists trained in the Netherlands for the production of MDMA (Ecstasy), as well as chemists from Taiwan and Hong Kong for the production of crystal methamphetamine.

Historically, MDMA has been smuggled into Indonesia from sources in the Netherlands or produced in China and smuggled to Indonesia by Chinese organized crime syndicates based in Hong Kong. However, in recent years, importation has been unnecessary as there has been large-scale MDMA and methamphetamine production in Indonesia itself. MDMA and methamphetamine produced in Indonesia is trafficked both domestically and internationally.

An MDMA and methamphetamine laboratory seizure took place in Depok, West Java on May 4, 2009. The Metro Jaya Police Department conducted a two-month-long investigation that resulted seizures of 4 tons of various chemicals, 30 kilograms of methamphetamine, 128 kilograms of ephedrine and 1700 Ecstasy pills, and 15 arrests. Police officials estimated that if all the raw materials in the laboratory were used, 11.5 million Ecstasy pills could have been produced.

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 controls post-market or finished products of precursor chemicals.

Laos

Laos is an important transit point for Southeast Asian heroin, amphetamine-type stimulants (ats), and precursor chemicals en route to other nations in the region. This transit drug trade includes criminal gangs with links in Africa, Latin America, Europe, and the United States, as well as in other parts of Asia. Laos is a party to the 1988 UN Drug Convention.

Individuals or small-scale merchants undertake the majority of street-level methamphetamine sales. Criminal gangs involved in drug trafficking across border areas adjacent to Vietnam, China, Thailand and Burma, including ethnic minority groups operating on both sides of those borders, constitute a particular problem for Lao law enforcement

In December 2007, the Lao National Assembly passed a drug law (Law on Drugs and Article 46 of the Penal Law), signed by the Prime Minister in early 2008, that defines prohibited substances and pharmaceuticals for medical use. In March 2009, the Prime Minister’s Office issued a “Decree” to the revised drug law to clarify criminal liability that includes a list of chemical precursors which could be used for illicit purposes (32 including caffeine).

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.

Laos’ law enforcement and criminal justice institutions remain inadequate to deal effectively with chemical control issues. The limited law enforcement presence in rural areas makes Laos vulnerable 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 2009. There are indications that methamphetamine laboratories may be operating in the northwest.

Malaysia

Malaysia is increasingly a regional production hub for crystal methamphetamine and Ecstasy (MDMA). 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). Small quantities of cocaine are smuggled into and through Malaysia from South America. Methamphetamine, ecstasy, and ketamine, mostly from India, are smuggled through Malaysia en route to consumers in Thailand, Japan, Indonesia, Singapore, China, and Australia. Ketamine from India continues to be an increasingly popular drug in Malaysia. Since 2006, Malaysia has also been a location where significant quantities of crystal methamphetamine are produced. This trend continued in 2009, with methamphetamine laboratories seized in Kuala Lumpur and in Southern Malaysia, and frequent police reports of ethnic Chinese traffickers setting up labs in Malaysia. Nigerian and Iranian drug trafficking organizations are also increasingly using Kuala Lumpur as a hub for their illegal activities.

The Philippines

Crystal methamphetamine remains the primary drug of choice in the Philippines. Intensified nationwide counternarcotics operations by Philippine law enforcement agencies have had an impact on drug prices.

The price of methamphetamine in areas that reportedly have clandestine methamphetamine laboratories, particularly in southern Luzon, had been decreasing in the last quarter of 2009. Wholesale quantities of crystal methamphetamine are smuggled into the country, and it continues to be manufactured clandestinely in the Philippines. Precursor chemicals are smuggled into the country from China, India, and Taiwan through international airports, seaports, the mails, as well as via large unpatrolled expanses of the Philippine coastline. There were nine known transnational criminal drug organizations operating in the country in 2009, compared with three in 2008. Chinese and Taiwanese chemists continue to establish clandestine laboratories in the Philippines for the manufacture of methamphetamine; these organizations remain the most influential foreign drug-trafficking groups in the Philippines, and control domestic methamphetamine production. These traffickers typically produce methamphetamine in relatively small-scale clandestine methamphetamine labs commonly referred to as “kitchen-type” labs. These labs more easily avoid detection by law enforcement authorities, and in the event that they are discovered and destroyed, less equipment and chemicals are lost. These Chinese and Taiwanese chemists rent apartment units, condominiums, and houses in small villages and affluent residential villages in rural and metropolitan areas. The move away from large “mega-labs” likely resulted from their having been targeted in the past by law enforcement agencies. In addition to large organized criminal transnational organizations, DDB reported that there were 85 local drug-trafficking groups in 2009.

