Chemical Controls

Bureau of International Narcotics and Law Enforcement Affairs
Report

Chemicals play two critical roles in the production of illegal drugs: as compounds required in the synthetic or extraction processes of drug production or as refining agents and solvents for processing plant-based materials such as coca into cocaine and opium poppy into heroin. Chemicals used in synthetic drug production are known as “precursor” chemicals because they are 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” or “precursor” chemicals and can be readily replaced by other chemicals with similar properties.

International efforts have long targeted the illicit diversion of the most common precursors for cocaine and heroin, potassium permanganate and acetic anhydride, respectively. The large licit market for these chemicals makes this a difficult task. Diversion of less than one percent of worldwide licit commercial use of these chemicals is required to produce the world’s supply of cocaine and heroin.

The International Framework

The 1988 UN Convention against Illicit Traffic in Narcotics Drugs and Psychotropic Substances is one of the three main international treaties intended to promote international cooperation to counter the harms caused by drugs. 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 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 involving these chemicals. The Convention further encourages state parties to license all persons and enterprises involved in the manufacture and distribution of listed chemicals.

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 and to establish an International Special Surveillance List (ISSL), a mechanism for monitoring chemicals that are not regulated by the Convention but for which substantial evidence exists of their use in illicit drug manufacture.

The INCB is an independent, quasi-judicial monitoring body for the implementation of the three UN international drug control conventions. The INCB encourages compliance with the drug control treaties and proposes appropriate remedial measures to governments that are not fully applying the provisions of the treaties or are encountering difficulties in applying them and, where necessary, to assist governments in overcoming difficulties.

The INCB has developed a number of instruments to address the challenges of precursor chemicals:

• The Pre-Export Notification (PEN) is an online database used by the Member States exporting precursor chemicals to alert the authorities in the importing country with the details of the export transaction. The PEN Online system enables easy on-line exchange of information between Member States on shipments (export and import) of the chemicals required for the manufacture of illegal addictive drugs such as heroin, cocaine and amphetamines and to provide the ability to raise alerts to stop suspect shipments before they reach illicit drug manufactures. The system facilitates full electronic reply to acknowledge receipt and notify the exporting country of clearance to export. This system is now used by 150 UN Member States and territories and more than 2,000 pre-export notifications are provided to the INCB each month.

• The Precursors Incident Communication System (PICS) is another INCB tool that provides real-time on-line communication platform designed to share intelligence and facilitate direct contact between national authorities in order to launch bilateral and regional investigations into chemical trafficking. PICS helps to fill information gaps by facilitating communication among governments and enhances real-time intelligence exchange between various agencies within a Government. PICS has shared intelligence on more than 800 chemical trafficking interdictions to various registered law enforcement and regulatory agencies around the world. The United States encourages all governments to register a focal point in their law enforcement and regulatory agencies and share information via PICS. As of November 2014, there were 400 registered PICS’ users from 90 governments and eight international and regional organizations.

Regional Bodies. The regulatory framework codified by the United Nations does not exist in isolation. Regional bodies, such as the European Union (EU) and the Organization of American States (OAS), actively work in partnership with the United States on multilateral chemical control initiatives, including CND resolutions.

Chemical Control Activities and New Trends

Methamphetamine. Methamphetamine is produced using the following precursor chemicals: pseudoephedrine, ephedrine, pharmaceutical products containing these chemicals, phenyl-2-propanone (P-2-P), and phenylacetic acid. As these precursor chemicals have become more difficult to obtain, traffickers have started using non-controlled pre-precursor chemicals such as APAAN, or alpha-phenylacetoacetonitrile as well as esters and derivatives of phenylacetic acid to produce the precursor chemicals necessary for methamphetamine production.

Methamphetamine production continues to rise worldwide. Production has reportedly expanded in Europe, Asia, Africa, and the Americas. As with other synthetic drugs, traffickers substitute chemicals for production based on availability and price. Most manufacturers in Mexico now use a production process known as P-2-P (from the precursor chemical phenyl-2-propanone). This alternative process does not require pseudoephedrine to produce the chemical base of the drug, allowing drug traffickers to circumvent existing chemical control efforts and continue production.

In Europe, APAAN is now the precursor of choice for illicit amphetamine and methamphetamine manufacture as evidenced by an alarming increase in seizures. In 2012, six European countries reported seizures totaling 17.5 tons, with the largest occurring in Belgium, the Netherlands and Hungary. However, the diversion of APAAN is not just a European problem. In the same year, Canada reported the seizure of two shipments of APAAN totaling 6.7 tons.

In March 2014, the CND included APAAN and its optical isomers in Table I of the 1988 Convention. The new code will enter into force on January 1, 2017, as part of the next edition of the World Customs Organization’s harmonized system nomenclature (“HS Nomenclature 2017 Edition”).

Heroin. The main precursor chemical used to produce heroin is acetic anhydride, a substance that is also widely used in legitimate industry. With increased heroin consumption in and trafficking to the United States as well as continuing production in Afghanistan, the United States has expanded its cooperative efforts to target acetic anhydride diversion.

The Government of Afghanistan has reiterated there is no legitimate use for acetic anhydride in Afghanistan and, since last year, is taking measures to block all imports of the substance. Afghan authorities believe that acetic anhydride is diverted primarily from neighboring countries to Afghanistan for heroin production. The United States, Afghanistan’s neighbors and other international partners continue to work with Afghanistan to address this issue.

Mexico, which is the world’s third largest cultivator of opium poppy, also legitimately produces, imports, and exports acetic anhydride. As illicit heroin production has grown, there has been a 35-fold increase in seizures of illegitimate shipments of acetic anhydride since 2012. Acetic anhydride may also be used as a reagent in the production of methamphetamine.

The United States is also working with 40 participant countries of the INCB Precursor Task Force of Project Prism and Project Cohesion. The INCB Task Force is currently focusing on legitimate of domestic trade and end use of acetic anhydride. The United States also supports increased use of the INCB’s PEN Online and the new PICS systems to control the diversion of acetic anhydride.

Elsewhere, other countries and regional organizations are stepping up efforts to target acetic anhydride. For instance, on November 2013, the European Commission adopted regulations that strengthened controls over acetic anhydride.

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

In South America, the only region of the world where coca is cultivated, the INCB’s Project Cohesion focuses on monitoring the imports of potassium permanganate to cocaine processing areas. Developing an effective multilateral effort focused on potassium permanganate has been difficult because of the vast licit uses of this chemical. Moreover, investigations from 2013 through 2014, and increased reporting of licit shipments through PEN Online reveal that traffickers continue to exploit domestic sources for chemicals. A growing trend cited by law enforcement officials is the recycling of chemicals used in cocaine production. This allows clandestine laboratory operators to reuse the chemicals up to four times before they need to be replaced. Alternative precursor chemicals used in cocaine manufacturing have also been detected. Additionally, traffickers are recycling the chemical containers, making it difficult to trace their origin. The United States, the INCB and others are encouraging countries in South America to continue obtaining and sharing information on these new trends.

New Trends. Over the past two decades, traffickers obtained bulk chemical shipments from licit markets and in response international cooperation focused on chemical control to prevent such diversion.

Illicit drug producers are adapting. Domestic chemical diversion is the biggest challenge in countries where drugs are already produced or the development of uncontrolled designer chemicals. In the coming years, it will be important to adapt policies and law enforcement efforts to overcome these challenges.

Increasingly, drug manufacturers use chemicals that are not listed under the conventions – or for that matter the national laws of the source or importing country – and exploiting countries that have limited enforcement and regulatory systems. International cooperation has also pushed trafficking groups to exploit domestic industry in a significant way. Traffickers are now obtaining, diverting, or manufacturing chemicals in the country where illicit drugs are produced, thereby escaping international monitoring, surveillance, and interdiction efforts.

Moreover, the internet has facilitated legal distribution of chemical compositions containing controlled substances as well as uncontrolled substances. Purportedly legitimate internet sales frequently disguise trafficking in controlled substances.

The methodologies of synthetic drug producers, aided by experienced chemists, are changing and becoming a major concern for authorities. In Belgium, for example, after years of decline, the production of synthetic drugs is on the rise again. The 2013 discovery of several high-capacity illegal synthetic drug laboratories and the manufacturing of MDMA (ecstasy) precursor chemicals in specialized conversion laboratories are strong indicators of a significant increase in MDMA production. In Colombia, chemical traffickers and clandestine laboratories use non-controlled chemicals such as n-propyl acetate to replace controlled chemicals that are difficult to obtain.

The Road Ahead

To counter the shifts in diversion, trafficking and production of chemicals, the United States is expanding its efforts to work with international partners, to implement the provisions of the 1988 UN Convention, monitor those substances on the ISSL, and to identify and stop shipments and/or smuggling of new substitute chemicals that can be used for illicit drug production.

Development and reliable implementation of effective chemical control regimes and legislation are critical. Additionally, it is important to develop and utilize the administrative, investigative, and prosecutorial tools to successfully identify suspicious transactions and bring chemical traffickers to justice, as well as to make better use of watch lists and voluntary control mechanisms to target listed chemicals and substitute chemicals and identify the latest production and trafficking methods.

Increased cooperation with domestic industry, including chemical and shipping companies and other public-private partnerships is critical to targeting these efforts. International guidelines and best practices have much to offer in this regard, as the INCB Voluntary Code of Conduct for Industry sets out a model for domestic cooperation. The United States will seek to work with other countries to encourage the application of domestic control measures similar to those applied to international trade in these chemicals.

Against this backdrop, the United States will continue to promote efforts through the INCB and engage the CND. In the Western Hemisphere, the United States works through the Inter-American Drug Abuse Control Commission (CICAD) of the OAS to advance cooperation on precursor chemical controls. CICAD carries out a variety of initiatives in this important field, and is supported by its Experts Groups on Chemical Control and Pharmaceutical Products, which meets annually.

Moreover, the United States is supporting partner nation efforts in various geographical regions of the world to develop and strengthen precursor laws and regulations to ensure compliance with international drug control treaties, including further steps to enhance and foster communication between competent national authorities, promote increased communication and follow-up on exports and imports of controlled chemicals through the INCB task forces, and expand diplomatic engagement on precursor initiatives bilaterally and through multilateral and regional institutions. The United States also provides training to international entities to improve the monitoring and control of chemical commercialization through the internet.

Major Chemical Source Countries and Territories

This section focuses on individual 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. These two sections are broken down by region.

Africa

Nigeria

The Federal Republic of Nigeria is party to the 1988 UN Drug Convention and, in accordance with Article 12, has implemented a chemical control regime to prevent diversion. Nigerian laws regulate the importation, exportation, distribution and use of the 23 chemicals listed in the Convention and the Federal Republic of Nigeria annually submits information required by the Convention. The National Agency for the Food Drug Administration and Control (NAFDAC) regulates and controls the importation, exportation, distribution and use of narcotic drugs, psychotropic substances and chemicals and other controlled substances. The entity also shares law enforcement responsibilities against the diversion of precursor chemicals with the National Drug Law Enforcement Agency (NDLEA).

