Chemical Controls

Bureau of International Narcotics and Law Enforcement Affairs
Report

Introduction

“Precursor” and “essential” chemicals play two critical roles in the production of illegal drugs: as compounds required in the production of synthetic drugs 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. For instance, diversion of less than one percent of worldwide licit commercial use of these chemicals would be sufficient to produce the world’s supply of heroin. Precursors can also be obtained from licit medicines as is the case for ephedrine and pseudoephedrine in finished cold medicine products.

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 their international trade in chemicals listed in 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 their international transactions involving these chemicals. Article 8 of the Convention requires licensing or similar control of 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 drug control policy-making body – have provided additional guidance to states on how to implement their obligations according to specific best practices, and have encouraged states to make better use of the INCB’s 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, assists Governments in overcoming difficulties. The United States provides funding to the INCB to monitor the measures called for in the Conventions, and improve detection and tracking of chemicals subject to being diverted.

In addition to ISSL, the INCB has developed a number of instruments to address the challenges of precursor chemicals:

  • The Pre-Export Notification Online system (PEN Online) is an online database system that enables the 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 responses to acknowledge receipt and to notify the exporting country of clearance to export of chemicals. Since the PEN online system was first launched in March 2006, 151 exporting as well as importing governments have so far registered to use the system. On average, 2600 PENs pre-export notifications are submitted via the online application on a monthly basis.
  • The Precursors Incident Communication System (PICS) is another INCB tool that provides real-time communication to share intelligence and facilitate direct contact between national authorities to further investigations into chemical trafficking. PICS has shared final intelligence on more than 800 chemical trafficking interdictions to various registered law enforcement and regulatory agencies around the world. As of November 2015, there were 480 registered PICS’ users, representing some 200 agencies from 94 countries and territories, and 10 international and regional agencies.

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 implementation of CND resolutions.

Chemical Control Activities and New Trends

Heroin. The main precursor chemical used to produce heroin is acetic anhydride, a substance that is also widely used in legitimate industry. Drug trafficking organizations continue to channel acetic anhydride to illicit producers through diversion, or smuggling. 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 and smuggling.

The Government of Afghanistan has reiterated there is no legitimate use for acetic anhydride in Afghanistan and has taken measures in the last few years to block all imports of the substance. Afghan authorities believe that acetic anhydride is diverted primarily from neighboring countries. The United States, Afghanistan’s neighbors, and other international partners continue to work with Afghanistan to address this issue through expanded law enforcement cooperation and information coordination.

Mexico, the world’s third largest source of opium poppy, also legitimately produces, imports, and exports acetic anhydride. Acetic anhydride may also be used as a compound substance to produce a chemical reaction in the production of methamphetamine.

The United States continues to work with participant countries of the INCB Precursor Task Force of Project Prism and Project Cohesion. The INCB Precursor Task Force is currently focusing on legitimate domestic trade and end-use of acetic anhydride. The United States also provides assistance to expand the International use of the INCB’s PEN Online and the PICS systems to control the diversion of acetic anhydride.

Countries and regional organizations are also stepping up efforts to target illicit acetic anhydride. For instance, the European Union adopted regulations that strengthened controls over acetic anhydride in November 2013 and enabled increased coordination on law enforcement activities in Europe. In addition, the OAS’ Inter-American Drug Abuse Control Commission (CICAD) is in the initial phases of developing programs that analyze consumption and production trends related to heroin in the western hemisphere.

Methamphetamine. Methamphetamine is produced using a variety of methods, but most require one or more of 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 due to increased diversion controls, traffickers have started using other chemicals, or seeking non-controlled pre-precursor chemicals or esters, and derivatives of phenylacetic acid to produce the precursor chemicals necessary for methamphetamine production. New production methods have also emerged. Traffickers, particularly in Europe, began using a pre-precursor, APAAN, or alpha-phenylacetoacetonitrile. Although this chemical was added to the list of internationally controlled chemicals under the 1988 UN Convention in 2013, traffickers continue to use it as many governments are only beginning to implement controls.

Meanwhile, methamphetamine production continues worldwide and there are indications that trafficking to the United States increased in 2015. 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 large scale 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 controls

Countries in Africa and Asia where precursors like P-2-P and APAAN are relatively unknown continue to rely on ephedrine and pseudoephedrine to produce top quality methamphetamine. Last year, nine kilograms (kg) of crystal methamphetamine were seized at Ghana's Kokota International Airport. According to airport officials, this was the largest seizure of crystal methamphetamine seized by airport authorities in that country.

