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U.S. Department of State

Diplomacy in Action

2012 INCSR: Chemical Controls


Bureau of International Narcotics and Law Enforcement Affairs
Report
March 7, 2012

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2011 Trends

Preventing diversion of precursor chemicals from legitimate trade is one key goal of the 1988 UN Convention. Specifically, state parties are required under article 12 to monitor international trade in chemicals listed under Tables I and II of the Convention. These tables are regularly updated to account for changes 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. The Convention further encourages state parties to license all persons and enterprises involved in the manufacture and distribution of listed chemicals. Subsequent resolutions from the UN Commission on Narcotic Drugs (CND)—the UN’s primary narcotic drug policy-making body—have provided additional guidance to states on how to implement these obligations according to specific best practices. The INCB is an independent, quasi-judicial body that monitors the implementation of the three United Nations international drug control conventions. The underlying strategy is to monitor the trade in drug precursors and prevent transactions to suspicious customers.

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-methylenedioxymethamphetamine 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.

Stepped up cooperation by the United States and other nations in controlling precursor chemicals in 2011 has forced drug traffickers to seek new sources of supply and ways to circumvent the traditional processing and smuggling methods. Governments are sharing data on chemical shipments through the INCB. They are also following up by analyzing the data and by targeting diversion through increased monitoring, surveillance and identification of legislative loopholes. Regional and multilateral cooperative efforts continue to be critical in this regard. These efforts build on a variety of bilateral, regional and multilateral mechanisms, such as the United Nations and the Organization of American States (OAS).

Methamphetamine. Abuse of amphetamines, including methamphetamines, increased across the globe in 2011. Although methamphetamine use may have stabilized in the United States, the United Nations Office of Drugs and Crime (UNODC) has reported increased use across Asia and resurgence in Europe. Seizures took place for the first time in Belarus, Lithuania, as well as in the Netherlands, Poland, and Portugal. Moreover, production of methamphetamine continues to rise in this hemisphere as well as in Asia. The two key precursor chemicals used in methamphetamine production, ephedrine and pseudoephedrine are not under international controls. However, they are included in a special monitoring list of chemicals not included in the 1988 UN 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 under INCB supervision. As a result of a 2006 UN CND resolution, governments are also encouraged to provide voluntary estimates specifically of licit ephedrine and pseudoephedrine licit requirements to allow for better tracking of the export and import of such precursors.

In 2011, the United States, the INCB and other international allies stepped up efforts to prevent diversion of ephedrine and pseudoephedrine into illicit channels. Traffickers have been increasingly forced to seek new sources of supply, find substitute chemicals and new smuggling routes and techniques. Many countries in the western hemisphere have made legislative and regulatory changes to tighten controls on ephedrine and pseudoephedrine. The result has been increased seizures and arrests, as well as stopped shipments. Many Central American nations have banned all import and export of these precursors. Australia and other Asian countries have strengthened regulations controlling these substances. These changes, combined with increased use of the INCB’s pre-export notification system, are promoting increased tracing and monitoring of bulk shipments. Real–time communication of exports has further allowed a more complete and systematic reporting regime covering the international trade in synthetic drug precursors. This effort, which began in 2006, was institutionalized through a CND resolution, which mandated the INCB to collect and share information with law enforcement and regulatory agencies.

A prerequisite for communicating on chemical control matters is development of the infrastructure of commercial information and regulation—not a simple task for many countries. At the end of 2011, the INCB reported that more than 126 countries and jurisdictions (up from 100 in 2008) are now cooperating and providing voluntary reporting on their licit requirements for methamphetamine precursor 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 use the data to determine whether importation is warranted – or, if no legitimate commercial use is apparent, whether pending shipments require additional law enforcement scrutiny.

One of the largest seizures in Mexico was a 1.1 metric ton seizure of ephedrine at a large scale illicit laboratory in March 2011. In reaction to the tightened controls and increased seizures, traffickers have increased efforts to develop new routes originating in or transiting through more vulnerable nations. For instance, West Africa is now a source of methamphetamine destined for Asia and trafficking through East Africa has been reported. Pakistan has also emerged as a transit country, and trafficking from Bangladesh was also reported. Seizure statistics and law enforcement information indicates an increase in criminal efforts to take greater advantage of finished pharmaceutical products containing precursor chemicals by extracting such chemicals from them. To avoid the detection of bulk shipments, traffickers have been forced to seek pharmaceutical preparations that contain ephedrine and pseudoephedrine. Also, there are increased efforts to substitute chemicals in methamphetamine production.

To address this, the CND in 2010 voted to increase controls over phenylacetic acid—an alternate methamphetamine precursor. This followed results of an INCB task force under Project Prism that revealed increased use of phenylacetic acid and pharmaceutical preparations in methamphetamine production. 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, but China remains a major source of diverted precursors around the world. Many criminal investigations highlight China’s role as the source of the precursor.

In 2011, several countries including El Salvador, Guatemala and Nicaragua expanded their control measures to cover derivatives of phenylacetic acid. Canada adopted legislation to prohibit anyone from possessing and/or production of any substance that can be used in methamphetamine production.

Heroin. In 2011, the United States continued cooperative efforts to target the precursor chemicals used to produce heroin, primarily acetic anhydride. International regulatory efforts to track the commercial flow of precursor chemicals were also given a boost. Operational reporting data revealed that most acetic anhydride is diverted while passing through domestic channels of the producing country.

In 2011, the United States joined with other nations to focus on acetic anhydride. The Government of Afghanistan informed the INCB that there is no legitimate use for acetic anhydride in Afghanistan and now seeks to block all imports of the substance. Afghanistan’s neighbors and donor countries continue to work with Afghanistan to address this issue. In November 2011, India hosted a meeting of the Paris Pact that included donor nations as well as Afghanistan’s neighbors to develop a regional strategy to target acetic anhydride. The United States continued to step up law enforcement pressure on traffickers by increasing cooperative efforts under the INCB-led operations. These efforts build on the success of INCB Project Cohesion Task Force-led Operation Dice (Data and Intelligence Collection and Exchange) and DICE 2 that included increased seizures, stopped shipments and identification of suspicious consignments involving hundreds of tons of acetic anhydride.