The Narcotics Control Division of the NAFDAC issues authorizations/permits to import and clear narcotics, psychotropic substances, precursor chemicals and other nationally controlled substances for scientific and medical purposes while preventing the diversion for illicit purposes. The division also grants authorizations for the importation of bulk narcotics and purchase of finished narcotics from Federal Medical Stores.

The Federal Republic of Nigeria does not have a large petrochemical industry. Chemicals for industrial and illicit production of drugs are imported from China and India. The largest precursor chemical import is ephedrine for the production of cold medication. However, ephedrine is also diverted for the manufacturing of methamphetamine.

The NDLEA reported seizures of 228 kg of ephedrine in 2014. Five kilograms of the seized ephedrine were destined for South Africa. The remaining 223 kg were destined for a clandestine methamphetamine laboratory in Nigeria. All of the ephedrine and pseudoephedrine imported into Nigeria was imported from India. The subsequent arrest of thirty-two individuals and a total seizure of 325.725 kg of methamphetamine took place at Lagos International Airport between 2013 and 2014. Most of the methamphetamine seized was destined for Malaysia, South Africa, Mozambique, Rwanda, Germany, India, and Dubai. Other precursors (such as P-2-P, APAAN) are not yet popular in Nigeria due to availability of ephedrine and pseudoephedrine; which results in better yields and quality of methamphetamine. There were no reports of Nigerian imports or exports of chemicals to or from the United States in 2014.

South Africa

South Africa is a leading regional importer of chemicals used in the production of illegal drugs, particularly synthetic drugs. South Africa Pharmaceutical products were listed in the top 10 imported commodities published annually by the South African Revenue Service (SARS). Although trade statistics were not separately available for the precursor chemicals for cocaine, heroin, methamphetamine, and methcathinone, the SARS website tracks monthly seizures handled by SARS Customs and Enforcement teams of illicit drugs and substances scheduled as precursors, and also provides analysis of trends in imports and exports.

Methamphetamine (known locally as “tik) is produced in South Africa from mostly imported ephedrine and pseudoephedrine from India, with lesser volumes reportedly imported from Nigeria. Another synthetic stimulant, methcathinone, is also produced locally using potassium permanganate. Methaqualone (“mandrax”) is also produced in the country for mostly local consumption. In 2014, SARS reported multi-kilogram seizures of ephedrine during attempted import. Local criminals trade precursor chemicals and illicit drugs for illegally poached abalone and rhino horn.

It is difficult to gather trade information to assess illicit use of ephedrine and pseudoephedrine in South Africa. Although South Africa is party to the 1988 UN Drug Convention, it has submitted only partial statistics to the INCB’s reporting requirements.

According to the latest information, dating from 2012, South Africa is not registered with the INCB’s PICS. South African legislation from 1965 (Department of Health Medicines and Related Substances Act) and 1992 (Drugs and Drug Trafficking Act No. 140) place legal controls on scheduled chemicals. The South Africa National Drug Policy (NDP) mandates the establishment of computerized inventory control systems for scheduled chemicals; however, the regulation and monitoring of the purchase of medicines containing precursors via a registry system has not yet begun.

The Americas

Argentina

Argentina is one of South America’s largest producers of precursor chemicals. The anti-drug agency SEDRONAR is the country’s lead agency for registering and tracking precursor chemicals. Argentina has a legislative and regulatory framework for the registration and monitoring of precursor chemicals, covering local production as well as imports and exports. Additionally, Argentina has taken measures to prepare a voluntary code of conduct for the chemical industry and implement a federal inspection plan for entities working with controlled substances, with emphasis on precursors used to produce cocaine. Argentina complies with UN CND Resolution 49/3 by submitting estimates for the size of Argentina’s licit domestic market for ephedrine and related substances to the INCB, and reports shipments using the INCB’s PEN Online system.

The Argentine government has not designated precursor control as a priority in its counternarcotics efforts. Precursors for the processing of coca leaf and cocaine are often diverted locally from Argentina’s sizeable chemical industry.

Brazil

Brazil is a party to the 1988 United Nations Convention and is one of the world’s ten largest chemical producers. Brazil licenses, controls, and inspects essential and precursor chemical products, including potassium permanganate and acetic anhydride. Controls allow both products to be commercialized without restriction for quantities of up to one kilogram for potassium permanganate and one liter of acetic anhydride.

The Brazilian Federal Police (DPF) Chemical Division controls and monitors 146 chemical products in conjunction with 27 DPF regional divisions and 97 resident offices. The Chemical Division is comprised of two units: the Chemical Control Division and the Criminal Diversion Investigations unit. Both divisions routinely coordinate and share information when conducting administrative inspections and criminal investigations.

Regulatory guidelines require all chemical handlers to be registered and licensed for conducting activities such as manufacturing, importing, exporting, storing, transporting, commercializing and distributing chemicals. The DPF uses a National Computerized System of Chemical Control to monitor all chemical movements in the country, including imports/exports, and licensing. This on-line system requires all companies to register and report all activities mentioned above, including the submission of mandatory monthly reports of chemical related movements as well as existing chemical stocks in their inventories.

The Government of Brazil adheres to the UN CND Resolution 49/3 on strengthening systems for the control of precursor chemicals used in the manufacturing of synthetic drugs. Brazil reports its annual estimates of legitimate requirements for ephedrine and pseudoephedrine for quantities above 10 grams, and P-2-P in any amount. This is done through the UN automated PEN Online. The DPF routinely uses PEN Online in cases of international trade and in coordination with member states to alert importing countries with details of an export transaction.

Canada

Canada’s “Controlled Drugs and Substances Act” (CDSA) prohibits any person from conducting activities with controlled substances unless authorized by regulation or exempted for medical or scientific purposes. Unauthorized activities with controlled substances or precursor chemicals are subject to criminal law penalties.

Under the Precursor Control Regulations (PCR) promulgated under CDSA in 2002, precursors are categorized as Class A precursors (23 in total including acetic anhydride, ephedrine, pseudoephedrine and potassium permanganate), and Class B precursors (six in total including acetone, hydrochloric acid and sulphate acid). Any person or business must be authorized under the PCR to produce, import, export, or sell precursors. In addition, the PCR outline requirements for record keeping, security and reporting on suspicious transactions and loss/theft, where applicable. The Canadian Health Department (Health Canada) is responsible for administering provisions of the PCR and verifying compliance by regulated parties. Health Canada is also proceeding through the stages of the federal regulatory process to add APAAN and its salts, isomers and salts of isomers as a scheduled substance under the PCR.

To address the problem of chemical diversion, the Royal Canadian Mounted Police (RCMP) instituted the National Chemical Precursor Diversion Program in 2001. Program coordinators liaise with Health Canada and the chemical industry, assist investigators who are conducting clandestine laboratory investigations, and provide training to the chemical industry in the identification, monitoring and prevention of suspicious transactions. Canada cooperates fully with the INCB in cases where shipments may pose a concern.

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. 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.

Chile complies with its international obligations to the 1988 UN Drug Convention and reports information on export and import shipments of precursor chemicals and pharmaceutical preparations through the INCB’s PEN Online system.

The regulatory entity for chemical controls, the Special Register of Controlled Chemical Handlers (REUSQC), collects information on the production, manufacture, preparation, importation and exportation of chemical substances that could be used in the production of illicit drugs. Companies that import, export, or manufacture chemical precursors must register with REUSQC and maintain customer records, and are subject to inspections. 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.

Chemical regulatory and investigative agencies are increasingly converting to automated data analysis systems and streamlining procedures in order to combat bureaucratic inefficiencies and technological deficiencies. In 2014, Chile conducted private sector inspections to ensure awareness of the requirements and overall compliance with controlled chemicals and to improve the implementation of the chemical control regime. Improvements in the active users’ registration process were substantiated by an increase of 517 registered users in REUSQC, compared to 183 in 2011. Also in 2014, the increase in registered users and enhanced interagency communication resulted in the Customs Service reporting 28 instances of unregistered companies exporting controlled chemicals.

Mexico

Methamphetamine production and importations of precursor chemicals continue to pose problems in Mexico. Mexico controls all chemicals listed in the 1988 UN Convention. Mexican laws regulate the production and use of many of these substances, and the Mexican Office of the Attorney General (PGR) is responsible for enforcing chemical control laws. In 2008, Mexico outlawed imports of pseudoephedrine and ephedrine, except hospital use of liquid pseudoephedrine.

Mexico has enhanced regulatory laws on the importation of precursor chemicals, including regulations for imports of phenylacetic acid (including its salts, esters, and derivatives), methylamine, hydriodic acid, and red phosphorous. Imports of essential chemicals are limited by law to 17 of 49 Mexican ports of entry. Of these 17, imports of precursor chemicals are permitted at only four ports of entry.

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 and acetic anhydride. Although Mexico-based transnational criminal organizations are major producers of methamphetamine, no pseudoephedrine or ephedrine is produced legally within the country. Mexico reported no new pseudoephedrine seizures between July 2013 and April 2014.

With respect to synthetic drugs, Mexican seizures of methamphetamine, which totaled 14.6 metric tons (MT) in 2013, decreased 56.1 percent when compared to the year before. In contrast, seizures of clandestine methamphetamine labs dropped slightly. Seventy-seven seizures occurred over the first seven months of 2014, a 12.5 percent decrease compared with the number of labs seized in during the same period in 2013.

Mexico participates in international efforts to control precursors and has a strong bilateral working relationship with the United States. Mexico participates in the National Methamphetamine and Pharmaceutical Initiative conference and signed a memorandum of cooperation with the United States in 2012 to address precursor chemicals and clandestine laboratories. The two governments also cooperate to share best practices with Central American countries affected by the trafficking of precursor chemicals. This cooperation includes a bi-monthly methamphetamine and precursor chemical meeting, with participants from the United States, Mexico, and other affected countries.

The United States

The United States manufactures and/or trades in all 23 chemicals listed in Tables I and II of the 1988 UN Convention to which it is a party; and it has laws and regulations implementing chemical control provisions.

The foundation of U.S. chemical control is the Chemical Diversion and Trafficking Act of 1988. This law and subsequent chemical control provisions of the U.S. drug law are interwoven into the Controlled Substances Act of 1970, rather than individual stand-alone legislation. The Drug Enforcement Administration (DEA) is responsible for administering and enforcing these laws. The Department of Justice, primarily through its U.S. Attorneys, handles criminal and civil prosecutions at the federal level. In addition to registration and recordkeeping requirements, the legislation requires importers and exporters to file import or export notifications at least 15 days before the transaction is to take place. The 15- day advanced notification permits DEA to evaluate the transaction. However, the legislation and regulations allow for a waiver of the 15-day advanced notification if a company has an established business relationship with its foreign customer and same day notification is permitted for future shipments. Diversion investigators and special agents communicate with exporting and importing government officials in this process. The legislation also gives the DEA the authority to suspend shipments.