In Europe, APAAN continues to be widely used for illicit amphetamine and methamphetamine manufacture, although seizures peaked in 2013. The legitimate uses for APAAN are limited in Europe, and therefore imports are likely to be intended for conversion to benzyl methyl ketone (BMK), an amphetamine precursor. According to the INCB, APAAN seizures in 2014 amounted to more than 11 metric tons (MT) and were all reported by countries in Europe.

The diversion and smuggling of APAAN is not just a European problem. In recent years, Canada has also reported large seizures of APAAN. As a result, the Canadian government is now proceeding through the stages of its federal regulatory process to add APAAN to its internal regulatory control.

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 cultivating large quantities of coca leaf, chemical trends continue along the lines outlined in previous years, with traffickers continuing to divert chemicals from legitimate industry either from domestic or international sources. Investigations from 2013 through 2014, and increased reporting of licit shipments through PEN Online reveal that traffickers 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.

INCB’s Project Cohesion monitors the imports of potassium permanganate to cocaine processing areas. Alternative precursor chemicals used in cocaine manufacturing have also been detected. Additionally, traffickers are recycling the chemical containers, making it difficult to trace the origin of the chemicals inside. The United States, the INCB and others are encouraging countries in South America to continue obtaining and sharing information on these new trends; at the same time, developing an effective multilateral effort focused on potassium permanganate has been difficult because of the large number of licit uses for this chemical.

New Psychoactive Substances (NPS). NPS are difficult to track because they are formulated and marketed so quickly that authorities do not often recognize them. Many cannot be identified through commonly available drug tests, and if they are truly new, they are not listed in the tables established by the international drug conventions. Producers modify and experiment with chemical formulas in search of new NPS. Distributors are able to spread the NPS widely before legislation to control it can be enacted. As of 2014, 95 countries reported the presence of NPS and alerted the global community through the UNODC tool, Global Synthetics Monitoring: Analyses, Reporting and Trends (SMART). Of the NPS identified by 2015, nearly 40 percent were synthetic cannabinoids and less than one-third had been controlled under the international drug control conventions.

At the 2015 CND, the United States sponsored a resolution that promoted the development of an international response to NPS that focused on increased review of these substances under the conventions, as well as the expansion of the INCB operational task forces to include NPS.

In April 2015, during an INCB-hosted conference in Bangkok on drug-related scheduled and non-scheduled precursor chemicals and NPS, 40 countries participated and adopted a statement of proposed measures to prevent the misuse of these substances. Among other things, delegates endorsed collaboration between national authorities and private industry, and expansion of the ISSL of non-scheduled precursor chemicals to include a limited prioritized list of NPS not under international control to allow for measures to be taken against the distribution and abuse of these substances.

Continuing Trends. Illicit drug producers are adapting. In the past, diversion of international shipments accounted for a greater proportion of precursor chemicals than it does now. Now, precursor chemicals are produced outside of domestic controls, and subsequently mislabeled for shipment or smuggled abroad. Domestic chemical diversion is the biggest challenge in countries where controlled substances are already produced. In coming years, it will be important to adapt policies and law enforcement efforts to overcome these challenges.

Increasingly, drug traffickers use chemicals that are not controlled under the convention or the domestic laws of the source or importing country. They exploit countries that have limited enforcement and regulatory capacity. International cooperation against chemical diversion has also pushed trafficking groups to exploit domestic industry in a significant way. Traffickers continue to obtain chemicals produced in the country where illicit drugs are produced, thereby escaping international monitoring, surveillance, and interdiction efforts.

The Internet continues to facilitate bulk sales and distribution of chemical compounds containing controlled substances, as well as the sale of uncontrolled NPS.

The methodologies of synthetic drug producers, aided by experienced chemists, are changing and becoming a major concern for authorities. In Belgium, as well as in the Netherlands, Poland, and the Czech Republic, the production of synthetic drugs is on the rise. In July 2014, for example, the Dutch police raided one of the biggest synthetic drugs labs for the production of ecstasy ever found in the Netherlands. Also in 2014, a joint Finnish and Dutch police operation uncovered a drug warehouse in the Netherlands and seized a large quantity of numerous forms of synthetic drugs, including sophisticated equipment for the production of NPS. 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 identify and stop diversion and/or smuggling of new substitute chemicals that can be used for illicit drug production.

The 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 as well as 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 precursor chemicals. 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 other member states through the CND and other multilateral venues. In the Western Hemisphere, for example, the CICAD advances voluntary cooperation on precursor chemical controls. CICAD’s Group of Experts on Chemical Control and Pharmaceutical Substances (Chem/Pharm) carries out a variety of initiatives in this important field. Of note, Chem/Pharm is exploring options for soliciting private sector input from the Western Hemisphere into the discussion on controlling substances that are legal but are used to make illegal drugs.