In 2011, the United States joined with other nations to promote the implementation of Security Council resolution 1817/2008 that focuses on Afghanistan, and the need for countries to target acetic anhydride. 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, and specialized middlemen now seek new routes and methods for acetic anhydride smuggling and diversion as demonstrated by the results and analysis of Operation DICE-2, which lasted nine months with the support of 60 countries. The INCB reviewed 860 international shipments of acetic anhydride, which led to the seizure of over 26 tons. These cases involved large scale seizures of acetic anhydride destined for the illicit manufacture of heroin. Analysis of seizures in a range of countries in Europe, the Middle East and East Asia identified definite patterns of diversion and trafficking. For instance, traffickers are increasingly smuggling acetic anhydride through Africa, as well as seeking new distributors there or in Asia, to including Iran and Iraq, or exploiting small European non-chemical export companies to obtain acetic anhydride. Analysis also demonstrated that heroin precursors are being illegally smuggled as well as diverted from legitimate trade.

Cocaine. Potassium permanganate, an oxidizer, is the primary precursor chemical used in producing cocaine. It is used to remove the impurities from cocaine base. It has many legitimate industrial uses, including waste water treatment, disinfecting, and deodorizing. Potassium permanganate also can be combined with pseudoephedrine to produce methcathinone, a synthetic stimulant that is also a controlled substance.

In South America, the Project Cohesion Task Force focuses on monitoring the imports of potassium permanganate to cocaine processing areas. Developing an effective multilateral effort focused on potassium permanganate has proved difficult because of the vast licit uses of this chemical. However, the United States, the INCB and others are encouraging countries in South America to make this a priority in 2012. While reporting and seizures seemed to indicate that global trade in potassium permanganate was down in 2010, in 2011 it appeared to be up to previous levels. 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 and notes concern about illicitly manufactured potassium permanganate.


The Road Ahead

The United States continues to work with international partners to assist other countries to implement the provisions of the 1988 UN Convention, monitor those substances on the special surveillance list, and identify new substitute chemicals that can be used for illicit drug production. Development of effective chemical control regimes and legislation is critical. 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.

Against this backdrop, the United States will promote efforts through Project Cohesion and Project Prism to target precursor chemicals. The United States will continue to foster the broader exchange of information and expertise pertinent to the control of methamphetamine and other synthetic drugs. The United States will also urge countries to avail themselves of the Pre-export Notification (PEN) system to 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. To promote the full implementation of the CND resolution and support ongoing INCB activities, including Project Prism, the Department of State has contributed $700,000 yearly from 2007-2011 to UNODC.

In this hemisphere, the United States works through the Inter-American Drug Abuse Control Commission (CICAD)of the Organization of American States (OAS) to further cooperation against diversion of precursor chemicals. CICAD receives U.S. support to counter the trafficking and abuse of illegal drugs, including methamphetamine. Guided at the policy level by CICAD Commissioners (delegates from the 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 meet annually.

II. 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. Diversion of 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

Special Monitoring List: In 1996, the United States 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 under INCB supervision. The list is regularly reviewed, but it takes time to update new analogues of existing precursors. As a result, criminals vigorously exploit delays and gaps in the listings.

Regional Bodies. The regulatory framework codified by the United Nations does not exist in isolation. Regional bodies also have worked to complement the regulatory role of the UN. In 2004, the European Union (EU) enacted binding legislation to regulate chemical control monitoring among all of its member states. External trade between the European Union and international actors is also covered. 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 to cooperate on chemical control issues since 1997, and annual bilateral meetings take place to coordinate efforts. The EU also has actively collaborated with the United States on multilateral chemical control initiatives, including CND resolutions. OAS is engaged on the issue of chemical control within the western hemisphere.


Major Chemical Source Countries and Territories

This section includes countries with large chemical manufacturing or trading industries that have significant trade with drug-producing regions and those 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 lack of adequate chemical control legislation or 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. The next section focuses on illicit drug manufacturing. Each of these two sections is broken down by region.

The Americas

Argentina

Argentina is one of South America’s largest producers of precursor chemicals and remains a source of potassium permanganate. The Government of Argentina (GOA) has banned imports or exports of ephedrine. The GOA has enhanced its precursor chemical regulatory framework and port and border controls and related criminal investigations in combating the traffic in precursor chemicals. Argentina is a party to the 1988 UN Drug Convention and has laws meeting the Convention's requirements to track chemicals. Argentina restricted the importation and exportation of ephedrine, both as a raw material and as an elaborated product, in 2008, resulting in a substantial decrease in legal ephedrine imports in both 2009 and 2010. In addition, the GOA has taken steps to implement CND resolution 49/3. In August 2010, Argentina implemented the INCB’s online Pre-Export Notification (PEN) system.

Brazil

Brazil’s chemical industry continues to grow as expanding exports of manufactured products and growing domestic markets have increased the demand for chemicals. One of the world’s ten largest chemical producers and the leader in Latin America, Brazil is also the only country that borders all three Andean cocaine producing countries.

Brazil is a party to the 1988 United Nations Convention and passed its first chemical control law in 2001 with an updated 2003 decree imposing strict controls on 146 chemicals that could be used to produce narcotic substances. The Brazilian Federal Police (DPF) established regulatory guidelines for chemical handlers and control and monitor chemical products throughout the country. In 2011, the DPF established a Criminal Diversion Investigations unit and set up a national computer system to track chemical shipments. Strict restrictions on ether and acetone shipments have caused traffickers to use substitutes for cocaine processing, such as cement and lime. These two materials, as well as kerosene and gasoline, are controlled by Brazil for exports to Bolivia, Colombia and Peru as essential substances for cocaine production, but are not controlled domestically in Brazil.

Brazil uses the PEN to report legitimate exports. Brazil currently controls both potassium permanganate and acetic anhydride for quantities in excess of 1 kilogram/1liter and is in the process of drafting new legislation to implement stricter controls. The DPF Chemical Diversion Investigations Unit works closely with the USG and with its neighbors to target diversion.

Canada

Canada continues to be a destination and transit country for the precursor chemicals used to produce synthetic drugs, particularly methamphetamine and ecstasy. According to the 2010 annual report of the Criminal Intelligence Service of Canada (CISC), Canadian-sourced pseudoephedrine has been found in raids of clandestine U.S. methamphetamine laboratories. Though methamphetamine use in Canada has stabilized, according to CISC, production has continued to increase to supply export markets. CISC asserts that criminals export significant quantities of methamphetamine to the United States, Japan, Australia, and New Zealand. Canadian officials find that smugglers move ecstasy precursor chemicals into Canada from source countries to include China and India. The United States works closely with Canada to target precursor chemicals and to identify and dismantle methamphetamine laboratories. Canada participates actively in a large annual conference, the National Methamphetamine and Pharmaceutical Initiative which brings together law enforcement officials, regulators, scientists and health professionals, prosecutors, and policy makers to focus on the diversion and illicit production and trafficking of precursor chemicals ( as well as controlled prescription drugs.) Canadian officials confirm, however, that domestic production of methamphetamine and ecstasy continues to increase. U.S. officials continue to work closely with Canadian partners to identify and dismantle ecstasy 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. It also supports Project Cohesion.