U.S. legislation requires chemical handlers to report to DEA suspicious transactions such as those involving extraordinary quantities or unusual methods of payment. 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. If the diversion of listed chemicals is detected, persons or companies may be prosecuted or the DEA registration may be revoked.

The Combat Methamphetamine Epidemic Act of 2005 (CMEA) mandated DEA to establish total annual requirements, import quotas, individual manufacturing quotas, and procurement quotas for three List 1 chemicals: pseudoephedrine, ephedrine and phenylpropanolamine. This affected those DEA-registered importers and manufacturers that wish to import or conduct manufacturing activities with these chemicals. The CMEA also restricted retail level transactions of nonprescription drug products that contain ephedrine, pseudoephedrine, or phenylpropanolamine, now known as “scheduled listed chemical products.” The CMEA and other chemical control legislation are aimed at preventing the illicit manufacture of illegal drugs domestically and internationally.

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 UN Office on Drugs and Crime (UNODC) and the INCB to develop information sharing procedures to better control precursor chemicals, including pseudoephedrine and ephedrine. U.S. officials are members of a combined task force for both Project Cohesion and Project Prism. The initiative allows for sharing of information and helps to identify trends in diversion, trafficking, and distribution. The United States has also 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 to prevent chemical diversion.

Central America and the Caribbean

Costa Rica

Costa Rica has a stringent licensing process for the importation and distribution of precursor chemicals. In 2010, the country adopted recommendations from the International Narcotics and Control Board, adding controls for Table I precursors as defined by the 1988 UN Drug Convention.

The administration’s National Plan on Drugs for 2013-2017 noted the international problem of production and trafficking of chemical precursors. Costa Rica has yet to seize large amounts of precursors compared to elsewhere in the region. The Costa Rican Drug Institute has a special unit with broad powers to monitor and respond to illegal activities, including the control and prosecution of precursor chemicals’ traffickers.

Dominican Republic

The Dominican Republic is party to the 1988 UN Drug Convention and, in accordance with Article 12, has implemented a chemical control regime to prevent diversion. Dominican laws regulate the production and use of the 23 chemicals listed in the Convention and the Dominican Republic annually submits information required by the Convention. The Dominican Republic has also ratified the Convention on Psychotropic Substances of 1971. The National Directorate for Drug Control (DNCD) is responsible for enforcing chemical control laws.

The Dominican Republic does not have a large petrochemical industry engaged in the manufacturing, importation, and exportation of chemical products. Chemicals for industrial production are imported from the United States. The two largest chemical imports are sodium carbonate and toluene, which the country uses them as an additive for gasoline and as a solvent for paint. Production of methamphetamine is not significant in the Dominican Republic.

The DNCD has reported no seizures of precursor chemicals since 2010. As of October 31, 2014, Dominican authorities had not seized methamphetamine.

The DNCD regulates and enforces the importation and use, receives pre-notifications, and issues certificates of importation for precursor chemicals. The DNCD also controls and regulates prescription drugs and issues annual permits to medical doctors, clinics, and hospitals, maintaining a register of the type of drug and amount each doctor prescribes each year, especially for drugs containing opiates. Clinics and hospitals are mandated to report prescriptions for certain drugs before dispensing them and the DNCD verifies that the prescription number and the doctor are valid before authorizing the sale. The DNCD is taking steps to automate its paper-based chemical control registration.

Guatemala

The manufacture of methamphetamine and other synthetic drugs, allied to the increased seizures of precursor chemicals continue to be a problem in Guatemala. Due to increased law enforcement efforts in Mexico, drug traffickers are now targeting Guatemala as a manufacturing base, presenting the Government of Guatemala with both law enforcement and chemical disposal challenges. The majority of chemicals enter and transit Guatemala via land borders.

Since 2005, the Government of Guatemala has been storing large quantities of seized precursor chemicals. In 2013, Guatemala accepted a U.S.-funded OAS proposal to improve the national capacity to manage and dispose of precursor chemicals, including training, equipment, and technical and administrative support in the management dispose of seized precursors and related hazardous materials. The OAS project is now in the process of diluting, neutralizing and burning the stockpiled chemicals.

Honduras

Honduras is part of the 1988 UN Drug Convention and has fulfilled its obligation under article 12 since 2011. However, precursor chemical trafficking continues to be a developing problem. In February 2014, the Honduran National Police (HNP) seized 12 barrels of acetic acid from a commercial flight from Costa Rica. In March 2014 the HNP seized 240 barrels containing over 50,000 liters of hydrochloric acid from a cargo shipping vessel originating from Colombia.

The OAS, with U.S. funding, is working with Honduras and other Central American countries to destroy existing stockpiles of seized precursor chemicals. The OAS expects to begin in-country destruction of seized precursor chemicals in 2015.

Asia

Bangladesh

Bangladesh is a source country for methamphetamine precursors such as ephedrine and pseudoephedrine. Bangladeshi entities purchase bulk shipments of ephedrine and pseudoephedrine from India and then produce pharmaceutical preparations containing pseudoephedrine. Bangladeshi authorities continue to be challenged by drug traffickers that divert precursor-based preparations from the legitimate market and smuggle shipments out of the country. Bangladeshi law enforcement agencies work closely with the DEA to seize and disrupt illicit drugs and chemicals.

The Government of Bangladesh is committed to the implementation of the 1988 UN Convention and regional agreements regarding control of narcotic drugs, psychotropic substances and precursor chemicals. The government has included 22 precursor chemicals in the “Schedule of Drugs” of the Narcotics Control Act to comply with the provisions of Article 12 of the 1988 UN Convention. The Narcotics Control Act also allows financial investigations and freezing of assets derived from trafficking in drugs and precursors. The Government of Bangladesh is developing a new national drug policy in response to the threat posed to the region by the abuse of and trafficking in pharmaceutical preparations and other drugs.

The Narcotics Control Rules regulate the control, monitoring and supervision of use of precursors for industrial, scientific and medical purposes through a licensing system. Department of Narcotics Control (DNC) issues licenses for the import, export, transport, ship, manufacture, sale, distribution, purchase, possession, storage, warehouse, or other use of controlled precursors

The Police, Customs, Rapid Action Battalion (RAB), Border Guards, and Coast Guard are also empowered to detect and intercept illegal operations regarding precursor chemicals. Bangladesh has established District Drug Control Committees (DDCC) to monitor and coordinate activities of all agencies responsible for interdicting drugs and precursors. The counterdrug unit of the Dhaka Metro Police has successfully assisted the DEA in conducting investigations targeting Dhaka based pseudoephedrine preparation traffickers. Despite government efforts, Bangladesh’s laws and resources are not adequate for effective control of precursors. The DNC lacks sufficient manpower and equipment to consistently detect and interdict precursors.

China

China is one of the world’s largest producers and exporters of precursor chemicals, with approximately 400,000 precursor chemical suppliers and distributors nationwide. As an original signatory to the 1988 UN Convention, China controls all 23 precursor chemicals. In addition, China regulates chloroform and hydroxylamine; in 2014 the PRC added bromophenylethylketone and APAAN to its precursor control list.

The diversion of precursor chemicals originating from China for the illicit production of drugs in other countries remains a significant problem. China does not control, regulate, or monitor certain chemicals known as “pre-precursors” such as benzaldehyde and nitroethane. These pre-precursors are now the primary chemicals employed in the illicit manufacture of methamphetamine in Mexico and Central America, which is often smuggled into the United States for consumption.

Most pre-precursor and precursor chemicals seized in Mexico and Central America destined for illegal production of methamphetamine were legally exported from China and illicitly diverted en route, or exported via fraudulent labeling or false declarations. Fraudulent labeling and false declarations are not criminal violations in China.

China is a significant producer of pseudoephedrine. It ranked the fourth largest exporter of pseudoephedrine, with 90,650 kg exported in 2013. It was also the fifth largest exporter of ephedrine in 2013, with 2,506 kg exported globally. ContacNT originating from China is the most prevalent type of pseudoephedrine combination product found in Australia and New Zealand, which is often used for the manufacture of methamphetamine. Although legally manufactured for domestic consumption in China, ContacNT is frequently smuggled and seized in Australia and New Zealand. China is also a major source of potassium permanganate, acetic anhydride, methylamine, peroxyacetic acid (PAA), piperonylmethylketone, hydroxylamine and other related chemicals that can be used to produce illicit drugs.

Chinese-produced pre-precursor and precursor chemicals are in high demand by transnational criminal organizations from Mexico, Colombia, West African countries, Iran, and Pakistan. However, China is increasing its efforts and engagements with multilateral partners through organizations such as the UNODC and the INCB to prevent such chemicals from ending up in illicit drug manufacturing labs.

Hong Kong

Hong Kong, a Special Administrative Region of the People’s Republic of China, is neither a drug manufacturing nor chemical producing economy. With well-developed logistics connectivity to China, Hong Kong’s chemical trade is mostly in the form of imports for consolidation and subsequent re-export or transshipments; only small amounts are consumed locally. In 2013 – the most recent year for which data is available – controlled chemical imports totaled 10,686,598 kg, exports 3,266,918 kg, while 358,152 kg were transshipped. Hong Kong supports international efforts to prevent precursor chemical diversion through a combination of legislation and law enforcement, and collaboration with the INCB, foreign counterparts, and the business community.

Hong Kong’s Control of Chemicals Ordinance regulates the possession, manufacture, transport, and distribution of designated controlled chemicals. The Ordinance currently covers 26 chemicals, including all those in the 1988 UN Drug Convention. The Ordinance established a licensing regime and applies to imports,

exports, and transshipments. Permits for each shipment and government approval for all premises and containers used to store such chemicals are mandatory. The Control Chemicals Group (CCG) of the Hong Kong Customs and Excise Department’s Drug Investigations Bureau administers and enforces the Ordinance.

CCG establishes the bona fides of a proposed shipment, including through coordination with foreign counterparts via PEN Online. CCG encourages traders, shipping companies, airlines, and cargo handling agents to report suspicious transactions. While Hong Kong does not control sales of over-the-counter (OTC) medicines containing ephedrine and Pseudoephedrine, the CCG investigates reports of possible diversion or parallel trading involving those substances.

Hong Kong actively supports international efforts to prevent illicit chemical diversion. CCG and the Hong Kong office of the DEA have collaborated since 2008 on Operation Zircon Pacific to monitor suspicious shipments through Hong Kong of acetic anhydride, acetyl chloride, piperidine, and potassium permanganate. CCG participated in INCB’s Prism and Cohesion projects. In February 2013, CCG joined INCB’s PICS. According to media reports, recent trends of illicit precursor trafficking, particularly of ethyl phenylacetate and ephedrine, involve smuggling operations between Hong Kong, Mainland China, and Latin America.

India

India is one of the world's largest manufacturers of precursor chemicals, including acetic anhydride, ephedrine and pseudoephedrine. India’s large pharmaceutical industry manufactures narcotic drugs and psychotropic substances. India issues pre-export notifications for export of precursors using the INCB’s PEN Online system, and has a licensing regime to control pharmaceutical products.