Moreover, the United States is supporting partner nation efforts in various regions of the world to develop and strengthen precursor laws and regulations to ensure compliance with international drug control conventions, including further steps to enhance and foster communication among 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 industries that have significant trade with drug-producing regions and those with significant chemical commerce susceptible to diversion domestically for smuggling into 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 24 chemicals listed in the 1988 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) is responsible for regulating the control of precursor chemicals and shares enforcement of the illicit use and diversion of precursor chemicals with the National Drug Law Enforcement Agency (NDLEA).

The Federal Republic of Nigeria does not have a large petrochemical industry engaged in the manufacturing of precursor chemicals. Chemicals for industrial and illicit production of drugs are imported from China and India. The largest precursor chemical import is ephedrine which is used in Nigeria for the production of cold medication and illegally diverted for use in the manufacturing of methamphetamine.

The NDLEA has reported seizures of 583 kg of ephedrine in 2015, an increase of 61 percent over the previous year. Of this amount, 98 percent was intercepted at four of the five Nigerian international airports (Lagos, Abuja, Kano and Enugu). All of the ephedrine/pseudo-ephedrine imported into Nigeria was imported solely from India. All imports are deemed legitimate but some of the ephedrine was diverted to clandestine laboratories for methamphetamine production. 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 give better yields and better quality of methamphetamine. No listed chemicals were exported or imported between Nigeria and the United States in 2015.

The NAFDAC regulates and controls the importation, exportation, distribution and use of narcotic drugs, psychotropic substances and chemicals and other controlled substances. 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. It also grants authorizations for the importation of bulk narcotics and purchase of finished narcotics from Federal Medical Stores.

South Africa

South Africa is a leading regional importer of chemicals used in the production of illegal drugs, particularly synthetic drugs. Domestically, South Africa enforces the 1988 UN Drug Convention’s requirements for scheduled precursor chemicals. With heroin and cocaine primarily trafficked in their usable form, the chemicals used in their production are not as commonly found as those used to manufacture methamphetamine and mandrax.

The South African Police Service (SAPS) has a trained, dedicated team to detect clandestine laboratories. The SAPS division of the Directorate for Priority Crime Investigation (DPCI) estimates 40-50 clandestine laboratories are dismantled annually. The SAPS reported seizure of 324 kg of methamphetamine in the SAPS 2013/2014 annual report. The South African Revenue Service (SARS) published the trade of chemical products as a broad category in the trade statistic report. SARS Customs and Enforcement teams also seize illicit drugs and substances scheduled as precursors.

Ephedrine and pseudoephedrine used in South Africa to synthesize methamphetamine largely originate in Nigeria and India. There is also a trend of seizures from passengers at the O.R. Tambo International Airport arriving from the United Arab Emirates. Although it is a challenge to gather trade information to assess illicit use and trade of precursors, South Africa reported on substances frequently used in the illicit manufacture of narcotic drugs and psychotropic substances to the INCB as a party to the 1988 UN Drug Convention. Also, South Africa is registered with PICS. Restricting and analyzing the trade of precursors is a component of the South Africa National Drug Policy (NDP), which mandates the establishment of computerized inventory control systems for scheduled chemicals and regular regulation and monitoring of the purchase of medicines containing precursors via a registry system. Such measures have not been fully implemented.

The nexus between wildlife trafficking and trade for precursors and illicit drugs is being investigated. The United States has sponsored research in this field and awaits the final report. U.S. agencies coordinate with South African authorities. Container shipments which the United States identifies as containing possible illicit materials, to include precursors, are investigated by South Africa and acted on. U.S. law enforcement collaborations with South Africa in investigations are purposeful, yet regular and enhanced interactions would prove useful.

The Americas

Brazil

Brazil is a party to the 1988 UN Drug Convention and is one of the world’s 10 largest chemical producers. Brazil licenses, controls, and inspects essential and precursor chemical products, including potassium permanganate and acetic anhydride. These controls allow for either product 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, subordinate to the DPF Executive Directorate, and the Criminal Diversion Investigations unit which reports to the Organized Crime Division. However, 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 system requires all companies to use an on-line system for registration and to report all activity being conducted, including the submission of mandatory monthly reports of all chemical related movements as well as existing chemical stocks in their inventories.

The Government of Brazil adheres to 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 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) and its regulations provide a legislative framework for the control of chemical precursors. Scheduling of substances under the CDSA and its regulations provides law enforcement agencies with the authority to take action against activities that are not in accordance with the law. These instruments also authorize Health Canada to communicate information collected to law enforcement agencies, border control officers, foreign competent authorities and the INCB if necessary.