Chile

Chile has a large petrochemical industry engaged in the manufacturing, importation, and exportation of chemical products. Although it has been a source of ephedrine for methamphetamine processing in Mexico, no ephedrine has been seized by Chilean counterparts since 2009. Chile is also a potential source of precursor chemicals used in coca processing in Peru and Bolivia.

Despite Chile’s chemical control laws, monitoring of diversion and smuggling is limited by the bureaucratic structure, lack of efficient registration system, and lack of sufficient personal. The regulatory function for chemicals belongs to the Special Register of Controlled Chemical Handlers (REUSQC) under the Ministry of Interior. Chilean law enforcement entities have specialized chemical diversion units and dedicated personnel assigned with the responsibility for investigating chemical and pharmaceutical diversion cases. Customs, which is not a traditional law enforcement agency, has a risk analysis unit which profiles suspicious imports and exports, which may include chemical precursors.

Companies that import, export, or manufacture chemical precursors must register with REUSQC and maintain customer records, and are subject to inspections. Through 2011, approximately 200 importers and exporters had registered with the Government of Chile, but there are potentially many more companies who should be registered, but are not, due to inefficiency within the registration system. There is legislation pending in the Chilean Congress to expand the list of companies subject to inspection and Chilean authorities continue to work with the United States. The majority of chemical imports originate in India and China and the diversion of such chemicals is primarily directed to Bolivia, Peru, and Mexico. Chemicals destined for Peru and Bolivia are transported by land, while chemicals sent to Mexico are transported via air cargo and maritime shipments.

Mexico

Significant methamphetamine production continues in Mexico and importations of precursor chemicals are on the rise. During 2011, the quantity of precursor chemicals seized as reported by the Government of Mexico (GOM) has totaled over 527,077 kilograms or more than 527 metric tons. A strong bilateral working relationship between U.S. and Mexican authorities continues, involving information exchange and operational cooperation, including through participation in the National Methamphetamine and Pharmaceutical Initiative conference. 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 GOM outlawed imports of pseudoephedrine, except for liquid pseudoephedrine for hospital use, in 2008. In November 2009, Mexico enhanced its regulatory laws pertaining to the import of precursor chemicals, which tightened the regulations for imports of phenyl acetic acid, its salts and derivatives, methylamine, hydriodic acid, and red phosphorous. In June of 2010, the GOM again strengthened its regulatory laws. However, potassium permanganate and acetic anhydride are not regulated in Mexico.

Mexico has several major chemical manufacturing and trade industries that produce, import, or export most of the chemicals required for illicit drug production, including potassium permanganate (for cocaine), and acetic anhydride (for heroin). While Mexico is a major supplier of methamphetamine, the country currently has no facilities or chemical plants that can synthesize or manufacture pseudoephedrine or ephedrine powder.

Imports of both precursor and essential chemicals are limited by the GOM to specific ports of entry. Mexico has a total of 49 ports of entry, of which only 17 are authorized for the importing of essential chemicals.

While pseudoephedrine and ephedrine imports are banned in Mexico, traffickers continue to smuggle these precursors into Mexico. During FY 2011, approximately 173 kilograms of pseudoephedrine was seized at the ports of Veracruz and Manzanillo. However, based on the number of clandestine laboratories that have been dismantled by the Mexican government (approximately 137) during FY 2011, phenyl-2-propanone (P-2-P) is the primary chemical used to produce methamphetamine. During FY 2011, the GOM reported the seizure of 158 metric tons of P-2-P.

Acidic anhydride has been identified at clandestine laboratories producing methamphetamine; however, the quantities are only one or two barrels (200-liter capacity).

Ephedrine destined for Mexico is supplied by China, the Czech Republic, Switzerland, Thailand, India, Bangladesh, and the United States. Drug traffickers in Mexico now substitute ephedrine and/or pseudoephedrine with phenyl acetic acid (PAA), which enters Mexico in large quantities from suppliers in the Netherlands, Bulgaria, and China. Mexican authorities have also detected shipments entering Mexico from the United States. The import, export, and trade of PAA are regulated according to an agreement issued by Mexico’s Health Secretariat in 2009. In May 2010, officials seized 88 tons of ethyl phenyl acetate, a pre-precursor chemical used to make P-2-P, a precursor to methamphetamines, at the Port of Manzanillo, representing the largest single seizure of the chemical. The chemical was found in five shipping containers sent from China.

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 1988 UN 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 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 and enforcing them. The Department of Justice, primarily through its U.S. Attorneys Offices, handles criminal prosecutions and cases seeking civil penalties for regulatory violations. 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. One of the main goals of DEA’s Diversion Control Program is to ensure that U.S. registrants’ (those companies registered with DEA to handle List I chemicals) products are not diverted for illicit drug manufacture.

U.S. legislation also requires chemical traders to report to DEA suspicious transactions such as those involving extraordinary quantities or unusual methods of payment. 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 revocation of DEA registration as well as to civil and criminal prosecution as appropriate.

The United States has played a leading role in the design, promotion, and implementation of cooperative multilateral chemical control initiatives. The United States also actively works with other concerned nations, and with the UNODC, and the INCB to develop information sharing procedures to better control precursor chemicals, including pseudoephedrine and ephedrine, the principal precursors for methamphetamine production. U.S. officials participate in the task forces for both Project Cohesion and Project Prism. The United States 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.

The Combat Methamphetamine Epidemic Act of 2005 (CMEA) mandated that DEA establish total annual requirements for these three chemicals for the U.S. and provide individual import, manufacturing and procurement quotas to registered importers and manufactures that wish to conduct import and manufacturing activities with these chemicals. Since the implementation of quotas in 2008, the United States has seen decreases in assessments of importation of some of these chemicals by over 80 percent.

Asia

China

In 2010, China was the fifth largest exporter of ephedrine and third largest exporter of pseudoephedrine. China has one of the world's largest chemical industries, producing large quantities of precursor chemicals, such as acetic anhydride, potassium permanganate, piperonylmethylketone (PMK) and pseudoephedrine and ephedrine. Organized crime groups divert legitimately manufactured chemicals, especially ephedrine and pseudoephedrine, from large chemical industries throughout China to produce illicit drugs. The diversion of precursor chemicals for the illicit production of drugs remains a problem within China. The sheer scale of China’s chemical industry, with an estimated 80,000 individual chemical companies in 2009, presents widespread opportunities for chemical diversion. Effective regulatory oversight of this industry remains a major challenge for China’s central authorities.