India controls 17 of the 23 controlled substance chemicals listed by the 1988 UN Convention. Out of the 17 controlled substances, the Narcotic Drugs and Psychotropic Substances (NDPS) Act designates a total of five as “Schedule A” substances (the highest classification for controls): acetic anhydride; ephedrine; pseudoephedrine; n-acetylanthranilic acid; and anthranilic acid. Domestic manufacture, transport, sale, possession, and international trade in designated precursor chemicals are also controlled under the NDPS Act.

In 2013, India was the second largest exporter of ephedrine with 58,829 kg in global exports; the largest exporter of pseudoephedrine with 440,132 kg in global exports; and the largest importer of ephedrine with 82,283 kg in global imports.

Criminal organizations continue to target India as a source of precursors for amphetamine-type stimulants, in particular ephedrine and pseudoephedrine. The diversion of ephedrine from legal production companies in India to illicit ephedrine brokers is a serious problem. The increased profitability from the manufacturing and distribution of methamphetamine has created a new trafficking element that did not exist 10 years ago – transforming India into a significant source of precursor chemicals. Global methamphetamine demand is creating new precursor chemical entrepreneurs in India who are retooling commercial chemical factories to produce illicit quantities of ephedrine and methamphetamine. Increasing global prices and demand for high quality methamphetamine may influence the increase in illicit precursor chemical manufacturing and trafficking networks operating in India.

Legitimate factory owners and operators are transitioning into criminal drug production and trafficking due to the potential for enormous profits and low risk from Indian law enforcement. The Indian legal system is not adapting fast enough to keep up with this trend.

In 2014, the Indian Narcotics Control Bureau (NCB) worked with the United States to conduct several joint ephedrine-methamphetamine investigations targeting illicit ephedrine distributors and methamphetamine production laboratories. Recent joint NCB and DEA investigations have also targeted licit precursor chemical factory owners who have produced illicit amounts of ephedrine and methamphetamine.

Singapore

The Government of Singapore continues to be an effective partner with concerned countries in international chemical control initiatives to prevent the diversion of precursor chemicals. The country was ranked the third largest exporter (31,150 kg), and the fourth largest importer (11,512 kg) of ephedrine, and the third largest exporter (92,117 kg) and second largest importer (61,671 kg) of pseudoephedrine in 2013. 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 port. Singapore is one of the largest distributors of acetic anhydride in Asia, which is used for film processing and the manufacture of plastics, pharmaceuticals, and industrial chemicals.

Precursor chemicals including ephedrine transit Singapore, one of the busiest transshipment ports in the world. Singapore does not screen containerized transshipments unless they involve vessels from select countries of international concern, or contain strategic or controlled items, including certain chemicals. Singapore authorities have assisted foreign law enforcement agencies, when they suspect precursor diversion.

Singapore controls precursor chemicals, including pseudoephedrine and ephedrine, in accordance with the 1988 UN Drug Convention. The Central Narcotics Bureau authorizes the import of controlled precursor chemicals only after reviewing documentation submitted by the importer as well as PEN Online records from the exporting country. Singapore sends pre-export notifications to foreign Competent Agencies for relevant substances as prescribed in Article 12 of the 1988 UN Convention. Singapore authorities also conduct site inspections on companies dealing with controlled chemicals to ensure awareness of the requirements and overall compliance.

The Republic of Korea

With one of the most developed commercial infrastructures in the region, the Republic of Korea is an attractive location for criminals to obtain precursor chemicals. Precursor chemicals used for the manufacture of illicit drugs, such as acetic anhydride, pseudoephedrine and ephedrine, are imported from the United States, Japan, India and China and either resold within South Korea or transshipped to other countries in the Middle East, Southeast Asia and Latin America. South Korea was the second largest importer of ephedrine (22,811 kg) in 2013, and the fourth largest importer of pseudoephedrine (41,951 kg) in global imports in the same year. As of 2014, 30 precursor chemicals were controlled by Korean authorities. Acetic anhydride remains the chemical of greatest concern.

Both the Korea Customs Service and the Ministry of Food and Drug Safety (MFDS) participate in INCB-coordinated taskforces including Projects Cohesion and Prism, which monitor imports of potassium permanganate and chemicals used to produce amphetamine-type stimulants, respectively. 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 law that requires manufacturers and exporters of precursor chemicals to register with the government, and also provided for education of Korean businesses to prevent them from unknowingly exporting such chemicals to fraudulent importers. However, there is no legislation in Korea defining precursor chemical transshipment activity as criminal, unless hard evidence shows the transshipment is related to the manufacture of illicit drugs.

In many cases, due to the structure of customs and chemical regulations, precursor chemical shipments can be legitimately shipped. Most chemicals are shipped by containerized cargo via ocean freighters. There is currently only a 1,000 kg reporting requirement threshold, therefore, the “smurfing” of acetic anhydride – a diversion method in which numerous small-quantity product purchases from multiple retail outlets are made – is nearly impossible to identify. Nevertheless, South Korean authorities work closely with U.S. counterparts to track suspect shipments.

Taiwan

The Ministry of Economic Affairs, Industrial Development Bureau plays a regulatory role in tracking chemicals such as acetic anhydride, piperonal, safrole, piperidine, hydrogen chloride, and potassium permanganate. While licensing is not required for the trade of these substances, any company importing, manufacturing, selling, storing, or otherwise utilizing these chemicals must report to the Industrial Development Bureau. The Bureau may inspect the company's records to ensure there is no diversion activity.

In 2013, Taiwan exported a total of 11,130 kg of acetic anhydride, including 10,080 kg to Iran, 1,050 kg to Indonesia. Taiwan also exported a total of 68,650 kg of potassium permanganate, including 60,000 kg to Mexico, 4,600 kg to Kingdom of Cambodia, 2,500 kg to Singapore, 1,050 kg to Vietnam, and 500 kg to South Korea. From January to September 2014, Taiwan exported a total of 35,100 kg of acetic anhydride, including 30,660 kg to Iran, and 4,440 kg to Indonesia. Taiwan exported a total of 77,732 kg of potassium permanganate, including 60,000 kg to Mexico, 13,080 kg to Bangladesh, 2,000 kg to Hong Kong, 1,450 kg to Vietnam, 1,200 kg to Lesotho, and 2 kg to Malaysia.

Taiwan does not have control regulations for the trade of ephedrine/ pseudoephedrine combination over-the-counter pharmaceutical preparations; however, companies must register their transactions with the Ministry of Health and Welfare, which may elect to examine relevant shipping records. Additionally, the Taiwan Food and Drug Administration (TFDA) requires companies exporting cold medicine containing ephedrine from Taiwan to possess import permits from the importing countries prior to shipment. Moreover, Taiwain was the fifth largest exporter of pseudoephedrine in 2013, with 88,604 kg exported in global exports.

In 2012, Taiwan began enforcing a 2009 law that requires the Ministry of Health and Welfare to report unusual or excessive sales of cold medicine to the Ministry of Justice Investigations Bureau (MJIB), which has resulted in a reduction of cold medicine sales. Taiwan also restricts the sale of over the counter cold medicines to a maximum dosage of seven days per customer.

In the last few years, aggressive law enforcement operations targeting factories illegally producing amphetamines, closer scrutiny of companies legally producing ephedrine, and renewed emphasis on surveillance of drug smuggling routes have reduced the availability of precursor chemicals for amphetamine production.

Thailand

Precursor chemicals are not produced in Thailand, but the government imports chemicals in bulk for licit medical and industrial purposes. The Precursor Chemical Control Committee is responsible for formulating the national strategy on precursor controls. The Office of the Narcotics Control Board (ONCB) is the principal Thai law enforcement agency responsible for enforcing the laws against the illicit diversion of prohibited chemicals.

Acetic anhydride and ephedrine transit Thailand en route to clandestine laboratories in Burma. Acetic anhydride is produced in Indonesia, while other chemicals are brokered through Indonesian chemical houses and transported through Malaysia into Thailand. Pseudoephedrine and ephedrine enter Thailand by couriers or by air, or containerized maritime cargo before being transshipped overland from northern or northeastern Thailand provinces to methamphetamine production centers in Burma, Laos, and/or Cambodia.

Increase in pseudoephedrine seizures led to a ban on the sale of pseudoephedrine tablets at local pharmacies. In 2013, due to the determination of an imminent threat to the public safety, the Thai Ministry of Public Health signed into law the control of mephedrone, methylenedioxypyrovalerone (MPDV), and methylone. These substances have been designated narcotics in schedule I under the Narcotic Drugs Act B.E. 2522 (1979) and their importation, exportation, and possession are strictly prohibited.

Thailand does provide pre-export notifications via PEN Online as a mean of discouraging diversion of precursors and essential chemicals in the illicit manufacture of narcotic drugs and psychotropic substances.

Europe

Chemical diversion control within the EU is regulated by EU regulations binding on all 28 Member States. 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. EU regulations are updated regularly and directly applicable in all Member States.

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 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, such as national or joint positions on chemical control matters before larger multilateral fora, including the CND.

On November 2013, the Commission approved new legislation that strengthens customs controls on ephedrine and pseudoephedrine, and tightens controls on companies in the EU using acetic anhydride.

For external trade, the change strengthened controls of medicinal products containing ephedrine or pseudoephedrine exported from or transiting through the EU. The Commission developed a new category of scheduled substance (Category 4), imposed mandatory export authorization and pre-export notification, and extended enforcement power to stop and seize cargo if there is “reasonable doubt” concerning the shipment. For trade within EU territory, compulsory registration of end-users for acetic anhydride was introduced by creating a new subcategory (2A). Additionally, a definition of “user” was added for natural or legal persons possessing substances for purposes other than placing them in the market.

Other amendments to the regulation to facilitate tracking and enforcement include introducing definitions for scheduled substance and natural products, strengthening the rules for licensing and registration by introducing explicit criteria for granting or refusing licenses and registrations, increasing the power of competent authorities to control non-scheduled substances, implementing quick reaction to new trends by adding a non-scheduled substance to the EU Voluntary Monitoring List, developing an EU database on drug precursors, and improving data protection capabilities.

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.

Belgium

Belgium has historically been the second largest producer of MDMA in the EU, following the Netherlands. Dutch and Belgian organized crime groups continue to be prominent producers of synthetic drugs, operating across borders and recruiting members from both countries.

After years of decline, synthetic drug production in Belgium appears to be on the rise again and a major concern for Belgian authorities. The 2013 discovery of several high-capacity illegal synthetic drug laboratories and the manufacturing of MDMA precursor chemicals in specialized conversion laboratories are strong indicators of a significant increase in MDMA production. This increase in synthetic drug production did not correspond to increase of precursor chemical seizures in 2014; precursor seizures in fact fell dramatically over this reporting period, from 6.11 MT in the first half of 2013 to zero during the first six months of 2014. Belgian law enforcement officials attribute this anomaly to abundant chemical stockpiles maintained by drug criminals.