The Philippines is a likely source of methamphetamine for other countries in East Asia and Oceania such as Australia, Canada, Japan, and South Korea. In addition, the Philippines is a primary source of methamphetamine for Guam and Hawaii.

In November 2009, the DDB approved the inclusion of N-Benzylpiperozine (BZP) in the list of dangerous drugs. In 2009, authorities seized 931 kilograms of methamphetamine. During the year, Phillippine Drug Enforcement Agency (PDEA) and Philippine National Police (PNP) also raided several clandestine laboratories, resulting in the seizure of chemicals and laboratory equipment along with the arrest of ethnic Chinese chemists and traffickers.

Latin America

Bolivia

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 Counter Narcotics 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.

EISUQ specializes in investigating and controlling the traffic of chemical substances and precursors to prevent diversion to drug trafficking. EISUQ primarily searches for the substances used in the traditional cocaine preparation process, such as sulfuric acid, kerosene, diesel oil, and limestone. EISUQ is headquartered in La Paz and has officers stationed in Oruro, Cochabamba and Santa Cruz.

EISUQ reports that traffickers attempt to evade law enforcement and to speed up the cocaine production process by replacing traditionally used chemical substances with new substances that are not prohibited under Bolivian Law 1008, but may be used in the more efficient “Colombian” production method. For example, EISUQ reports that traffickers are replacing sulfuric acid with “electrolyte,” a substance found in car batteries, and traditional base solvents, such as limestone and cement, with “urea.”

Through September 2009, EISUQ seized 719.2 metric tons of solid substances (a 97 percent increase from 2008) and 1,277,240 liters of liquid substances (a 20 percent increase from 2008).

Pseudoephedrine can be easily obtained in markets but there is little evidence of domestic methamphetamine production.

Colombia

Chemical trafficking is a serious problem in Colombia. Unlike illicit drugs, chemicals have a legitimate use. The onus is on the police to prove that the chemicals are intended for illicit drug 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 have also been diverted at large Colombian chemical companies, whose management has no knowledge of the illegal activities. Chemicals, such as potassium permanganate, are imported into Colombia. 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 Colombian National Police (CNP) has a special investigative unit Chemical Sensitive Intelligence Unit (SIU) dedicated to national and international enforcement of precursor chemical control laws that was formed in June of 1998. The seizure and interdiction of precursor chemicals used to produce cocaine and heroin have been steadily on the rise. The unit’s primary mission was to confirm the existence of companies bringing in chemicals from other countries including the United States. They were also charged with inspecting the companies to confirm that they were conducting a legal business. The primary mission of the group changed near the end of 2000 when the focus shifted to investigative work as opposed to solely regulatory inspections.

In 2007, the regulatory function was transferred to a separate unit within the SIU, while the SIU maintained its investigative focus. The SIU unit is currently comprised of 40 members, while the Regulatory Unit is comprised of 20 members. The SIU is spread out over four cities in Colombia (Bogota, Medellin, Villavicencio, and Cali), and the Regulatory Unit is based in Bogota but travels as needed to other cities within Colombia.

The primary mission of the SIU is to target and dismantle large-scale chemical trafficking organizations that provide chemicals to cocaine, heroin, and synthetic drug producing organizations within Colombia and Mexico. The SIU and Regulatory Unit are also responsible for spearheading the multi-national chemical targeting operation Six Frontiers (“Seis Fronteras”). The SIU coordinates all operations within Colombia in which participants include the Colombian Military, DAS, CTI, Colombian Prosecutors office, Colombian Customs, and various other agencies. This operation has resulted in large quantities of chemicals being seized by participating countries (with Colombia as the lead). By October 2009, the SIU had arrested 108 people and seized 2,203 gallons of hydrochloric acid, 2,197 kilograms of calcium chloride, 76,781 kilograms of sulfuric acid, 260 kilograms of active carbon, 3.2 kilograms of acetic anhydride, 145 kilograms of potassium permanganate, 1,400 kilograms of sodium carbonate, 2,350 kilograms of urea, 38,732 kilograms of cement, 1,630 gallons of methyl ethyl ketone (MEK), 325 kilograms of sodium metabisulfite, 478 gallons of gasoline, 371 gallons of diesel fuel, 16,284 kilograms of solvent #1A, 5,644 kilograms of isopropyl alcohol, 47,400 kilograms of thinner, 8,150 kilograms of potassium chloride, 70 kilograms of lime, 500 kilograms of caustic soda, 9,550 gallons of N-propyl acetate, 60 gallons of acetone, and 19 kilograms of ephedrine.