China produces and monitors all 23 of the chemicals on the tables included in the 1988 Drug convention. China continues to cooperate with the United States and other concerned countries in implementing a system of pre-export notification for dual-use precursor chemicals. China regulates the import and export of precursor chemicals covered by the 1988 UN Convention, but does not currently notify other countries of non-regulated chemicals on the INCB’s surveillance list. Chinese authorities successfully investigated 234 cases of illegal trade and smuggling of precursor chemicals in 2010 and seized 869.11 tons of precursor chemicals.

In 2010, China reported to the INCB that it had produced 150,000 kg of ephedrine and 160,000 kg of pseudoephedrine. Criminal investigations and law enforcement authorities from Europe, Latin American and elsewhere in Asia have indicated that large-scale illicit methamphetamine producers in Asia and Mexico use Chinese-produced ephedrine and pseudoephedrine. In 2005, China passed new chemical regulatory and administrative laws and strengthened the export controls of 58 precursor chemicals. China cooperates in international chemical control initiatives and continues participation in ASEAN. In September 2010, China attempted to strengthen regulations on internet sales of chemicals, banning unlicensed sales. This resulted in the closing of 331 illegal websites based in China.

India

India is one of the world's largest manufacturers of precursor chemicals and in 2010 was the top exporter of both ephedrine (65,000 kilograms) and pseudoephedrine (458,000kilograms). 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 Narcotic Drug and Psychotropic Substances Act requires records on all transactions of acetic anhydride, ephedrine and pseudoephedrine. Exports of ephedrine and pseudoephedrine, require a “No Objection” Certificate from the Indian Narcotics Commissioner, who issues a Pre-Export Notification to the Competent Authority in the importing country as well as the INCB. India continues to work closely with the INCB and with international partners.

India is, nevertheless, a key source of diverted precursor chemicals for methamphetamine and heroin. Seizures in South and Central America continue to indicate that traffickers are targeting India. And several large shipments of ephedrine and pseudoephedrine tablets were seized in Mexico. Large shipments of bulk pseudoephedrine from India were formed into tablets in Bangladesh and sent to countries in Central America and the Caribbean.

Singapore

In 2010, Singapore’s exports and imports of both ephedrine and pseudoephedrine decreased slightly. However, in 2010, Singapore was ranked the fifth largest importer of ephedrine and the fourth largest importer of pseudoephedrine (ranked first in 2009). Authorities indicate that the amounts not re-exported are used primarily by the domestic pharmaceutical industry and by the large number of regional pharmaceutical companies served by Singapore’s largest port. Singapore is one of the largest distributors of acetic anhydride in Asia. Used in film processing and the manufacture of plastics, pharmaceuticals, and industrial chemicals, acetic anhydride is also the primary acetylating agent for heroin.

Singapore participates in a multilateral precursor chemical control programs, including Operation Cohesion, and Operation Prism, and works closely with the USG. Singapore controls precursor chemicals, including pseudoephedrine and ephedrine, in accordance with the 1988 UN Drug Convention provisions, and accordingly tracks exports and works closely with industry officials.

The Republic of Korea

In 2010, South Korea was the third largest importer of ephedrine and the second largest importer of pseudoephedrine. With one of the most developed commercial infrastructures in the region, the Republic of Korea (ROK) is an attractive location for criminals to obtain precursor chemicals. As of 2011, 30 precursor chemicals were controlled by Korean authorities. Both the Korea Customs Service (KCS) and the Korean Food and Drug Administration (KFDA) participate in the INCB’s Projects Cohesion and Prism and DICE. In this role, they closely monitor imports and exports of precursor chemicals, particularly acetic anhydride. Korean law enforcement authorities also cooperate with Southeast Asian nations to verify documents and confirm the existence of importing businesses and send representatives to the region to investigate. In April 2011, the National Assembly passed a new law that requires manufacturers and exporters of precursor chemicals to register with the government and provides for education to Korean businesses to prevent them from unknowingly exporting such chemicals to fraudulent importers. South Korean authorities work closely with the U.S. authorities to track suspect shipments.

Taiwan

In 2010, Taiwan was the fourth largest exporter of ephedrine and ranked as the third largest exporter of pseudoephedrine. Taiwan was also ranked the fourth largest importer of ephedrine in 2010. Taiwan law enforcement has long recognized that certain Taiwan-based chemical companies divert chemicals, which may be used to manufacture illicit substances in countries such as Cambodia, Thailand, Mexico, Honduras, and Belize. The Ministry of Economic Affairs, Industrial Development Bureau serves as the regulatory agency for chemicals, including those controlled under the 1988 UN Convention, and other non-regulated chemicals. In 2011, Taiwan exported 848 kg of acetic anhydride worldwide.

Taiwan does not have control regulations for the trade of ephedrine/pseudoephedrine combination in over-the-counter pharmaceutical preparations. However, companies engaging in their import/export must register their transactions with the Taiwan’s Department of Health, which may elect to examine relevant shipping records. Taiwan does have control regulations for the export and import of ephedrine and pseudoephedrine. In 2011, Taiwan’s Ministry of Economic Affairs added eight new precursor chemicals to the control list. Taiwan's law enforcement agencies work closely with U.S. law enforcement officials.

Thailand

Thailand is not a chemical manufacturer or producer, but the government imports chemicals in bulk for licit domestic requirements. Thai officials are concerned by a dramatic increase in pseudoephedrine diversion, the diversion of pseudoephedrine preparation 60 mg tablets manufactured in South Korea identified in late 2009.

Thailand has taken a proactive stance in precursor chemical control and has laws to regulate and control precursor chemicals. In 1975, the Psychotropic Substances Act was passed wherein drugs and chemicals were placed into four categories or schedules similar to the drug schedule developed in the United States. Pseudoephedrine and ephedrine, for example, are listed as Type II controlled drugs under the 1975 Psychotropic Substances Act. Drugs listed under Type II can pose serious health risks and include strict controls.

Thailand submits information to the INCB on the country’s licit trade and legitimate uses of and requirements for substances in Table I and II of the 1988 Convention. The Thai government has requested pre-export notifications pursuant to article 12, paragraph 10 (a), of the 1988 Convention for most of the chemicals in Table I. Thailand submits its annual legitimate requirements for ephedrine and pseudoephedrine, which are frequently used in manufacturing of amphetamine-type stimulants, to the INCB. Thailand ranked number nine on the list of worldwide countries reporting legitimate need for these chemicals during 2009 and 2010.