Health Canada submits an annual report to the INCB with respect to its obligations under the 1988 UN Drug Convention. The annual report provides information on licit imports and exports for the previous year, as well as stopped shipments and seizures, and refusals of permit applications due to objections from foreign authorities, information received from the INCB, and incomplete or invalid application information. Canada cooperates fully with the INCB in cases where shipments may pose a concern.

As a State party to the 1988 Convention, Canada is also obligated to impose controls on substances in response to decisions of the CND. In March 2014, the Commission voted to control APAAN and its optical isomers, which are used in the illicit manufacture of P-2-P, itself a scheduled precursor to amphetamines (primarily methamphetamines). Health Canada is now proceeding through the stages of the federal regulatory process to add APAAN and its salts, isomers, and the salts of its isomers, to the schedule to the Precursor Control Regulations (PCR). Canada signaled its intent to support the international controls through a Notice in Canada Gazette in 2014.

To address the problem of chemical diversion, the 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.

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 PEN Online.

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, maintain customer records, and are subject to inspections. Chilean law enforcement entities have specialized chemical diversion units and dedicated personnel assigned with 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 to combat bureaucratic inefficiencies and technological deficiencies. Although Chile still struggles with a lack of sufficient personnel, it continues to work hard to strengthen its chemical control regime. In 2015, Chile conducted documentary and on-site inspections of companies to ensure that the registry reflects active users of controlled chemicals and to enhance administration of the chemical control regime. Improvements in the registry process mean that there are now 553 registered users in REUSQC, compared to 183 in 2011. In 2015, there were three instances of unregistered companies exporting controlled chemicals, including isopropyl alcohol, sodium carbonate, acetic acid, and sodium hydroxide. Those companies were fined and then registered in REUSQC.

Mexico

Methamphetamine production and importation of precursor chemicals continue to pose problems in Mexico. Mexico controls all chemicals listed in the 1988 UN Drug 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.

With respect to synthetic drugs, Mexican seizures of methamphetamine, which totaled 14.6 MT in 2013, decreased 56.1 percent when compared to the year before. Seizures of clandestine drug labs increased slightly. Mexico seized 143 labs in 2014, an 11.7 percent increase over seizures 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 almost all 24 chemicals listed in Tables I and II of the 1988 UN Drug 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 U.S. 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 advance 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 UNODC and the INCB to develop information sharing procedures to better control precursor chemicals, including pseudoephedrine and ephedrine, the principal precursors in one method of methamphetamine production. U.S. officials are members of a combined task force for both Project Cohesion and Project Prism. The United States has established close operational cooperation with counterparts in major chemical manufacturing and trading countries. This cooperation includes information sharing in support of chemical control programs and 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 it also adopted recommendations from the INCB, 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 the substances compared to elsewhere in the region. The Costa Rican Drug Institute has a special unit dedicated to the control and regulation of precursor chemicals, and this unit has broad powers to monitor and respond to illegal activity. By law, importers and businesses that handle chemical precursors or certain types of prescription drugs are required to submit monthly reports through an online tracking system. As of August 2015, approximately 3,000 businesses were registered in this system and submit regular reports, including 150 importers of chemical precursors. The system tracks the movement of chemical precursors and solvents and also alerts personnel to cases that merit additional investigation.

The United States is in the midst of a project to assist in evaluating and preparing Costa Rica’s forensics laboratory for international certification.

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 24 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 is used in the Dominican Republic as an additive for gasoline and as a solvent for paint. Production of methamphetamines is not significant in the Dominican Republic. The DNCD has reported no seizures of precursor chemicals since 2010. As of October 31, Dominican authorities had not seized methamphetamine in 2015.

The DNCD regulates and enforces the importation and use of precursor chemicals. The DNCD receives pre-notifications for precursor imports and issues certificates of importation. 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.

El Salvador

El Salvador is party to the 1988 UN Drug Convention, and invokes its rights to pre-notification of scheduled precursor chemicals under Article 12. However, precursor chemical trafficking continues to be a developing problem as methamphetamine production spreads from Mexico into neighboring Guatemala. Major but sporadic seizures of precursor chemicals imported from China have been reported at the Acajutla seaport in prior years; no such seizures were made in 2015, and Salvadoran authorities reported the destruction of the last remaining stockpiles from prior seizures. Salvadoran authorities recorded the seizure of 2 kg of methamphetamine on September 16, 2015, a large amount for the country, and discovered a small laboratory in the suspect’s San Salvador apartment the following day, September 17, the first of its kind found in El Salvador.

The OAS, with U.S. funding, worked with Central American countries to destroy existing stockpiles of seized precursor chemicals. The OAS signed a cooperative agreement with the Government of El Salvador in February 2015, for technical assistance in the management and disposal of controlled chemical substances. The OAS also provided test kits for chemical identification and personal protective gear to Salvadoran authorities over the course of the year.