During 2013 – the most recent year for which full year statistics are available – Belgian authorities seized 16 synthetic labs related to synthetic drugs compared to six in 2012. Along with an increase in seizures amounts, the number of dumping sites also increased dramatically. These dumping sites seem to indicate either an increase in production capacity or numerous as yet undetected labs operating in Belgium. In 2013, two of the MDMA labs seized in Belgium were the largest labs seized in the EU to date.

Seizure information suggests that some of these drugs, especially MDMA, are making their way to the United States. With five labs seized in the first half of 2014, Belgium is keeping pace with the record number of labs seized in 2013. In 2014, Brazil also seized large quantities of MDMA arriving from Belgium.

While usually not a final destination for international shipments of precursors, Belgium has surfaced as a transit zone for significant quantities of precursor chemicals including ephedrine, safrole oil, and 1-Phenyl-2-propanone (BMK), and for the pre-precursor chemical APAAN. While there is no known commercial use for APAAN, and authorities have not declared it a controlled chemical, Belgian authorities have seized shipments because of mislabeling, and also in an attempt to locate possible conversion laboratories.

Belgium requires and enforces strong reporting requirements for the import and export of precursor chemicals (bulk pseudoephedrine, ephedrine, safrole oil, and benzyl methyl ketone), and the Belgian Federal Police have the lead role in enforcing these controls. Illicit manufacturers, however, have adapted to these regulatory steps, and these precursors are now often synthesized and converted within Europe from imported non-scheduled chemicals sometimes referred to as 'pre-precursors' and 'masked' (or 'designer') precursors. This situation presents a challenge to controlling policies, as a greater number of chemicals need to be considered, some of which have legitimate uses. There is always a risk that as one chemical comes under scrutiny, producers will simply switch to an alternative 'pre-precursor' chemical that can be used for illicit drug production.

Drug traffickers are increasingly turning to pharmaceutical preparations that contain pseudoephedrine or ephedrine as a way to circumvent controls on those substances in their form as raw products. Shipments of pharmaceutical preparations (medication in tablet form) containing pseudoephedrine and ephedrine are only controlled on a regulatory level by the Belgian Ministry of Safety and Public Health. Belgium and other Western European countries have seen an increase in transshipments of ephedrine and other methamphetamine/amphetamine precursors.

In instances where precursor diversion for drug manufacturing purposes was suspected, Belgian authorities have cooperated by executing international controlled deliveries (i.e., illicit deliveries monitored by law enforcement in order to further investigations) to the destinations, or by seizing the shipments when controlled deliveries are not possible. The United States continues to coordinate with Belgian authorities to identify and investigate both suppliers and shippers of precursor chemicals.

Denmark

Denmark complies with the chemical control requirements of the 1988 UN convention. In May 2000, the country controlled all substances of Table I of the 1988 UN Convention against the Illicit Trafficking of Narcotics Drugs and Psychotropic Substances. Measures to control the movement of precursors are in place and Danish authorities use the PEN Online system to control shipments of precursors. The Danish government cooperates closely with DEA and U.S. Customs, to identify and stop chemical precursor diversion.

Danish exports of ephedrine have decreased in 2013. However, according to the Global Trade Atlas’ (GTA) most recent data, Denmark came in fourth place as one of the top-five exporters, with 3,400 kg exported in the same year. According to the same data, exports of pseudoephedrine have slightly increased in 2013.

Germany

Germany continues to be a leading manufacturer of legal pharmaceuticals and chemicals. In 2013 (the most recent available data), Germany was the largest exporter of ephedrine (91,900 kg) and the second largest exporter of pseudoephedrine (389,100 kg). 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 are used for the illicit production of narcotic drugs, are manufactured and/or sold by the German chemical and pharmaceutical industry. Germany’s National Precursor Monitoring Act complements EU regulations. Germany has a highly developed chemical sector which is tightly controlled through a combination of national and EU regulations, law enforcement action, and voluntary industry compliance. Cooperation between the chemical and pharmaceutical industry, merchants, and German authorities is a key element in Germany’s chemical control strategy.

Germany works closely with UNODC, and is an active participant in chemical control initiatives led by the INCB, including Project Prism and Project Cohesion. The United States works closely with Germany’s chemical regulatory agency, the Federal Institute for Drugs and Medical Devices, on chemical control issues and exchanges bilateral information to promote transnational chemical control initiatives. German agencies cooperate closely with their U.S. counterparts to identify and stop chemical precursor diversion.

The Netherlands

The Netherlands has a large chemical industry with large chemical storage facilities, and Rotterdam serves as a major chemical shipping port. The Netherlands has strong legislation and regulatory controls over the industry, and law enforcement authorities track domestic shipments and work closely with international partners. Trade in precursor chemicals is governed by the 1995 Act to Prevent Abuse of Chemical Substances (WVMC), which aims to prevent the diversion of legal chemicals. Chemical substances are also governed under The Act on Economic Offences and the Opium Act, and EU regulations.

Production of synthetics is significant in the Netherlands, and recent trends show an increase in new types of precursors and pre-precursors to circumvent national and international legislation. APAAN is used in amphetamine production and acetic anhydride is used as a pre-precursor for BMK. Safrole continues to be used as a pre-precursor for piperony methyl ketone (PMK) and its increased availability has been attributed to an increase in MDMA production. Law enforcement, especially in the south, reinforced its efforts against synthetic drugs and pre-precursors in 2014.

The Financial Investigation Service (FIOD) of the Ministry of Finance oversees implementation of the WVMC and has responsibility of law enforcement efforts targeting precursors. Customs monitors trade in and production of chemicals and the chemical industry is legally obliged to report suspicious transactions. The Netherlands abides by all EU Regulations for drug precursors. The Prosecutor’s Office has strengthened cooperation with countries playing an important role in precursor chemicals used in the manufacture of ecstasy.

The Netherlands is an active participant in the INCB-led Project Prism taskforce and provides the INCB annual estimates of legitimate commercial requirements for chemical precursors. The Dutch government continues to work closely with the United States on precursor chemical controls and investigations. The Netherlands has a longstanding memorandum of understanding with China concerning chemical precursor investigations

The Netherlands requires a license for the manufacture and trade of ephedrine. Relevant reports on suspicious transactions are shared nationally and internationally. The Netherlands also monitors a number of non-registered substances used in the production of methamphetamine.

Poland

Poland ephedrine exports dropped from 15,400 kg in 2012 to 0 kg in 2013, according to commercial trade data. Legitimate needs for precursor chemicals and pharmaceutical exports continue to increase. Authorities in Poland and neighboring countries are reporting increased illicit production of synthetic drugs, including methamphetamine. However, it is unclear whether methamphetamine is produced for local consumption or for distribution to countries such as the Czech Republic.

In Poland, there are no restrictions regarding medicines containing pseudoephedrine. In 2012, methamphetamine seizures were at their highest in a three-year period. According to the 2013 National Report to the European Monitoring Centre for Drugs and Drugs Addiction by the European Network of Information on Drugs and Addiction, Poland remains one of the leading source countries of amphetamine-type stimulants in Europe.

In 2012, Poland imported close to 15 tons of APAAN. In the same year, law enforcement authorities dismantled 15 clandestine laboratories producing Amphetamine. Subsequent statistics in 2013 and 2014 indicated similar seizures. Increased restrictions to the purchase and supply of BMK have reduced the ability of criminal groups to obtain sufficient quantities to produce a high yield of illicit drugs. As a result, drug traffickers selected APAAN as the precursor of choice to produce BMK.

Poland is a party to all three UN drug conventions. Cooperation on investigations related to chemical diversion is good. Both regulatory and law enforcement officials work closely with DEA on chemical control issues. There are challenges regarding the enforcement of chemical analogs used in the production of synthetic drugs. Polish laws are slow to keep up with the ever changing chemical analog properties utilized by chemical and drug trafficking organizations.

Poland continues to participate with the United States and other countries in the INCB’s Project Prism and is actively involved in supporting INCB-led operations. The National Polish Police, Customs Service, Border Guards, Military Police, Internal Security Agency and the Prison System report drug seizures. However, all of the aforementioned entities have not yet developed a single data collection system, which makes it difficult to estimate the quantities of drugs seized across the country.

Switzerland

The Government of Switzerland continues to be a strong partner with the United States and other concerned countries in international chemical control initiatives to prevent the diversion of synthetic drug precursor chemicals, including ephedrine and pseudoephedrine, and other primarily essential chemicals, including potassium permanganate and acetic anhydride. Switzerland was the largest importer of pseudoephedrine in 2013, with 93,322 kg imported in global imports.

Switzerland participates in multilateral chemical control initiatives led by the INCB, including Project Prism and Project Cohesion. Specifically, ephedrine and pseudoephedrine are subject to import and export license requirements and Swiss chemical manufacturers must provide “end-user” certificates in concert with the exportation of ephedrine and pseudoephedrine. In addition, an export license is required to export acetic anhydride to “risk” countries where significant illicit drug production occurs.

Swiss law enforcement agencies have established close cooperation with the Swiss chemical manufacturing and trading industries and counterparts in major chemical manufacturing and trading countries. This cooperation includes information exchange in support of chemical control programs and in the investigation of diversion attempts. Cooperation between U.S. and Swiss law enforcement agencies, particularly the Swiss Federal Criminal Police, on chemical control related issues is excellent.

The United Kingdom

The United Kingdom (UK) continues to be one of the top worldwide exporters of ephedrine. The UK strictly enforces national precursor chemical legislation in compliance with EU regulations. In 2008, the Controlled Drugs Regulations were implemented, bringing UK law in line with pre-existing EU regulations. Licensing and reporting obligations are required for the commercialization of listed substances. No compliance 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 National Crime Agency and the police have the responsibility to investigate suspicious transactions. Her Majesty’s Revenue and Customs monitors imports and exports of listed chemicals. The United Kingdom was the fifth largest global importer of pseudoephedrine (41,100 kg) in 2013. U.S. and UK law enforcement continue to exchange information and training on the methamphetamine threat.

Middle East

Egypt

Egypt oversees the import and export of chemicals through a committee composed of the Ministry of Interior Ministry of Finance, and Ministry of Health. This committee approves or denies requests to import or export chemicals. Over the past few years, there was an unaccounted spike in the importation of ephedrine for medicine. Egypt was the fifth largest global importer of ephedrine (6,057 kg) in 2013. It appears unlikely that all imported ephedrine is used for legitimate medicinal production. However, the Government of Egypt states that there are no reports indicating large-scale diversion of ephedrine or other chemicals, and it has not made any significant seizures.

Iraq

The abuse of licit pharmaceutical medication and psychotropic substances, including illicit synthetic drugs is growing at a rapid rate within Iraq. Amphetamine-type stimulants (ATS) are trafficked and used in large quantities through Iraq and interdiction efforts are limited. The Iraqi government is addressing this issue by reviewing new legislation that regulates psychotropic substances and chemical precursors, including regulations on the sale of prescription medications to the public. The Islamic State of Iraq and the Levant (ISIL) fighters reportedly use amphetamines during battles.