During 2010, the Thai Office of Narcotics Control Board (ONCB) reported the seizure of more than 33 million pseudoephedrine tablets destined for Thailand’s neighboring countries. As of June 2011, the Thai ONCB had reported the seizure of 7.5 million pseudoephedrine tablets. As a result, Thai Food and Drug Administration (FDA) and ONCB officials are working with parliament to adopt stricter import regulations and controls for ephedrine and pseudoephedrine pharmaceutical products.

Europe

Chemical diversion control within the European Union (EU) is regulated by EU regulations binding on all 27 Member States. The regulations are updated regularly, most recently in 2005. The EU regulations meet the chemical control provisions of the 1988 UN 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 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 investigating and prosecuting violators of national laws and creating 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 cooperation 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 coordinates national or joint positions on chemical control matters before larger multilateral fora, including the CND.

Bilateral chemical control cooperation continues between the United States and EU member states. Many states participate in 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 is not a major producer of illicit drugs or chemical precursors used for the production of illicit drugs. However Belgium has a substantial pharmaceutical product sector which manufactures ephedrine and pseudoephedrine for licit products to a very limited extent. Belgium has reporting requirements for the import and export of precursor chemicals (bulk pseudoephedrine/ephedrine). Shipments of pharmaceutical preparations containing pseudoephedrine and ephedrine are only controlled on a regulatory level by the Belgian Ministry of Safety and Public Health.

Seeking to circumvent the ban on pseudoephedrine and ephedrine by Mexico and many countries in Central America, traffickers are extracting these substances from pharmaceutical preparations, or cold medicine from Belgium for methamphetamine production. As a result, Belgium and other Western European countries have seen an increase in transshipments of ephedrine and other methamphetamine precursors embodied in uncontrolled pharmaceutical preparations. The United States continues to coordinate with Belgian authorities to identify and investigate both suppliers and shippers of precursor chemicals.

Germany

Germany continues to be a leading manufacturer of licit pharmaceuticals. In 2010, Germany was the second largest exporter of ephedrine and pseudoephedrine worldwide. Most of the 23 scheduled substances under international control as listed in Tables I and II of the 1988 UN Drug Convention and other chemicals, which can be misused for the illicit production of narcotic drugs, are manufactured and/or sold by the German chemical and pharmaceutical industry.

Germany is a party to the 1988 UN Convention. In Germany, the National Precursor Monitoring Act complements EU regulations. Although Germany’s developed chemical sector makes it susceptible to chemical diversion. National and EU regulations, law enforcement action, and voluntary industry action tightly control the movement of chemicals throughout the country. In 2010, the number of cases regarding acetic anhydride decreased from 2009. Cooperation between the chemical/ pharmaceutical industry, merchants, and investigation authorities is a key element in Germany’s chemical control strategy. Germany works very closely with UNODC in the field of drug control.

The United States works closely with Germany’s chemical regulatory agency, the Federal Institute for Drugs and Medical Devices, on chemical control issues, including exchanging information and cooperating both bilaterally and multilaterally, to promote transnational chemical control initiatives. Germany supports INCB precursor chemical control activities and continues to participate in significant UN projects. Germany was recognized for its contributions to Operation PAAD, a Project Prism initiative which focused on shipments of phenylacetic acid and its derivatives which are being used to illicitly product P-2-P in clandestine laboratories.

The Netherlands

Drug traffickers continue to target the Netherlands, which has a large chemical industry with large chemical storage facilities, and use Rotterdam as a major chemical shipping port. However, the Netherlands has strong legislation and regulatory controls and the police force tracks domestic shipments and works closely with its international partners. The Netherlands is a party to the 1988 UN Drug Convention and 1990 EU Regulations. Trade in precursor chemicals is governed by the 1995 Act to Prevent Abuse of Chemical Substances (WVMC). The law seeks to prevent the diversion of legal chemicals into the illegal sector. 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 ecstasy. The Netherlands signed an MOU with China concerning chemical precursor investigations. The Netherlands is an active participant in the INCB/project Prism taskforce. The Dutch continue to work closely with the United States on precursor chemical controls and investigations. In April 2009, the Netherlands established a separate Expertise Center on Synthetic Drugs and Precursors (ESDP) and a Precursors Taskforce. Trade and industry report suspect transactions of registered chemicals and in 2010 there were 82 investigations of suspicious transactions reports, up from 59 in 2009. The latest ESDP report indicated two new types of precursors: PMK-glycidate and alpha-phenylacetoacetonitrile (APAAN) used in methamphetamine production. Criminal groups use these new types of precursors and pre-precursors to circumvent national and international legislation.

The United Kingdom

In 2010 the United Kingdom (UK) was the fifth largest worldwide exporter of ephedrine. The UK strictly enforces national precursor chemical legislation in compliance with EU regulations and is a party to the 1988 UN Drug Convention. In 2008, the Controlled Drugs Regulations (Drug Precursors) (Intra and External Community Trade) were implemented, bringing UK law in line with preexisting EU regulations. Licensing and reporting obligations are requirements for those that engage in commerce of listed substances, and failure to comply with these obligations is a criminal offense. The Home Office Drug Licensing and Compliance Unit is the regulatory body for precursor chemical control in the UK. However, the Specialized Organized Crime Agency (SOCA) and the police have the responsibility to investigate suspicious transactions. Revenue and Customs monitors imports and exports of listed chemicals. The UK implemented CND resolution 49/3 through the European Council directive 111/2005, and through the PEN system. As of October 2011, the UK Home Office reported a licit domestic need for 10,500 kg of ephedrine, 12,850 kg of pseudoephedrine, and 29,840 kg of preparations of these chemicals. U.S. and UK law enforcement continue to exchange information and training on the methamphetamine threat. In 2011, several small clandestine methamphetamine laboratories were seized in the UK.


Significant Illicit Drug Manufacturing Countries

Asia

Afghanistan

Afghanistan does not have a domestic chemical industry or a legitimate use for acetic anhydride (AA) and consequently has banned all imports and exports of acetic anhydride. The principal illicit sources are believed to be China, South Korea, Europe, the Central Asian states and India. Re-packaging and false labeling often hide the identity of the shipper. Limited police and administrative capacity hampered efforts to interdict precursor substances and processing equipment and Afghan heroin conversion laboratories tend to be small operations making the task of control and investigative authorities more difficult. Seizures of AA and other precursors have increased since 2010. In the last 12 months Afghan and Coalition Forces seized 20,000 liters of AA.

Afghanistan is a party to the 1988 UN Drug Convention and all 23 substances under international control are subject to an import/export regime in Afghanistan. This is a multi-agency body that includes the Counter Narcotics Police of Afghanistan (CNPA) and Department of Customs that is responsible for tracking shipments. MCN’s limited administrative and regulatory infrastructure has inhibited its ability to comply with the Convention’s record keeping and other requirements. However, the CNPA has established a Precursor Control Unit within the Intelligence Department that works closely with the UN and is beginning to establish cooperative efforts with other countries in the region.