Ephedrine seizures in Colombia increased slightly in 2009. Although Colombian drug trafficking organizations profit from the illicit trafficking of ephedrine, a key ingredient in decongestant medication, there is little evidence that the traffickers are using the substance as a chemical precursor in large-scale methamphetamine production. There have been minor seizures of ecstasy in Colombia, but no indication of significant production or export. The GOC has held a number of seminars and training sessions on this threat.

Peru

Peru is a major importer of precursor chemicals that can be 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 with a major concentration in the coca valleys. Peru also produces some precursor chemicals such as sulfuric acid and calcium oxide that can be used for processing coca base into cocaine base.

In Peru, 90 percent of chemical precursors are smuggled from Lima to drug trafficking areas where the chemicals are utilized in the cocaine manufacturing process. Drug traffickers transport precursor chemicals to cocaine labs using individuals, animals, vehicles, and boats.

Peruvian National Police (PNP) have identified principal routes of precursor chemicals from Lima into the drug sources areas. In 2009, the PNP installed a number of checkpoints strategically located in the gateways to the Andes and in the jungle, as part of the effort to control and prevent chemicals from reaching coca maceration pits and cocaine laboratories. Drug traffickers now seek alternate routes to move chemicals.

On May 28,1993, the GOP created the PNP’s Control and Investigative Unit for Chemical Precursors (DICIQ), a multi-faceted initiative focused on chemical company audits, interdiction efforts, and liaison with industry and regulatory agencies through Minister of Production and Peruvian Internal Revenue and Customs authority (SUNAT). The major objective is to stop the illicit diversion of acetone, sulfuric acid, hydrochloric acid, and potassium permanganate. PNP efforts resulted in multi-ton seizures totaling 498 metric tons of these chemicals in 2009.

In 2009, 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 focuses on regulatory inspections/audits of suspect chemical distributors, interdiction operations along routes where chemicals are transported; disrupting and dismantling criminal organizations involved in the diversion and movement of illicit chemicals. DICIQ was responsible for the seizure of 75 metric tons of chemical precursors in 2009, as well as asset seizures of nearly three million U.S. dollars, and the arrest of 81 traffickers.

The Government of Peru continues to work on developing a chemical user registry, which is needed to fully implement the Precursor Chemical Control law. On November 17, 2009, the Peruvian Congress approved a law that enforces the control of and stipulates penalties for trafficking in chemical precursors. The U.S.G. is supporting the creation of specialized mobile police units to expand interdictions of precursor chemicals being trafficked all over the country.

Methamphetamine Chemicals

Recent efforts in reducing and preventing methamphetamine production through a global campaign to prevent diversion of precursor chemicals are forcing traffickers to seek new sources, trafficking routes, and production methods. 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.

High-level meetings of the UN Commission on Narcotic Drugs and a special plenary meeting at the UN General Assembly led to significant increased commitments by the international community on the topic of Amphetamine-type stimulants (ATS). This issue was one of the top at the decade review of the 1998 UN General Assembly Special Session commitments at 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.)

The UN Security Council also committed to greater action against the diversion of precursor chemicals used in production of heroin in Afghanistan—the world’s largest producer.

Combat Methamphetamine Epidemic Act (CMEA) Reporting

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.

Major Exporters and Importers of Pseudoephedrine and Ephedrine (Section 722, CMEA)

This section of the INCSR is in response to the Section 722 requirement for reporting on the five major importing and exporting countries of the identified chemicals. In meeting these requirements, the Department of State and DEA considered the chemicals involved and the available data on their export, import, worldwide production, and the known legitimate demand for them.

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, 2008 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 2008 than in any previous year. It is still not fully sufficient to enable any accurate estimates of diversion percentages based on import data. There are significant numbers of countries which have yet to report their legitimate domestic demand to the INCB on a regular basis. The number of countries reporting legitimate data has increased from 100 in 2008 to 120 in 2009. 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 120 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 most countries have not made any attempt to reconcile the trade data and their own reporting of licit requirements. For the first time, there are some signs of countries beginning to make efforts to reconcile the data. For instance, some countries that noted licit requirements had not reported into the Global Trade data exports or imports and have begun to do so.