Significant Illicit Drug Manufacturing Countries

This section is also broken down by region and focuses on illicit drug manufacturing countries, their chemical control policies and efforts.

Asia

Afghanistan

Afghanistan does not have a domestic chemical industry or a legitimate use for acetic anhydride and has banned its importation. However, large quantities of acetic anhydride are smuggled into the country by trafficking networks for heroin production. The principal sources for diverted chemical supplies are believed to be China, South Korea, Europe, the Central Asian states, and India. Limited police and administrative capacity has hampered Afghan government efforts to interdict precursor supplies. In March 2014, Afghan authorities reported the seizure of over 45 MT of solid precursors and 21,417 liters of liquid precursors.

Afghanistan has an export/import regimen for all 23 substances listed in the 1988 UN Convention. Afghanistan’s multi-agency body responsible for tracking shipments includes the Counter Narcotics Police of Afghanistan (CNPA) and Department of Customs. The Precursor Chemical Unit (PCU) of the CNPA is online with the Precursor Incident Communication System. The PCU has commenced using PICS, which is providing Afghanistan with real-time information regarding suspicious shipments and potential diversion activities.

Burma

Illicit production and trafficking of synthetic drugs in Burma continued to increase in 2014. Burma does not have a significant chemical industry and does not manufacture ephedrine, pseudoephedrine or acetic anhydride used in synthetic drug manufacturing. Organized criminal syndicates smuggle these precursor chemicals into Burma through borders shared with Bangladesh, China, Laos, India and Thailand. The precursors are then transported to heroin and ATS laboratories primarily located in regions of Shan State which are under the control of armed militia groups or in other areas that are lightly policed.

In 2014, Burmese authorities faced challenges in controlling the illicit import and diversion of precursor chemicals for use in production of illegal narcotics, exacerbated by the extremely porous borders, including along non-government controlled areas in Burma and India. In May 2014, Burma signed a Memorandum of Understanding with India which provides a framework for security coordination to prevent illegal cross-border activities, including the control of precursor chemicals. The Burmese police made significant precursor seizures in government controlled areas such as Mandalay, Burma’s main distribution center for precursor chemicals. Additional international seizures of precursors destined for or synthetic drugs manufactured in Burma are a further sign of growing production.

The Government of Burma has not provided estimates on the size of its licit domestic market for ephedrine or pseudoephedrine; however, Burmese officials have noted that all pseudoephedrine smuggled across the Burma/India border is destined for illicit methamphetamine laboratories in Shan State and not the legal domestic market. Importers of licit chemicals are required to use a pre-import notification system to obtain a certificate of verification, and retailers must also apply for a certificate to transport chemicals across and within Burma’s borders.

Official seizure statistics between January and September 2014 related to ATS production included approximately 1,700 kg of pseudoephedrine, 32 kg of ephedrine, and 246 kg of caffeine powder. Burmese police also seized 10.34 million ATS tablets and 45 kg of crystal methamphetamine during the same reporting period. Burma is a party to the 1988 UN Drug Convention, but has not yet instituted laws that meet all UN chemical control provisions. Burma’s Precursor Chemical Control Committee, established in 1998, is 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

The 2009 National Narcotics Law gave the National Narcotics Board the authority to monitor narcotics and precursor production at pharmaceutical plants, and to conduct investigations and arrests in response to precursor and narcotics violations. Although there are several laws and regulations regarding the import and export of precursor chemicals, and Indonesia has reorganized the Ministry of Trade and Industry and the Ministry of Health to better control the import of precursor chemicals and pharmaceutical drugs, the extent of enforcement is largely unknown. However, Indonesia was the third largest importer of ephedrine (12,612 kg) and pseudoephedrine (56,033 kg) in 2013.

The National Narcotics Board reports that it regularly conducts unannounced inspections to companies that are listed importers of precursor chemicals such as potassium permanganate and acetic anhydride, which are commonly used for cocaine and heroin production. In 2014, the agency conducted visits to registered importers, but unlike in past years there were no findings of illegal precursor chemicals. In regard to supervision of acetic anhydride, the National Narcotics Board cooperates closely with the Ministry of Industry. Indonesia is now utilizing an online pre-export notification system for pharmaceutical precursors and the National Single Window for control of imports and exports, including precursors. Every year, through the Ministry of Health, Indonesia reports estimates of its legal domestic narcotics precursors to the INCB, as mandated by CND Resolution 49/3.

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’s criminal law has several prohibitions against the import, production, and use and misuse of chemicals 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 diversion of chemicals for narcotics production is relatively small. In 2008, the Lao National Assembly passed a drug 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 emerging as a regional production hub for crystal methamphetamine and ecstasy. Narcotics imported to Malaysia include heroin and marijuana from the Golden Triangle area (Thailand, Burma, and Laos). Small quantities of cocaine are smuggled into and through Malaysia from South America. Methamphetamine, largely from China, Nigeria and Iran, and ketamine, mostly from India, are smuggled through Malaysia en route to consumers in Thailand, Japan, Indonesia, Singapore, and Australia.

Since 2006, Malaysia has been a location where significant quantities of crystal methamphetamine are produced. Since 2009 there have been reports of 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 also continue to use Kuala Lumpur as a hub for their illegal activities.

Pakistan

Pakistan is one of the world’s top transit countries for the movement of illicit precursor chemicals used in the production of heroin and amphetamine type stimulants, such as methamphetamine. Based on the quantity of heroin produced in land-locked Afghanistan, UNODC estimates that 300 to 600 MT of acetic anhydride are illegally trafficked into Afghanistan through Pakistan on an annual basis. However, not all trade in these substances is illicit. Pakistan does not domestically produce industrial-scale quantities of either acetic anhydride or ephedrine, though they have chemical and pharmaceutical industries with a legitimate, albeit modest, demand for these substances.

Pakistan enforces a basic precursor control regime, as part of its Paris Pact obligations, covering the import of seven multi-use chemicals: acetic anhydride, pseudo-ephedrine, anthranilic acid, acetone, potassium permanganate, methyl-ethyl ketone, and toluene. The Anti-Narcotics Force (ANF) monitors imports and exports through its licensing system and PEN Online requests. In 2014, ANF received 121 PEN Online notifications, approving 95 shipments and denying 26. Additionally, the ANF approved the import of 30 MT of pseudoephedrine, but did not approve the import of any acetic anhydride.

There is reason to believe that significant imports of precursor chemicals circumvent the PEN system via mislabeled shipping containers and dhow boats unloading cargo along Pakistan’s largely unpatrolled coastlines. In 2014, ANF reported that it seized 38,200 liters of acetic anhydride. In 2014, both ANF and Pakistan Customs continued to provide information in the INCB’s PICS.

Latin America

Bolivia

Substantial quantities of precursor chemicals continue to be diverted or smuggled into Bolivia for the production of cocaine. Peru is the largest source of these chemicals, claiming about 40 percent of Bolivia’s market as estimated by the Chemical Substances Investigations Group (GISUQ) of the Bolivian counternarcotic police.

The most common chemicals seized from contraband match those commonly found in drug factories (where base/paste is prepared) and cocaine labs (where base/paste is transformed into cocaine HCl). Since Bolivia has become a transit country for Peruvian base/paste, the number of labs has significantly increased. The majority of chemicals found in cocaine factories and labs consist of sulfuric acid, hydrochloric acid, sodium carbonate, caustic soda, ammonia, phenacetin, sodium metabisulfite, and isopropyl alcohol. The last three products are not listed under controlled substances, and GISUQ believes they are increasingly used to circumvent controls. An emerging trend among cocaine laboratories is to utilize recycling equipment allowing the operators to reuse many of the chemicals up to four times before they need to be replaced. Seventy-five percent of the labs seized in 2014 were built and equipped in such a manner.

Over the first 10 months of 2014, GISUQ seized 278 MT of solid chemical precursors and 162,000 litters of liquid chemical precursors, a two percent increase and 38 percent decrease respectively, compared to the same period in 2013. In 2014, with mixed results, GISUQ changed its strategy from focusing on importers and major chemical distributors to field operations. The new counternarcotics law announced by the Bolivian government in 2014 is expected to include a provision allowing law enforcement to expeditiously add new chemicals to its controlled precursor substances list.

According to Bolivian counternarcotic police authorities, in 2014 law enforcement did not find any psychotropic labs in Bolivia, but small quantities of psychotropic substances originating from neighboring countries in the region were seized. The counternarcotics police are working on possible strategies to address this growing concern.

GISUQ coordinates activities with the General Directorate for Controlled Substances, a civilian entity under the Government of Bolivia that administers and licenses the sale and transport of controlled substances listed under Bolivian CN Law 1008. Per Bolivian law, unless controlled substances are found next to a cocaine lab, unlicensed transport and sale results only in an administrative violation, penalized by a fine and the possibility to lose the merchandise (if the proper paperwork is not produced within a certain period of time).

The Bolivian government does not have control regimes for ephedrine and pseudoephedrine. The GISUQ, however, coordinates with the Ministry of Health to supervise and interdict the illegal sale of methamphetamine.

Colombia

Precursor chemical diversion continues to be a serious problem in Colombia. Currently, there are approximately 4,500 chemical companies authorized to handle controlled chemicals for legitimate use. Although chemical companies must have governmental permission to import or export specific chemicals and controlled substances, the police have the burden to prove whether chemicals are intended for the production of illicit drugs.

The Colombian government has tightened chemical controls on chemicals used for coca processing as well as strengthened chemical control legislation. However, traffickers are now seeking new avenues and many of these precursors are camouflaged and clandestinely imported into Colombia. They have also been diverted by large Colombian chemical handlers whose management may have no knowledge of the illegal activities. The bulk of the diversion occurs at the second or third level of the distribution chain. Chemical traffickers and clandestine laboratories use non-controlled chemicals such as n-propyl acetate to replace controlled chemicals that are difficult to obtain. They also recycle chemicals in order to decrease the need to import or divert them. Additionally, traffickers are recycling the chemical containers, making it difficult to trace their origin.

The Colombian government implements restrictions on other needed chemicals for coca processing, such as gasoline and cement. These restrictions include reduced numbers for production, distribution and storage of chemicals and, in some areas, no allowance of particular chemicals at all in a zone. In addition, the essential cocaine processing products of sulfuric acid, hydrochloride acid and potassium permanganate, which were only regulated after a 5 liter/5 kg threshold, are now controlled regardless of the amount.

Colombian companies are not authorized to export ephedrine or pseudoephedrine in bulk form and all drug combination products containing ephedrine or pseudoephedrine have been banned from domestic distribution. However, they can import these precursors for the manufacture of pharmaceutical preparations which can be re-exported.

The Colombian National Police’s (CNP) Chemical Sensitive Investigative Unit (SIU) was formed in June of 1998. Now both the SIU and the CNP’s Chemical Control and Compliance Unit (CCCU) conduct investigations. The CCCUs primary mission remains the chemical handlers, developing audits of chemical handlers and investigative leads that are either pursued by them or passed on to the SIU for further criminal investigation and prosecution. The SIU and the CCCU are also responsible for the multi-national chemical targeting operations.