Burma

The illicit production and export of synthetic drugs in Burma continues. Burma does not have a significant chemical industry and does not manufacture ephedrine and pseudoephedrine used in synthetic drug manufacture, or acetic anhydride. Organized criminal syndicates smuggle these precursor chemicals into Burma through the extremely porous and difficult to police borders shared with Bangladesh, China, India, and Thailand. The precursors are then transported to heroin refineries and amphetamine-type stimulants (ATS) laboratories primarily located in regions of the Shan State which are under the control of armed militia groups or in other areas that are lightly policed.

In 2011, Burmese authorities continued to fail to control the illicit import and diversion of precursor chemicals for use in production of illegal narcotics. The Burmese police made significant precursor seizures in government-controlled areas such as Mandalay, Burma’s main distribution center for precursor chemicals. However, Burmese authorities have not made significant efforts to stem the illicit influx of chemicals from border areas where they have minimal controls. In 2011, Burmese authorities seized 2,853 liters of liquid chemicals, including acetic anhydride. (GOB statistics do not differentiate among precursor chemicals.) The Government of Burma has not provided estimates on the size of its licit domestic market for ephedrine, pseudoephedrine. (Note: There is a listing for “Myanmar” in this year’s table, but only one chemical-ephedrine-has a numerical entry-1MT for Ephedrine-but they appear to have formally declared no legal requirements (0) for all of the others.)

Even so, official seizure statistics between January and September 2011 related to ATS production included approximately 2,373.16 kilograms of pseudoephedrine, 553 kilograms of caffeine powder and 29 kilograms of ephedrine. Burmese police also seized 2.3 million ATS tablets and 9 kilograms of methamphetamine ICE. Burma is a party to the 1988 UN Drug Convention, but has not yet instituted laws that meet all UN 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

Imports of ephedrine and pseudoephedrine pose significant challenges for Indonesia. While Indonesia’s growing population of close to 240 million warrants a large demand for cough and flu medicines, authorities estimate that some of these medicines and their precursors are diverted for production of methamphetamine/ecstasy. China is the primary source of licit chemicals for the Indonesian pharmaceutical industry and for chemicals used to produce illicit methamphetamines. India, Taiwan, and other Asian countries are also significant sources of licit pharmaceutical drugs diverted for use to produce amphetamine type stimulants. Indonesia has adopted precursor control regulations of narcotics and precursors included in Categories I and II of the 1988 UN Convention.

The 2009 Narcotics Law gives enforcement officials authorities to monitor shipments and conduct investigations. Indonesian authorities that have responsibilities on chemical and precursor control include: the Food and Drug Administration of the Ministry of Health, the National Narcotics Board (BNN), the Indonesian National Police (INP), the Ministry of Trade and Commerce, and the Ministry of Industry. The Food and Drug Administration is responsible for the enforcement, monitoring, and authorization of import/export of narcotics and precursors, and narcotics and precursor activity for food and pharmaceutical applications, such as for medicines and food preservatives. The INP’s Narcotics and Organized Crime Directorate is the lead entity to combat narcotics and precursor criminal activity.

Laos

Laos is an important transit point for Southeast Asian heroin, ATS, and precursor chemicals en route to other nations in the region. This transit drug trade involves 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.

The Laos Penal Code has several prohibitions against the import, production, and use and misuse of chemical substances used for manufacturing illicit narcotics. The Ministry of Health and the Customs Department maintain controls over chemical substances. Laos has a small and nascent industrial base and the use of industrial chemicals subject to misuse for narcotics manufacture is relatively small. In 2008 the Lao National Assembly passed a drug law (Law on Drugs and Article 46 of the Penal Law) 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 32 chemical precursors which could be used for illicit purposes.

Malaysia

Malaysia is a regional production hub for crystal methamphetamine and ecstasy. Narcotics imported to Malaysia include heroin and marijuana from the Golden Triangle area (Thailand, Burma, Laos), and other drugs such as 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. Since 2006, Malaysia has 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.

Latin America

Bolivia

Bolivia does not have a large chemical industry. Most of the chemicals required for illicit drug manufacture of cocaine are either smuggled from neighboring countries or imported legally and then diverted. Precursor chemicals are shipped to Bolivia from Chile, Peru, Brazil, and Argentina. The Bolivian Special Counternarcotics Police (FELCN) Chemical Control Group works with the Vice Ministry of Social Defense and Controlled Substances to control access to precursor chemicals and investigate diversion for illicit purposes.

The Chemical Substances Investigation Team is a more specialized division of the Special Operations Force (FOE) of FELCN that focuses specifically on searching for chemicals used in the cocaine manufacturing process, such as sulfuric acid, kerosene, diesel oil and limestone. In 2010, the Chemical Control Group found traffickers using new chemicals, such as electrolytes and acetone, which are not controlled under Bolivian Law 1008.

In 2010, GISUQ seized 963.8 MT of solid substances and 2,400,271 liters of precursor chemicals, surpassing 2009 results by 11 percent and 52 percent, respectively.

The GOB does not have control regimes for ephedrine and pseudoephedrine. On June 6, 2010, 49 kilograms of cocaine and 445 kilograms of ephedrine concealed in wood furntiture from Santa Cruz, Bolivia, were seized in Manzanillo, Mexico. The ephedrine was likely smuggled into Bolivia by traffickers seeking a freight-forwarding area with limited law enforcement scrutiny.

Colombia

Chemical trafficking continues to be a serious problem in Colombia. Currently, 4,500 chemical companies in Colombia are authorized to handle precursor chemicals for legitimate use. Chemical companies must have governmental permission to import or export chemicals and drugs. Pre-notification is required for chemical exports and neither ephedrine nor pseudoephedrine can be exported. Colombian companies can import these precursors to produce medications for national demand. The GOC cooperates fully with INCB and other multilateral chemical control initiatives. It provides annual estimates of licit chemical use to the INCB in accordance with international obligations.

In addition to diversion from large companies, chemicals are smuggled into Colombia. Potassium permanganate is also imported into Colombia. Increasingly, chemical traffickers and clandestine laboratories use non-controlled chemicals, such as N-propyl acetate, to replace controlled chemicals that are difficult to obtain. Traffickers are increasingly recycling chemicals as well as the chemical containers, making it difficult to trace their origin.