Thus far the economic analyses required by CMEA, are not possible because of insufficient and constantly changing 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 continue to work 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. Often the collection and reporting of such data requires a regulatory infrastructure that is beyond the means of some governments in question. The USG continues to support the INCB’s efforts to assist countries in this regard. Moreover, efforts to support the implementation of prior resolutions and global commitments were a key USG objective realized in the High-level Commission on Narcotic Drugs to review the 1998 UNGASS commitments. This report provides export and import figures for both 2007 and 2008 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 2004-2008 and provide an indication of the volatility of the trade in pseudoephedrine and ephedrine. We are using the 2008 data in this cycle of review to identify the major participants in the trade in ephedrine and pseudoephedrine.

Ephedrine and Its Salts: Export Statistics
(Commodity: 293941)

 

Reporting Country

2004

2005

2006

2007

2008

Reporting Total

 

 

255,734

303,059

 

India

79,708

217,106

185,804

221,105

188,967

Denmark

1,400

2,100

1,300

4,500

24,500

Germany

23,100

51,100

33,200

31,100

22,700

Singapore

12,555

16,350

14,550

12,426

14,010

United Kingdom

2,500

3,700

7,300

5,900

9,000

Subtotal

119,263

290,356

242,154

275,031

259,177

United States

4,388

5,542

596

5,821

1,120

 

Analysis of Export Data: According to the GTA data the top five exporters of ephedrine in 2008 include —India, Denmark, Germany, Singapore, and the United Kingdom. Although in 2007, Belgium edged out the United Kingdom for the third largest exporter, this year Belgium dropped of the list with 0 exports listed this year. (It is unclear if there are no exports or if Belgium did not report.) The lists for 2006 and 2005 included India, Germany, Singapore, the United Kingdom, and China. In 2008 the aggregate amount of ephedrine exported by the top five countries declined from 275,031 kilograms in 2007 to 259,177 kilograms. The United States is the eighth largest exporter. The worldwide aggregate volume of ephedrine exports that was reported by the Global Trade Atlas increased from 303,059 kilograms in 2007 to 519,474 kilograms in 2008. This overall increase included increases by almost every exporter with the exception of the top exporter India and the United States. Exports of ephedrine from the United States increased from 596 in the 2006 level to 5,821 kilograms in 2007 and to 1,120 kilograms in 2008.

Pseudoephedrine and Its Salts: Export Statistics
(Commodity: 293942)

 

Reporting Country

2004

2005

2006

2007

2008

Reporting Total

 

 

722,044

1,132,665

 

India

303,157

270,600

301,068

360,718

462,761

Germany

579,400

389,700

229,700

546,400

333,500

Taiwan

41,141

31,546

45,830

43,785

66,180

Singapore

0

0

0

43,750

46,501

China

177,907

107,914

50,279

70,591

39,302

Subtotal

1,101,605

799,760

626,877

1,065,244

948,244

United States

55,540

28,895

36,715

14,714

26,499

 

For pseudoephedrine, the aggregate volume of worldwide exports dropped to 1,032,207 kilograms in 2008 from 1,132,665 kilograms in 2007. As in the past two years, the top five exporters of pseudoephedrine were India, Germany, Taiwan, Singapore, and China. Germany and Taiwan showed decreases, but India, Singapore, and China all showed increases. Exports from the United States as the seventh largest exporter also rose from 14,714 kilograms to 26,499 kilograms.

Ephedrine And Its Salts: Import Statistics
(Commodity: 293941)

 

Reporting Country

2004

2005

2006

2007

2008

Reporting Total

 

 

191,766

321,975

 

South Korea

7,600

17,550

17,150

15,650

25,150

Argentina

2,599

3,925

6,100

20,450

15,650

Indonesia

15,110

16,177

15,407

11,407

12,893

Singapore

14,529

19,875

12,750

14,000

12,501

Denmark

0

600

700

5,000

9,500

Subtotal

39,838

58,127

52,107

66,507

75,694

United States

218,118

178,657

89,624

166,886

81,432


Pseudoephedrine and Its Salts: Import Statistics
(Commodity: 293942)

 

Reporting Country

2004

2005

2006

2007

2008

Reporting Total

 

 

 

 

 

Egypt

 

0

0

0

60,973

Switzerland

95,114

67,800

38,891

56,399

54,952

Singapore

24,121

37,830

45,400

50,950

50,014

Thailand

35,578

30,475

43,955

34,929

45,600

South Korea

28,380

32,050

34,150

27,800

42,230

Subtotal

183,193

168,155

162,396

170,078

253,769

United States

616,346

319,998

171,195

312,209

148,468

 

Analysis of Import Data: This year’s top five ephedrine importers include South Korea, Argentina, Indonesia, Singapore and Denmark. South Korea and Singapore have been on the list three years in a row. Indonesia continues to be on the list for the second year. U.S. imports of ephedrine rose from 89,624 kilograms to 166,886 kilograms in 2007 then showed a marked decline to 81,432 kilograms in 2008. The 2007 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. The aggregate volume also fluctuated from 188,606 kilograms in 2006 to 314,419 kilograms in 2007 and to 208,738 kilograms in 2008.