In 2011, the Colombian government amended its chemical law making the diversion of listed chemicals a criminal act. With this amendment, the company owners can be prosecuted and their companies subject to forfeiture. The Colombian government also scheduled levamisole, a veterinarian parasite product, which is now the most frequently used product to cut Colombian cocaine.

The CNP primary interdiction force, the DIRAN’s airmobile Jungle Commandos (Junglas), are largely responsible for the significant number of cocaine HCl and coca base labs destroyed in 2013, as well as the seizure of significant amounts of listed chemicals during the course of their operations in the same year. The combined efforts of Colombian government’s law enforcement and military seized over 2.8 million gallons of liquid precursors and 25,875 MT of solid precursor chemicals over the first nine months of 2014. There has been a recent trend of HCl labs – long thought to be only located in Colombian jungles – moving into the urban centers. Also in 2013, investigations have led to the discovery of large scale labs in the metropolitan cities of Cali and Medellin.

Peru

Peru continues to be a major importer of precursor chemicals used in cocaine production, including acetone, sulfuric acid, hydrochloric acid, and calcium oxide – the four primary precursor chemicals used in the production of cocaine in the country according to a 2012 study by the United Nations. Peru also produces sulfuric acid for this purpose. These chemicals are often diverted from legitimate channels to cocaine production with a concentration in Upper Huallaga Valley (UHV) and the Ene, Apurimac and Mantauro River Valley (VRAEM), the principal coca producing areas in Peru. Potassium permanganate, the precursor chemical most widely sought in cocaine production in neighboring countries to remove impurities and enhance the coloration, is not typically used in Peru, where alcohol is the preferred substance for this purpose. In 2014, the Peruvian National Police (PNP) seized only 2.7 MT of potassium permanganate. The PNP has identified the principal routes of precursor chemicals from Lima into the drug source areas, and is building its capacity to intercept these shipments.

In 2014, the PNP Chemical Investigations Unit (DEPCIQ) continued its chemical enforcement and regulatory operations, leading to the seizure of 2,564 MT of precursor chemicals – including calcium oxide (437.8 MT), sulfuric acid (161.2 MT), hydrochloric acid (69.6 MT), and acetone (59.6 MT). The counternarcotics police (DIRANDRO) continued a bilateral chemical control program with the United States, known as Operation Chemical Choke, which specifically targets the seizure of acetone, hydrochloric, and sulfuric acid through a specialized enforcement and intelligence unit of the police. Operation Chemical Choke targets those organizations that divert chemicals to cocaine production. In 2014, this operation resulted in the arrest of several chemical traffickers and the seizure of 14.3 MT of acetone, 6.7 MT of hydrochloric acid, and 28 MT of sulfuric acid. Peruvian Law enforcement conducted bilateral chemical enforcement operations from October 19-30, resulting in seizures of 63 MT of sulfuric acid.

Peruvian law enforcement also conducted chemical enforcement operations with neighboring countries and participated in enforcement strategy conferences to address chemical diversion. Joint operation seizures included several floating gas stations and 204,116 liters of gasoline, 10 MT of precursor chemicals, and 3.5 MT of cement. Sixteen cocaine laboratories were destroyed as part of this mission.

In 2012, the Government of Peru issued a legislative decree to enhance monitoring and control of chemical precursors, finished products, and machinery used to produce and transport illegal drugs.

Major Exporters and Importers of Pseudoephedrine and Ephedrine (Section 722, Combat Methamphetamine Epidemic Act (CMEA)

This section of the INCSR is produced in response to the CMEA Section 722 requirement to report on the five major importing and exporting countries of the identified methamphetamine precursor chemicals. In meeting the CMEA 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. The available data does not address illicit trafficking and production.

Ephedrine and pseudoephedrine are the preferred chemicals for methamphetamine production, although traffickers are increasingly using substitutes or pre-precursors. The phenomenon of substitute chemicals used in methamphetamine production is particularly pronounced in Europe where the method using APAAN is more pronounced. 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. Phenylpropanolamine is not a methamphetamine precursor chemical and trade and production data are not available on phenylpropanolamine. Therefore, this section provides information only on pseudoephedrine and ephedrine.

The 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, given the reporting cycles by participating countries, data often lags behind one year. 2013 is the most recent year with full-year data. The data, including data from the previous year, is continually revised as countries review and revise their data. GTA data is used in the tables at the end of the chapter.

Obtaining data on legitimate demand remains problematic, but it is more complete for 2012 and 2013 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 – although each year the number is increasing. 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.

Ephedrine and pseudoephedrine pharmaceutical products are not specifically listed chemicals under the 1988 UN Convention. Therefore, 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, 157 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 small 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 either from commercial industry, domestic use, or onward exports. For instance, some countries that noted licit requirements, but had not reported into the GTA 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 and Middle East countries. Although we have recently learned that Egypt is now an exporter of cold medications to other parts of the Middle East and surrounding areas.

Thus far, the economic analysis required by the CMEA remains limited 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. 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. The United States will 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, and to follow the development of any other chemicals used in the production of methamphetamine. 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 2011-2013. 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 not all major producers will release this proprietary data.

Top Five Exporting Countries and the United States

Ephedrine and Its Salts 2011-2013

Reporting Country

Unit

Quantities

2011

2012

2013

         

Germany

KG

62,200

82,300

91,900

India

KG

94,971

49,231

58,829

Singapore

KG

9,800

10,295

31,150

Denmark

KG

1,100

4,000

3,400

China

KG

3,110

18,316

2,506

Top Five Total

 

171,181

164,142

187,785

         

United States

KG

163

171

265

Analysis of Export Data: The top-five exporters of ephedrine in 2013 were Germany, India, Singapore, Denmark, and China. According to the GTA, ephedrine exports increased 14.4 percent in 2013, due to a spike in exports from Germany, India, and Singapore. Germany’s exports increased to 91,900 kg in 2013 from 82,300 kg in 2012, making it the lead global exporter of ephedrine. Despite the substantial drop between 2011 and 2012, India’s exports increased by 19.5 percent between 2012 and 2013; continuing to rank it as the second largest exporter of ephedrine. Singapore is now third with a 202.5 percent increase between its 2012 and 2013 exports. Denmark appears fourth, although its exports have dropped from 4,000 kg in 2012 to 3,400 kg in 2013. China has substantially dropped its ephedrine exports from 18,316 kg in 2012, to 2,506 kg in 2013, and Poland, which was fourth in 2012, had no ephedrine exports in 2013. The top-five countries in 2012 included: Germany, India, China, Poland, and Singapore.

The aggregated amount of ephedrine exported by the top-five countries in 2013 was 187,785 kg. This means an increase of 9.7 percent compared to 2011, and 14.4 percent compared to 2012. U.S. exports increased substantially from 171 kg in 2012 to 265 kg in 2013; a 55 percent increase. Yet, the United States is far down the overall exporting list in tenth place.

Top Five Exporting Countries and the United States

Pseudoephedrine and Its Salts 2011-2013

Reporting Country

Unit

Quantities

2011

2012

2013

         

India

KG

1,658,599

409,736

440,132

Germany

KG

473,000

308,000

389,100

Singapore

KG

43,371

55,278

92,117

China

KG

65,200

67,309

90,650

Taiwan

KG

70,310

77,924

88,604

Top Five Total

 

2,310,480

918,247

1,100,603

         

United States

KG

13,423

11,809

6,597

Analysis of Export Data: For pseudoephedrine, the aggregated volume of worldwide exports for the top-five exporters increased from 918,247 kg in 2012 to 1,110,603 kg in 2013. The top-five exporters of pseudoephedrine in 2013 were India, Germany, Singapore, China, and Taiwan. In 2012, the top-five were India, Germany, Taiwan, China, and Singapore. All top-five exporters increased their pseudoephedrine exports in 2013. India and Germany’s exports increased 7.4 percent and 26.3 percent respectively. Singapore’s exports increased from 55,278 kg in 2012 to 92,117 kg in 2013, and China from 67,309 kg in 2012 to 90,650 kg in 2013. Taiwan has also increased its exports from 77,924 kg in 2012 to 88, 604 kg in 2013.

The United States has decreased its pseudoephedrine exports from 11,809 kg in 2012 to 6,597 kg in 2013 – a 79 percent drop. The U.S is ranked eighth in the overall pseudoephedrine worldwide exporting list.

Top Five Importing Countries and the United States

Ephedrine and Its Salts 2011-2013

Reporting Country

Unit

Quantities

2011

2012

2013

         

India

KG

6,100

44,019

82,283

South Korea

KG

25,801

28,150

22,811

Indonesia

KG

9,322

9,279

12,612

Singapore

KG

10,277

11,704

11,512

Egypt

KG

19,923

3,694

6,057

Top Five Total

 

71,423

96,846

135,275

         

United States

KG

10,132

11,731

15,972

Analysis of Import Data: The top-five ephedrine imports in 2013 were India, South Korea, Indonesia, Singapore, and Egypt. India’s imports appear to have doubled, following its continuing annual requirements and production of cold and other medicines. India, South Korea, Singapore, Indonesia, and Hong Kong were the top-five ephedrine importers in 2012.

U.S. imports increased substantially in 2013 (more than 36 percent), ranking the country as the third-largest ephedrine importer. Prior to the CMEA, U.S. companies were importing large quantities of ephedrine. After the passage of the CMEA and the introduction of quotas for ephedrine, companies did not need to apply for a quota since sufficient stock was on hand. The current situation is that these companies have gone through their stock and need to obtain ephedrine for current operations. Also, there is a surge in product development efforts by U.S. companies. However, since all quota requests must be approved in advance, the legitimacy of the requests is verified before the quota is granted.

Despite the refinement of the quota system implemented under the CMEA, U.S. ephedrine imports continue to increase in the last three consecutive years, going from 10,132 kg in 2011 to 11,731 kg in 2012, and to 15,972 kg in 2013.

Top Five Importing Countries and the United States

Pseudoephedrine and Its Salts 2011-2013

Reporting Country

Unit

Quantities

2011

2012

2013

         

Switzerland

KG

84,980

60,056

93,322

Singapore

KG

55,069

49,624

61,671

Indonesia

KG

40,147

51,594

56,033

South Korea

KG

40,200

38,975

41,951

United Kingdom

KG

24,800

19,400

41,100

Top Five Total

 

245,196

219,649

294,077

         

United States

KG

248,354

185,306

166,424

Analysis of Import Data: The quantity of pseudoephedrine imported by the top-five pseudoephedrine importers increased in 2013. The aggregated amount of pseudoephedrine imported by the top-five countries in 2013 was 294,077 kg; a 33.9 percent increase. The new rank of top pseudoephedrine importers in 2013 includes Switzerland, Singapore, Indonesia, South Korea, and the UK. All top-five importing countries increased their pseudoephedrine imports, and the UK has increased imports by more than 54 percent compared to 2012. A large pharmaceutical producer in the U.S. recently moved its manufacturing of a pseudoephedrine-based cold product to the UK, which would account for their increase in imports. The 2012 list included Switzerland, Indonesia, Singapore, Egypt, and South Korea.