Guatemala

The manufacture of methamphetamine and other synthetic drugs in Guatemala remains a problem as highlighted by the ongoing seizures of precursor chemicals. After a decrease in seaports seizures over the previous two years, authorities captured large shipments of chemicals at the nation’s ports in 2015.

Since 2005, the Guatemalan government has been storing large quantities of seized precursor chemicals. In 2013, the Guatemalan government accepted a U.S. government-funded OAS proposal to improve the national capacity to manage and dispose of precursor chemicals in compliance with the United Nations Chemical and Waste Management Program and Guatemalan laws, provide a national standard operations procedure (SOP) for the handling of dangerous chemicals seized in law enforcement operations, improve the safety and security of the main Guatemalan government storage facility by providing training, equipment, and technical and administrative support in the management of seized precursors, and safely dispose of all precursor and related hazardous materials.

After completing set-up preparations including SOP development, structural improvements at the primary storage location, and initial chemical destruction training, the OAS project began the process of diluting, neutralizing, and burning the stockpiled chemicals in April 2014.

As of October 2015, there were approximately 3,500 tons of seized precursor chemicals in Guatemala, of which half were phenyl acetate. Authorities store the majority of these seized precursors in 196 containers at seaports. Since January 2015, authorities have transported 17 containers, previously stored at one of the three main seaports, to Estazuela. By the end of 2015, 197 tons of phenyl acetate has been disposed of under the auspices of the OAS and at the current pace. In total, of the estimated 36,000 drums of seized precursor chemicals in country, 1,076 have been neutralized to date.

The United States, through its Office of International Narcotics and Law Enforcement (INL-G) in Guatemala City, initiated the purchase process to acquire an incinerator that once is installed and functioning at full capacity, would dispose of all precursors in Guatemala seized to date in an estimated two years or less. Guatemalan government officials are pursuing an agreement among neighboring Central American countries to permit transport and subsequent disposal of seized precursors from countries in the region.

Honduras

Precursor chemicals are a developing problem in Honduras. There is little information on the exact amount or types or chemical precursors that are transiting the country.

There is Honduran legislation banning the import of many chemical precursors used in illicit drug manufacture, but enforcement of these laws is weak. Fines and penalties for importation of banned chemical precursors are also insufficient and there is limited end-user accountability.

Asia

Bangladesh

Bangladeshi authorities continue to combat drug traffickers who smuggle precursor chemical preparations (incorporating ephedrine, pseudoephedrine, toluene, and acetone) out of the country. The chemicals are illicitly purchased from Bangladeshi pharmaceutical or chemical companies and smuggled to international trafficking organizations where the ephedrine-pseudoephedrine is extracted and used to produce methamphetamine.

The Government of Bangladesh is committed to the implementation of the 1988 UN Drug Convention and regional agreements regarding control of narcotic drugs, psychotropic substances, and precursor chemicals. Twenty-two of the 24 precursor chemicals listed in the 1988 UN Drug Convention are included in the “Schedule of Drugs” of the Narcotics Control Act to comply with the provisions of Article 12 of the 1988 UN Drug Convention. The Narcotics Control Act also allows financial investigations and freezing of assets derived from trafficking in drugs and precursors. The Directorate General of Drug Administration developed a draft national drug policy, for approval from the Parliamentary Standing Committee, in response to the threat posed by the abuse of and trafficking in pharmaceutical preparations and other drugs.

The Department of Narcotics Control (DNC) issues licenses for the import, export, transport, shipment, manufacture, sale, distribution, purchase, possession, storage, or other use of controlled precursors. The Narcotics Control Rules regulate the control, monitoring, and supervision of use of precursors for industrial, scientific, and medical purposes through a licensing system. The DNC lacks sufficient staff and equipment to consistently detect and interdict precursors. Bangladeshi law enforcement agencies work closely with the DEA to seize and disrupt illicit drugs and precursor chemicals.

Bangladesh has also established District Drug Control Committees (DDCC) to monitor and coordinate activities of all agencies responsible for interdicting drugs and precursors. The Police, Customs, Rapid Action Battalion, Border Guard, and Coast Guard are empowered to detect and intercept illegal precursor chemical and drug operations. The counterdrug unit of the Dhaka Metro Police has successfully assisted the DEA in conducting investigations targeting Dhaka-based traffickers of pseudoephedrine chemical preparations. Despite government efforts, Bangladesh struggles to control precursors through the application of existing laws and resources.