Shifts in trade of pseudoephedrine have also resulted in a change in the top five importers for 2008 that now include Egypt, Switzerland, Singapore, Thailand, and South Korea. Egypt had not previously reported any imports of pseudoephedrine, although they had reported annual legitimate requirements of 54,000 kilograms. The United Kingdom’s is no longer on the list because imports continued to drop significantly from 140,600 to 33,300.kilograms from 2006-07 and then to 18,600 in 2008.

Mexico in the top five in 2006 has also continued to its dramatic declining volume —down from 43,428 kilos in 2006 to 11, 502 in 2007 and now down to 2,325 kilograms in 2008. 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 remains the top importer of pseudo ephedrine with imports of 148,468 kilograms in 2008. However, this is down from of 312,209 kilograms in 2007, which in turn was up from 171,195 kilograms in 2006.

After a significant increase in 2007, the aggregate imports from the top five importers of pseudoephedrine this year declined from 482,287 kilograms in 2007 to 402,237 kilograms in 2008. 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 in sales or represents a temporary statistical variance. U.S. imports are expected to continue to decline next year.

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.

Trade data also fails to reflect illicit smuggling that has been detected by 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 that 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 methamphetamine production and trafficking in 2007-09. 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 was detected 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 or less controlled phenylacetic acid 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 and Syria for example, have reported licit national requirements for pseudoephedrine (55 metric tons and 50 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. Egypt provided for the first time trade data on these substances. It is unclear why the import/export of these two substances is so high or the reason for the significant increase legitimate needs.

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. Traffickers are also clearly exploiting sources for preparations of these substances in high volumes. 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.

INCB Tables on Licit Requirements

 

Annual legitimate requirements reported by Governments for ephedrine, pseudoephedrine, 3,4-methylenedioxyphenyl-2- propanone, 1-phenyl-2-propanone and their preparations. (Kilograms)

Status: 13 Jan 2010



Country or territory
Ephedrine
Ephedrine preparations
Pseudo-ephedrine
Pseudo-ephedrine preparations
3,4-MDP-2-Pa
P-2-Pb           
Afghanistan
50
0
5 000
0
0
0
Albania
1
 
 
 
 
 
Algeria
10
 
17 000
 
 
 
Argentina
156
 
9 700
 
 
1
Australia
5
15
9 000
1 250
 
40
Austria
130
67
1
1
1
1
Azerbaijan
20
 
10
 
 
 
Bangladesh
368
 
49 021
 
 
 
Barbados
250
 
160
 
 
 
Belarus
 
60
50
 
1
1
Belgium
250
 
21 000
 
0
200
Belize
 
 
P
P
 
 
Benin
2
 
 
15
 
 
Bosnia and Herzegovina
20
 
1 500
 
0
0
Botswana
300
 
 
 
 
 
Brazil
2 200
 
12 160
 
0
3 807
Bulgaria
50
 
 
 
 
 
Cambodia
200
50
300
900
 
 
Canada
2 000
5
20 000
 
0
0
Chile
270
 
6 800
 
0
0
China
140 000
 
110 000
 
 
 
Hong Kong SAR
4 500
0
4 300
0
0
0
Macao SAR
1
10
1
159
0
0
Colombia
26
 
20 393
 
 
 
Cook Islands
 
1
 
 
 
 
Costa Rica
1
 
918
 
0
0
Côte d'Ivoire
31
1
0
0
0
0
Croatia
100
 
400
 
 
 
Cuba
140
 
 
5
 
 
Cyprus
 
 
100
 
 
 
Czech Republic
660
14
2 300
2 000
0
1
Democratic People's Republic of Korea
2 300
 
 
 
10
 
Democratic Republic of the Congo
250
 
900
 
 
 
Dominican Republic
100
 
 
500
 
 
Ecuador
100
 
7 500
 
 
 
Egypt
2 000
 
58 000
2 000
 
 
El Salvador
10
5
0
 
 
 
Estonia
6
 
 
 
 
 