For the second consecutive year, U.S. imports continue to drop since the high of 312,000 in 2007. The passage of the CMEA eliminated the grey market for pseudoephedrine, since companies had to apply for a quota for any pseudoephedrine they wanted to import. Also, companies switched their formulations from pseudoephedrine to phenylephrine.

Even with the decline in imports, the United States remained the top importer of pseudoephedrine, with imports of 166.424 kg in 2013. It should be noted, however, that the United States no longer manufactures pseudoephedrine.


 

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-2-propanone and their preparations

 

(Kilograms, rounded up)

               
 

Status: 1 December 2014

         
 

Country or

territory

Ephedrine

Ephedrine preparations

Pseudoephedrine

Pseudoephedrine preparations

3,4-MDP-2-Pa

P-2-Pb

               
 

Afghanistan

50

0

3 000

0

0

0

 

Albania

3

0

3

0

0

0

 

Algeria

1

 

17 000

 

0

0

 

Argentina

27

 

13 329

 

0

0

 

Armenia

0

0

0

0

0

0

 

Ascension Island

0

0

0

0

0

0

 

Australia

3

13

6 110

1 720

0

1

 

Austria

105

15

1

1

0

1

 

Azerbaijan

20

 

10

 

0

0

 

Bahrain

0

0

   

0

 
 

Bangladesh

200

 

49 021

 

0

0

 

Barbados

200

 

200

58

0 i

 
 

Belarus

0

25

25

20

0

0

 

Belgium

300

200

9 000

8 000

5

5

 

Belize

   

P

P

0 i

 
 

Benin

2

 

8

10

0 i

 
 

Bhutan

0

0

0

0

0

0

 

Bolivia

41

1

1066

1373

0

0

 

Bosnia and Herzegovina

8

2

1000

845

0

0

 

Botswana

300

     

0 i

 
 

Brazil

900c

 

18 000 c

 

0

1

 

Brunei Darussalam

0

2

0

158

0

0

 

Bulgaria

200

400

25

0

0

0

 

Cambodia

200

50

300

900

0 i

 
 

Cameroon

25

     

0 i

 
 

Canada

1 330

5

27 900

 

0

1

 

Chile

94

200

8 424

950

0

0

 

China

60 000

 

200 000

 

0 i

 
 

Hong Kong SAR of China

3 050

0

8 255

0

0

0

 

Macao SAR of China

1

10

1

159

0

0

 

Christmas Island

0

0

0

1

0

0

 

Cocos (Keeling) Islands

0

0

0

0

0

0

 

Colombia

0 d

1 802 e

1 858 d

P

0

0

 

Cook Islands

0

0

0

1

0

0

 

Costa Rica

0

0

523

39

0

0

 

Cote d'Ivoire

30

1

25

500

0

0

 

Croatia

30

0

0

0

0

0

 

Cuba

200

   

6

0 i

 
 

Curacao

0

 

0

 

0

0

 

Cyprus

 

0

550

 

0 i

 
 

Czech Republic

600

8

1 200

600

0

1

 

Democratic People's Republic of Korea

300

1 200

0

0

5

0

 

Democratic Republic of the Congo

300

10

720

900

0 i

 
 

Denmark

       

0

0

 

Dominican Republic

75

5

200

250

0

0

 

Ecuador

20

6

900

2 500

0

0

 

Egypt

4 000

0

50 000

2 500

0

0

 

El Salvador

P(6) f

P(0) f

P

P

0

0

 

Eritrea

0

0

0

0

0

0

 

Estonia

5

5

0

350

0 i

0

 

Faroe Islands

0

0

0

0

0

0

 

Falkland Islands (Malvinas)

 

1

 

1

0 i

 
 

Finland

6

70

0

600

0 i

0

 

France

2 000

10

20 000

500

0

0

 

Gambia

0

0

0

0

0

0

 

Georgia

10

25

2

15

0 i

 
 

Germany

1 000

 

8 000

 

1

8

 

Ghana

4 800

300

3 200

200

0

0

 

Greece

1 000

 

1 000

 

0

0

 

Greenland

0

0

0

0

0

0

 

Guatemala

0

 

P

P

0

0

 

Guinea

36

     

0 i

 
 

Guinea-Bissau

0

0

0

0

0

0

 

Guyana

120

50

120

30

0

0

 

Haiti

200

1

350

12

0

0

 

Honduras

P

P(1) e

P

P

0

0

 

Hungary

650

 

1

 

0

1 800

 

Iceland

1

 

0

0

0 i

 
 

India

2 200

112 729

333 585

1 092

0

0

 

Indonesia

10 000

0

52 000

1 000

0

0

 

Iran (Islamic Republic of)

50

1

55 000

10

6

51

 

Iraq

3 000

100

14 000

10 000

0

P h

 

Ireland

1

1

1

585

0

0

 

Israel

1

30

16

1 971

0 i

 
 

Italy

1 000

0

7 500

18 000

0

600

 

Jamaica

50

150

400

300

0

0

 

Japan

1 000

 

12 000

 

0 i

 
 

Jordan

50

 

15 000

 

0 i

P

 

Kazakhstan

0

 

0

 

0

0

 

Kenya

2 500

 

3 000

 

0 i

 
 

Kyrgyzstan

0

0

0

100

0

0

 

Lao People's Democratic Republic

0

0

1 000

130

0

0

 

Latvia

25

27

41

383

0

0

 

Lebanon

26

5

240

700

0

0

 

Lithuania

1

1

0

600

1

0

 

Luxembourg

1

0

0

0

0

0

 

Madagascar

702

180

150

 

0 i

 
 

Malawi

1 000

     

0 i

 
 

Malaysia

40

25

5 001

3 500

0

2

 

Maldives

0

0

0

0

0

0

 

Malta

 

220

220

 

0

0

 

Mauritius

0

0

0

0

0

0

 

Mexico

P(500) f

P f

P

P

0

0

 

Monaco

0

0

0

0

0

0

 

Mongolia

3

     

0 i

 
 

Montenegro

0

1

0

80

0

0

 

Montserrat

0

1

0

1

0

0

 

Morocco

41

0

2 179

0

0

0

 

Mozambique

3

     

0 i

 
 

Myanmar

2

0

0

0

0

0

 

Namibia

0

0

0

0

0

0

 

Nepal

 

1

6 500

 

0 i

 
 

Netherlands

200

0

 

0

0

0

 

New Zealand

50

0

800

 

0

3

 

Nicaragua

P g

P g

P

P

0 i

 
 

Nigeria

9 650

500

5 823

15 000

0

0

 

Norfolk Island

0

0

0

0

0

0

 

Norway

225

0

1

0

0

0

 

Pakistan

3 300

 

29 500

500

0 i

 
 

Panama

5

2

400

650

0 i

 
 

Papua New Guinea

1

 

200

 

0

0

 

Paraguay

0

0

2 500

0

0

0

 

Peru

54

 

2 524

1 078

0 i

 
 

Philippines

120

0

120

0

0

0

 

Poland

110

0

4 150

0

1

5

 

Portugal

   

15

 

0 i

 
 

Qatar

0

0

0

80

0

0

 

Republic of Korea

23 316

 

62 901

 

1

1

 

Republic of Moldova

0

450

0

450

0

0

 

Romania

192

 

6 600

 

0

0

 

Russian Federation

1 500

     

0 i

 
 

Saint Helena

0

1

0

1

0

0

 

Saint Lucia

0

0

0

0

0

0

 

Saint Vincent and the Grenadines

0

 

0

 

0

0

 

Sao Tome and Principe

0

0

0

0

0

0

 

Saudi Arabia

1

 

18 485

 

0 i

0

 

Senegal

0

0

0

0

0

0

 

Serbia

25

0

1 265

0

0

1

 

Singapore

12 269

4

63 037

3 416

1

1

 

Slovakia

3

7

1

1

0

0

 

Slovenia

9

 

250

 

0

0

 

Solomon Islands

0

1

0

1

0

0

 

South Africa

13 900

0

10 444

10 816

0

0

 

Spain

186

 

8474

 

0

98

 

Sri Lanka

 

0

 

0

0

0

 

Sweden

188

170

1

30

1

13

 

Switzerland

3 300

 

85 000

 

1

700

 

Syrian Arab Republic

1 000

 

50 000

 

0 i

 
 

Tajikistan

38

     

0 i

 
 

Thailand

53

0

101

0

0 i

0

 

Trinidad and Tobago

       

0 i

0

 

Tristan da Cunha

0

0

0

0

0

0

 

Tunisia

1

25

4 000

0

0

0

 

Turkey

374

0

25 357

4 942

1

1

 

Turkmenistan

0

0

0

0

0

0

 

Uganda

150

35

2 500

400

0

0

 

Ukraine

0

81

0

3247

0

0

 

United Arab Emirates

0

 

3 000

2 499

0

0

 

United Kingdom

64 448

1 011

25 460

1 683

8

1

 

United Republic of Tanzania

100

100

2 000

100

0 i

 
 

United States of America

19 300

 

246 000

 

0

64 294

 

Uruguay

6

0

0

1

0

0

 

Uzbekistan

1

 

15

 

0 i

 
 

Venezuela (Bolivarian Rep. of)

80

 

3 000

 

0 i

 
 

Yemen

75

75

3000

2000

0 i

 
 

Zambia

50

25

50

100

0 i

 
 

Zimbabwe

150

150

150

50

1 000

1 000

               
               

Notes: The names of territories, departments 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 currently has no licit requirement for the substance.

 
 

The letter “P” signifies that importation of the substance is prohibited.

 
 

Reported quantities of less than 1 kg have been rounded up and are reflected as 1 kg.

 
               

a

3,4-Methylenedioxyphenyl-2-propanone.

 
               

b

1-Phenyl-2-propanone.

 
               

c

Including the licit requirements for pharmaceutical preparations containing the substance.

 
               

d

The required amount of ephedrine is to be used for the manufacture of injectable ephedrine sulphate solution. The required amount of pseudoephedrine is to be used exclusively for the manufacture of medicines for export.

 
               

e

In the form of injectable ephedrine sulfate solution.

 
               

f

Imports of the substance and preparations containing the substance are prohibited, with the exception of the imports of injectable ephedrine preparations and ephedrine as a prime raw material for the manufacture of such ephedrine preparations. Pre-export notification is required for each individual import.

 
               

g

Imports of the substance and preparations containing the substance are prohibited, with the exception of the imports of injectable ephedrine preparations and ephedrine as a prime raw material for the manufacture of such ephedrine preparations. Such export requires an import permit.

 
               

h

Includes products containing P-2-P.

 
               

i

The Board is currently unaware of any legitimate need for the importation of this substance into the country.

 

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