Cambodia

Cambodia is one of three countries in the region, along with China and Vietnam, known to process safrole oil, a precursor chemical used in the production of MDMA. Cambodia continued to be a producer and exporter of safrole oil, which was also used in the manufacture of legal products such as perfumes, insecticides, and soaps. Active safrole oil extraction and production continued in 2015 despite the fact that the harvest, sale, and export of safrole oil remained illegal in Cambodia.

China

China remains one of the world's top producers and exporters of precursor chemicals. Although the majority of precursor chemical production and export is intended for legitimate use, precursors are being diverted by transnational criminal organizations to produce illicit drugs. China's close proximity to drug production centers in Southwest and Southeast Asia, insufficient regulatory oversight capacity of the precursor chemical industry, lower production costs, as well as numerous coastal cities with large precursor chemical factories and modern port facilities, make it an ideal source for precursor chemicals intended for illicit drug production.

In 2014, 3,847 MT of precursor chemicals were seized in China and a total of 5.88 MT of precursor chemicals intended for international export were stopped due to irregularities. Notably, seizures of ephedra decreased from 1,271 MT in 2013 to 422.9 MT in 2014. Illicit demand for China-sourced ephedra continues to decline as illicit drug manufacturers have shifted toward the P-2-P method of methamphetamine production, which does not require this substance.

India

India is one of the world's largest legitimate manufacturers of narcotic drugs, psychotropic substances, and precursor chemicals, including acetic anhydride, ephedrine and pseudoephedrine.

India issues pre-export notifications for exports of precursors using an online system developed by the INCB, and administers a sophisticated licensing regime to control dual use pharmaceutical products. India regulates 17 of 24 precursor chemicals listed by the 1988 UN Drug Convention. Of the 17 chemicals, India’s NDPS Act designates five as “Schedule A” substances (subject to the most stringent controls): acetic anhydride, ephedrine, pseudoephedrine, n-acetylanthranilic acid, and anthranilic acid.

The diversion of precursor chemicals from licit producers to illicit brokers is a serious problem in India. India-based precursor trafficking organizations are involved in the illicit exportation and domestic sale of precursor chemicals such as ephedrine and pseudoephedrine, both of which are used in the manufacture of methamphetamine. In light of this challenge, India has undertaken significant efforts to control precursor chemicals produced in its large chemical industry and actively participates in international precursor control initiatives as Project Cohesion and Project Prism.

Law enforcement agencies in India continued extensive cooperation with the DEA. NCB and DEA have made joint arrests and seizures of significant amounts of narcotics. For example, in 2015, Indian authorities acting on DEA information seized over 1.14 million tablets of various pharmaceutical drugs destined for illicit diversion in the United States and international markets.

Singapore

Singapore’s geographic advantage and robust port infrastructure contribute to its rank as one of the world’s top trade hubs, including the trade of precursor chemicals. The Government of Singapore continues to be a partner with concerned countries in international chemical control initiatives to prevent the diversion of synthetic drug precursor chemicals, including ephedrine and pseudoephedrine, commonly used in the illegal production of methamphetamine. Singapore does not produce ephedrine or pseudoephedrine; however, Singapore sees significant volumes of ephedrine and pseudoephedrine coming through its ports. Singapore exported 29.07 MT of pseudoephedrine and 4.83 MT of ephedrine over the first six months of 2015, and imported 29.9 MT and 5.5 MT, respectively. Most of the ephedrine imported to Singapore is from India and Taiwan, the bulk of which is re-exported to Indonesian pharmaceutical companies. The imported pseudoephedrine is mostly from India, China, Germany and Taiwan, and then often re-exported to pharmaceutical companies in Indonesia. Singapore also exports both chemicals to Vietnam, Cambodia, Malaysia and Nepal for pharmaceutical purposes. Ephedrine and pseudoephedrine that are not re-exported are used primarily by the domestic pharmaceutical industry.

The Central Narcotics Bureau (CNB) is the Competent Authority (CA) in Singapore for the 1988 UN Drug Convention and is tasked with undertaking measures to prevent the diversion of Ephedrine and Pseudoephedrine. All imports, exports and transshipments of these controlled substances require a permit from the CNB and supporting documentation must be kept by the companies for a minimum of two years and made available for inspection by the CNB. Supporting documents may include invoice, sale contracts and documentary proof from the competent authority of the exporting countries. The movement of these controlled substances is also tracked and monitored by CNB. If the permit application is approved, CNB will provide pre-export notification via PEN Online to the CA of the importing country for any exportation of substances.