The Colombian National Police Chemical Sensitive Intelligence Unit (SIU) has both a regulatory component and investigative component, including dismantling large-scale chemical trafficking organizations. Colombian officials conduct on-site inspections and audits, verification of imports/exports, and develop leads for criminal prosecution purposes. SIU operations have resulted in large chemical seizures. In 2011, the SIU arrested 118 people and seized approximately 3,662 kilograms (kg) of hydrochloric acid. The Colombian officials also inspected and audited 1,770 Colombian chemical companies which resulted in the immobilization of 8.6 million kg of listed chemicals due to administrative violations.

During 2011, the Colombian chemical law was amended to make the diversion of controlled chemicals by a registered Colombian company a criminal act. The Colombia National Police (CNP) primary interdiction force, the Anti-Narcotics Directorate’s (DIRAN) Jungle Commandos (Junglas) or airmobile units, are largely responsible for the significant number of HCL and coca base labs destroyed in 2011 and also seized significant amounts of precursor chemicals during the course of their operations in 2011, including 14 MT of solid precursors and 4.5 MT of liquid precursors.

Peru

Peru continues to be a major importer of precursor chemicals used in cocaine production, including acetone and sulfuric acid. Peru is also a major importer of other essential chemicals for cocaine production. In 2011, the Peruvian National Police (PNP) Chemical Investigations Unit (DEPCIQ) continued its successful chemical enforcement and regulatory operations, leading to the seizure of significant quantities of precursor chemicals, including 20 MT of acetone, 117 MT of hydrochloric acid/muriatic acid, and 23 MT of sulfuric acid.

Many tons of these chemicals are diverted from legitimate channels to cocaine production with a major concentration in the coca valleys. Lima is the source of 90 percent of chemical precursors smuggled to cocaine production areas, where the chemicals are utilized in the cocaine manufacturing process. Drug traffickers transport precursor chemicals to cocaine labs using individuals, animals, and vehicles. PNP has identified the principal routes of precursor chemicals from Lima into the drug source areas. Consistent with the GOP’s Five-Year Drug Strategy, Peru’s counternarcotics police, DIRANDRO, continued Operation Chemical Choke, a bilateral chemical control program that targets acetone, hydrochloric, and sulfuric acid through a specialized enforcement/intelligence unit of PNP officers. In 2010, Operation Chemical Choke targeted those organizations that divert these chemicals to cocaine production laboratories located near coca growing areas. The results included the arrests of several chemical traffickers and the seizure of 9.5 metric tons MT of acetone, 21.8MT of hydrochloric acid, and 2.12MT of sulfuric acid.

Peru’s law enforcement has reported multi-hundred-ton seizures of hydrochloric acid and acetone as well as calcium oxide, totaling 290 MT. In 2010, seizures of potassium permanganate totaled 516 kg. Peru’s law enforcement organizations conducted joint chemical enforcement operations with neighboring countries and participated in enforcement strategy conferences to address chemical diversion. Peru was a major participant in the Operation Sin Fronteras Phase I held in Buenos Aires, Argentina. In 2010, Peru’s efforts in Operation Sin Fronteras resulted in the seizure of 20 MT of sulfuric, acetone, and hydrochloric acid, as well as several arrests.

The GOP continues to work on developing a chemical user registry to fully implement the Precursor Chemical Control law. In November 2009, the GOP issued a new law which enforces the control of, and stipulates penalties for, trafficking in chemical precursors.

Multilateral Efforts to Target Methamphetamine Chemicals

Unprecedented levels of cooperation on methamphetamine precursors in 2011 forced traffickers to seek new sources, trafficking routes and production methods to circumvent controls and surveillance. Increasingly they are turning to substitute chemicals. The United States continues to work in close cooperation with the CND and the INCB, the two international entities that have played a critical role in fostering multilateral cooperation. Recent efforts over the past several years have included:

--in 2011 establishment of a new INCB-led operation focusing on phenylacetic acid—a methamphetamine precursor,

--in 2010 the CND vote to increase controls on phenylacetic acid. These two actions have increased surveillance, monitoring and control of phenylacetic acid and led to stopped shipments and prevented diversion.

--2007-2010 cooperation in several INCB-led operations that have revealed new trends including an upswing in increased use of pharmaceutical preparations as monitoring of bulk shipments increased.

--at the 2009 High-level meetings of the CND and a special plenary meeting at the UN General Assembly included a specific focus on ATS issues that received unparalleled support from all nations.

--continued engagement on the 2006 U.S.-sponsored CND resolution that requested governments to provide an annual estimate of licit precursor requirements and to track the export and import of such precursors;

--implementation of a resolution drafted by the United States and the European Union to strengthen controls on pseudoephedrine derivatives and other precursor alternatives.

--increased use of the INCB Secretariat’s program to monitor licit shipments of precursor chemicals through its Pre-Export Notification (PEN) online system. This allows for increased availability of national licit estimates. While comparison of these licit estimates to trade statistics is not easy, the estimates do give some indication of the totals a country may be using.

--follow-up on the UN Security Council’s commitment to greater action against the diversion of precursor chemicals used in production of heroin in Afghanistan.

The United States is targeting methamphetamine production in the western hemisphere through both bilateral enforcement efforts as well as multilateral cooperation, including through the UN and through CICAD. Efforts have included raising awareness of the issue to promoting internal changes to targeting diversion and smuggling efforts, as well as coordination of information sharing to facilitate operations preventing or stopping diversion and/or smuggling—primarily through the INCB-led task forces. In 2010, Mexican authorities sought to implement legislative and administrative changes enacted during the previous two years to target ephedrine and pseudoephedrine.

To help stem production, trafficking, and abuse in East and Southeast Asia, the United States supported bilateral and multilateral initiatives in 2011 that included a UNODC 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 West (JIATF) supports Interagency Fusion Centers (IFCs) in various partner nations throughout Asia. The United States 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 to pursue our common anti-drug and broader geopolitical objectives with the countries of the region, as well as to undercut illegal drug producers that could eventually turn their sights on U.S. markets.


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

This section of the INCSR is in response to the CMEA 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.

Ephedrine and 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. As a result phenylpropanolamine is no longer approved for human consumption. Phenylpropanolamine is still imported for veterinary medicines, and for the conversion to amphetamine for the legitimate manufacture of pharmaceutical products. 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, 2010 is the most recent year with full-year data. Moreover, the data, including data from the previous year, is continually revised as countries review and revise their data. GTA data have been used in the tables at the end of the chapter.

Obtaining data on legitimate demand remains problematic, but it is more complete for 2010 and 2011 than in any previous years. 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 regularly to the INCB their reasonable estimates about the trade in the end products that form the basis of legitimate demand. Many countries and regions do not report trade in ephedrine and pseudoephedrine when it is incorporated into a finished pharmaceutical product, in the form of finished dosage units such as liquids, tablets, and capsules, due to concerns that this type of information infringes on commercially sensitive information. Further challenges 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.