Falkland Islands (Malvinas)
 
1
 
1
 
 
Finland
100
 
 
1 000
 
5
Georgia
100
25
50
25
 
 
Germany
8 000
 
20 000
 
1
3 046
Ghana
2 000
 
700
 
 
 
Greece
50
 
320
 
 
 
Guinea
36
 
 
 
 
 
Guinea-Bissau
0
0
0
0
0
0
Guyana
 
 
85
 
 
 
Haiti
150
 
360
 
0
0
Honduras
150
 
 
 
 
 
Hungary
800
 
0
0
300
1 421
Iceland
1
 
1
 
 
 
India
 
 
0
0
 
0
Indonesia
12 058
 
29 452
 
 
 
Iran (Islamic Republic of)
50
1
55 000
10
6
51
Iraq
3 000
 
12 000
 
 
 
Ireland
1
1
1
863
0
0
Israel
15
 
1 822
21
 
 
Italy
126
 
25 528
 
 
4 011
Jamaica
 
 
 
 
0
0
Japan
210
 
10 000
 
 
 
Jordan
1 650
 
20 000
 
 
60 500
Kazakhstan
818
 
1
 
 
 
Kenya
3 000
 
3 500
 
 
 
Kyrgyzstan
0
 
20
 
0
0
Latvia
25
27
41
383
 
 
Lebanon
1
 
150
 
0
0
Lithuania
 
1
 
600
 
 
Madagascar
702
 
150
 
 
 
Malawi
1 000
 
 
 
 
 
Malaysia
410
0
15 625
1 500
0
0
Malta
 
220
 
220
1
1
Mauritius
0
0
0
0
0
0
Mexico
P
P
P
P
 
 
Monaco
0
0
0
0
0
0
Mongolia
1
 
 
 
 
 
Montenegro
 
1
 
1
 
 
Montserrat
 
1
 
1
 
 
Morocco
1
0
1 024
0
0
0
Mozambique
3
 
 
 
 
 
Myanmar
3
 
 
 
 
 
New Zealand
50
 
650
 
 
 
Nicaragua
 
 
200
 
 
 
Nigeria
3 849
 
5 823
 
 
 
Norway
300
 
 
 
 
1
Pakistan
22 000
 
48 000
 
 
 
Panama
25
30
2 500
2 500
 
 
Papua New Guinea
1
 
200
 
0
0
Paraguay
 
0
2 500
0
0
0
Peru
39
 
2 494
1 425
 
 
Philippines
61
 
112
 
0
0
Poland
100
 
3 600
 
 
 
Portugal
 
 
15
 
 
 
Republic of Korea
15 950
 
32 500
 
 
 
Republic of Moldova
 
10
 
150
 
 
Romania
192
 
4 575
 
 
 
Russian Federation
1 500
 
 
 
 
 
Saint Helena
 
1
 
1
 
 
Sao Tome and Principe
0
0
0
0
0
0
Serbia
55
 
600
 
 
 
Slovakia
3
1
1
0
0
0
Slovenia
3
 
350
 
 
 
Solomon Islands
0
1
0
1
0
0
South Africa
10 000
0
10 000
0
0
0
Spain
1 154
 
7 005
 
0
 
Sri Lanka
 
 
0
0
0
0
Sweden
177
 
1
 
1
25
Switzerland
 
 
 
 
0
 
Syrian Arab Republic
1 000
 
50 000
 
 
 
Tajikistan
38
 
 
 
 
 
Thailand
16
 
36 900
 
 
 
Turkey
2 000
 
23 000
 
 
 
Uganda
200
1
2 000
6
 
 
United Arab Emirates
200
 
2 000
 
 
 
United Kingdom
3 335
 
6 918
 
3
0
United Republic of Tanzania
950
 
500
 
 
 
United States of America
140 260
 
511 100
 
0
46 803
Uruguay
 
 
22
 
 
 
Venezuela (Bolivarian Republic of)
1 000
 
20 000
 
 
 
Yemen
 
 
5 000
 
 
 
Zambia
5
 
10
 
 
 

 

Notes: The names of territories and special administrative regions are in italics.

A blank field signifies that no requirement was indicated or that data were not submitted for the substance in question.
A zero (0) signifies that the country or territory has no licit requirement for the substance.

Reported quantities of less than 1 kg have been rounded up and are reflected as 1 kg. The letter “P” signifies that importation of the substance is prohibited.

a 3,4-Methylenedioxyphenyl-2-propanone.
b 1-Phenyl-2-propanone.



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