Information on all goods imported and exported through Singapore’s borders must be provided in advance to enable Singapore Customs, the Immigration and Checkpoints Authority (ICA) or other controlling agencies to facilitate legitimate and secured trade through measures such as timely pre-clearance risk assessment. Singapore does not screen containerized transshipments unless they involve vessels from select countries of international concern, a Singapore consignee, or if the shipment contains strategic or controlled items, including certain chemicals. In instances where precursor diversion for illicit drug manufacturing purposes was suspected, Singapore authorities assisted foreign law enforcement agencies. The Government of Singapore conducts site visits 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 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. In 2014, South Korea imported 21,250 kg of ephedrine, and 35,302 kg of pseudoephedrine. As of 2015, 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. 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 2011, the National Assembly passed a law requiring 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 without having to be reported. 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.

Thailand

Precursor chemicals are not produced in Thailand, but the government imports chemicals in bulk for licit medical and industrial purposes. To prevent the diversion of precursor chemicals from legitimate industry, the Precursor Chemical Control Committee was established in 1993. This committee is responsible for formulating the national strategy on precursor controls, supervising the controls, and integrating the activities of the agencies engaged in preventing diversion. 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.

Improved law enforcement capabilities of Thai authorities and more intense scrutiny of end-user requirements have meant the diversion of licit chemicals through Thailand has become less profuse over the past several years. The growing availability of drugs and chemicals from sources in China and India has further mitigated the use of Thai chemical channels.

Limited quantities of certain chemicals, such as acetic anhydride and ephedrine, transit Thailand en route to clandestine laboratories in Burma. 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. The most recent reported seizure of precursor chemicals occurred in September 2014, 3.8 kg of pseudoephedrine from courier originating from India.

In 2012, the Thai Food and Drug Administration announced a ban on the sale of pseudoephedrine tablets at local pharmacies. The law includes penalties for possession of pseudoephedrine tablets: less than five grams – results in up to a five-year imprisonment; more than five grams results in between five and twenty year imprisonment and fines.

Europe

Chemical diversion control within the EU is based upon EU regulations binding on all 28 Member States. EU regulations meet the chemical control provisions of the 1988 UN Drug Convention, including provisions for record-keeping on transactions in controlled chemicals, a system of permits or declarations for exports and imports of regulated chemicals, and authority for governments to suspend chemical shipments. EU regulations are updated regularly and directly applicable in all EU Member States.

EU regulations establish common risk management rules to counter chemical diversion at the EU’s borders. Member States are responsible for investigating and prosecuting violators.

The U.S.-EU Chemical Control Agreement, signed May 28, 1997, is the formal basis for U.S. cooperation with the EU and its 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.

In December 2013, the EU adopted new basic legislation that strengthens controls on ephedrine and pseudoephedrine, and tightens controls on companies in the EU using acetic anhydride.

For external trade, the change strengthened controls on medicinal products containing ephedrine or pseudoephedrine exported from or transiting through the EU. The EU developed a new category of scheduled substances (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 a quick reaction mechanism to add new chemicals to the list of scheduled substances, developing an EU database on drug precursors, and improving data protection provisions.

On 1 July 2015, a Commission Delegated Regulation and a Commission Implementing Regulation entered into force (replacing previous implementation legislation). These regulations complete the revision of the EU drug precursor legislation which started at the end of 2013.

Bilateral chemical control cooperation continues between the United States, and EU and its Member states. Many EU Member 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. A new version of these guidelines will be adopted in 2016.

Belgium

Belgium is neither a major producer of nor destination for the chemical precursors used for the production of illicit drugs. The country does, however, manufacture methamphetamine precursors for licit products to a very limited extent, and in recent years, Belgium has emerged as a transshipment point for ephedrine and other methamphetamine precursors. Belgium requires and enforces strong reporting requirements for the import and export of precursor chemicals (bulk pseudoephedrine and ephedrine, safrole oil and benzyl methyl ketone), and the Belgian Federal Police have the lead role in enforcing these controls. However, 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.

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. Pseudoephedrine and ephedrine contained in these medications can be extracted and used in the production of methamphetamine. Since ephedrine is strictly regulated in the United States and other countries in the Western Hemisphere, Belgium, and other Western European countries have been used as transshipment points for ephedrine and other methamphetamine 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. There were no ephedrine or pseudoephedrine seizures in 2014.

Germany

Germany continues to be a leading manufacturer of legal pharmaceuticals and chemicals. In 2014, Germany was the second largest exporter of ephedrine (40,200 kg) and the second largest exporter of pseudoephedrine (313,500 kg). Most of the 24 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 the UN Office on Drugs and Crime, and is an active participant in chemical control initiatives led by the International Narcotics Control Board, 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 on the Prevention of Misuse of Chemicals 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 piperonyl methyl ketone (PMK), and its increased availability has been attributed to an increase in MDMA production. In recent years, law enforcement, especially in the south, reinforced its efforts against synthetic drugs and pre-precursors.