Even in the case of the reporting on licit market requirements for ephedrine and pseudoephedrine, the governing UN resolutions are not mandatory and only request voluntary reporting trade and demand of pharmaceutical products. Even so, the trend in this direction has been positive: since the passage of the 2006 CND resolution sponsored by the United States, 123 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 reported, and these rare communications were scattered and irregular.

A further challenge to analyzing the data is that most countries have not made any attempt to reconcile trade data and their own reporting of licit requirements, although this is changing. There are some signs countries are beginning to make efforts to reconcile data. For instance, some countries that noted licit requirements, but had not reported into the Global Trade Atlas data exports or imports, have begun to do so. And the INCB has indicated that it remains concerned about the high estimates of annual legitimate requirements for certain precursors, especially in West Asian countries.

Thus far the economic analysis required by CMEA, is not possible because of insufficient and constantly changing data. Often the collection and reporting of such data requires a regulatory infrastructure that is beyond the means of some governments in question. However, more data is available in 2010 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.

This report provides export and import figures for both ephedrine and pseudoephedrine for calendar years 2006-2010. The report illustrates 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 trade. Complete data on the worldwide production of pseudoephedrine and ephedrine are not available because the major producers will not release this proprietary data. 
 

Top Five Global Exporters

Ephedrine

Annual Series: 2006 – 2011

Reporting Country

Unit

Thousands Quantity

2006

2007

2008

2009

2010

Reporting Total

KG

     

141

114

India

KG

186

221

189

88

65

Germany

KG

33

31

23

13

16

Singapore

KG

15

12

14

12

9

Taiwan

KG

2

3

5

8

6

United Kingdom

KG

7

6

9

4

4

Total of Five

 

243

273

240

125

100

             

United States

KG

1

6

1

13

0

Analysis of Export Data: According to the Global Trade Atlas (GTA) data the top five exporters of ephedrine in 2010 were the same as in 2009. These include India, Germany, Singapore, Taiwan, and the United Kingdom. The aggregate amount of ephedrine exported by the top five countries continues to decline from the high of 125,000 kilograms in 2007 to 100,000 kilograms in 2010. U.S. exports have dropped below 1,000 kilograms.

The worldwide aggregate volume of ephedrine exports that was reported by the GTA dropped from a high of 519,474 kilograms in 2008 and to 141,121,000 kilograms in 2009 and further to 114,000 kilograms in 2010. Decreases in exports were noted by almost every exporter.


Top Five Exporters

Pseudoephedrine

Annual Series: 2006 - 2011

Reporting Country

Unit

Thousands Quantity

2006

2007

2008

2009

2010

World Reporting Total

KG

     

1072

1206

India

KG

301

361

463

534

458

Germany

KG

230

546

334

305

365

Taiwan

KG

46

44

66

76

102

Slovenia

KG

0

0

0

0

100

China

KG

50

71

39

32

73

Total Top five

 

627

1022

902

947

1098

             

United States

KG

37

15

26

26

14

Analysis of Export Data: For pseudoephedrine, the aggregate volume of worldwide exports rose from 1,072,000 kilograms in 2009 to 1,206,000 kilograms in 2010. The top five exporters of pseudoephedrine were India, Germany, Taiwan, Slovenia and China. While India’s exports declined, the other four countries exports increased. Slovenia had virtually no exports of pseudoephedrine previously and is now fourth worldwide with 100,000 kilograms of pseudoephedrine. Moreover, Slovenia has reported the only 100 kilograms for licit requirements to the INCB.


Top Five Global Importers of Ephedrine

Annual Series: 2006 - 2011

Reporting Country

Unit

Thousands Quantity

2006

2007

2008

2009

2010

World Reporting Total

KG

     

180

299

Egypt

KG

0

0

7

65

178

Nigeria

KG

 

8

19

15

16

South Korea

KG

17

16

25

11

16

Taiwan

KG

3

4

6

7

10

Singapore

KG

13

14

13

14

9

Total top five

 

33

42

70

112

229

             

United States

KG

90

167

81

18

22

Analysis of Import Data: The top five ephedrine importers in 2010 are Egypt, South Korea, Nigeria, Taiwan and Singapore. (2009 included Egypt, Nigeria, Singapore, the United Kingdom, and Indonesia.) Overall imports are up significantly, due to an almost doubling of Egypt’s ephedrine imports. At the same time, the INCB indicates that Egypt has reported increased corresponding licit requirements due to a rise in cold medication sales on both the domestic and export market. U.S. imports of ephedrine rose from 90,000 kilograms to 167,000 kilograms in 2007 then showed a marked decline to 81,000 kilograms in 2008 and are now at 22,000. The aggregate volume also fluctuated from highest levels of 180,000 kilograms in 2008 to a total of 299,000 kilograms in 2010. 


Top Five Global Importers of Pseudoephedrine

Annual Series: 2006 – 2011

Reporting Country

Unit

Thousands Quantity

2006

2007

2008

2009

2010

World Reporting Total

KG

     

741

1084

             

Egypt

KG

0

0

55

21

210

South Korea

KG

34

28

42

37

65

Switzerland

KG

39

56

55

42

62

Singapore

KG

45

51

50

58

56

France

KG

10

33

32

25

55

Total of top five

 

128

168

234

183

448

             

United States

KG

171

312

148

186

212


Analysis of Import Data: Shifts in trade of pseudoephedrine have also fluctuated dramatically in 2010 and resulted in a change in the top five importers for 2010. These include Egypt, South Korea, Switzerland, Singapore, and France. The 2009 top five importers of pseudoephedrine included Singapore, Taiwan, Switzerland, Indonesia, and Thailand. Egypt was the top importer of pseudoephedrine in 2008, but was not in the top five in 2009. However, the imports in Egypt (210,000) kilograms are four times their 2008 exports.

In contrast, however, the United States remains the top importer of pseudoephedrine with imports of 212,000 kilograms in 2010. However, this is still down from of 312 thousand kilograms in 2007. After a significant increase in 2007, the aggregate world imports increase to 1,084,000 kilograms in 2010 from 741,000 kilograms in 2009.


INCB Tables on Licit Requirements

Annual legitimate requirements (ALR) as reported by Governments for imports of ephedrine, pseudoephedrine, 3,4-methylenedioxyphenyl-2-propanone, 1-phenyl-2­propanone and their preparations (Kilograms, rounded up)

Go To: INCB Tables on Licit Requirements [PDF format]



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