The Financial Investigation Service (FIOD) of the Ministry of Finance oversees implementation of the WVMC and has responsibility for law enforcement efforts targeting precursors. Customs monitors the trade 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 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 also 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.

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 third largest importer of pseudoephedrine in 2014, with 71,275 kg imported globally.

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 exchanges 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 remains a leading producer of precursor chemicals, particularly ephedrine, which can be used in the production of illicit drugs. However, because the UK applies a strict regulatory regime to the production and trade of precursor chemicals, including mandatory licensing and reporting obligations, relatively small amounts are believed to be diverted for illicit use. The Home Office Drug Licensing and Compliance Unit is the regulatory body for precursor chemical control in the UK. The United States and UK cooperate closely in international bodies to promote global regulation of precursor chemicals.

Middle East

Egypt

Egypt oversees the import and export of all internationally-recognized chemicals through a committee composed of the Ministry of Interior (ANGA), Ministry of Finance (Customs), and Ministry of Health (Pharmaceutical). This committee approves or denies requests to import or export chemicals. Over the past few years, there was a spike in the importation of ephedrine. With the large amounts of ephedrine imported relative to the population of Egypt, it is possible that not all of it is used for legitimate medicinal production. The Egyptian government, however, has not reported any large-scale diversion of ephedrine or other chemicals, made any significant seizures, or observed any increase in the use of methamphetamine in the local populace.

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 related efforts.

Asia

Afghanistan

In Afghanistan, porous borders and a lack of law enforcement capacity to monitor incoming shipments of chemicals hamper adequate control of precursor chemicals. Smugglers primarily traffic chemicals from Iran into Nimroz, Farah, Kandahar and Helmand Provinces with a final destination into Pakistan, according to Afghan authorities. They store the chemicals in Pakistan along the Afghanistan border where smugglers do not face restrictions. Chemicals are also smuggled from Pakistan into eastern Afghanistan.

After an upward trend over several years, the amount of precursor chemicals smuggled into Afghanistan decreased in 2015. Afghan officials believe the decrease is due to the transfer of clandestine laboratories operations to Pakistan. One-third of the opium grown in Afghanistan was estimated to have been converted into morphine or heroin before leaving the country in 2015; this was down from an estimated two-thirds in 2014. Afghan authorities reported the seizure of over 2.35 MT of solid precursors and 19,774 liters of liquid precursors for the first nine months of 2015.

Both acetic anhydride and ammonium nitrate are legal in Afghanistan and have no legitimate uses. Hydrochloric acid, acetone, and sulfuric acid are controlled substances and are subject to seizure for other reasons, such as customs violations. Ammonium chloride is not illegal; however, if found at a laboratory site, Afghan authorities say they will seize and destroy it. The Afghan government estimates its annual, legitimate requirements for imports of four common methamphetamine precursors as: 50 kg of ephedrine preparations; three MT of pseudoephedrine preparations; and no requirements for 3,4-methylenedioxyphenyl-2-propanone or 1-phenyl-2-propanone.

Since 2013, the United States has funded an expansion of UNODC’s Container Control Program that supports additional training for customs and law enforcement personnel at the Kabul inland container depot, and is establishing new interagency Port Control Units to monitor, examine, and interdict drug shipments in container traffic at two dry ports in northern Afghanistan, Hairatan and Sher Khan Bandar, and one dry port in eastern Afghanistan, Jalalabad. Hairatan and Sher Khan Bandar are two of the most important ports for containerized imports and exports between Afghanistan, Uzbekistan, and Tajikistan, and Jalalabad is a key transit route between Afghanistan and Pakistan.

The Precursor Chemical Unit (PCU) of the Counternarcotics Police of Afghanistan uses PICS developed by the INCB to enhance information sharing between national authorities on precursor incidents. The PCU also communicates directly with the Central Asian Regional Information and Coordination Centre for Combating Illicit Trafficking of Narcotic Drugs, Psychotropic Substances and their Precursors (CARICC), and PENS Online. Afghanistan also has a Drug Regulation Committee (DRC) to monitor and regulate the licit precursor chemical trade. The DRC licenses chemicals for licit use and stores data on the use of chemicals so that the authorities can better understand emerging trends. The DRC can authorize investigations and spot checks on companies importing chemicals.

Burma

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 (later expanded to 27) substances as precursor chemicals, and prohibited their import, sale or use in Burma.

Significant amounts of heroin and amphetamine-type-stimulant (ATS) produced in Burma reflect the volumes of essential and precursor chemicals smuggled into the country for illicit drug production. The illicit production and export of synthetic drugs in Burma continued to increase in 2015. 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 precursor chemicals into Burma through borders shared with Bangladesh, China, Laos, India, and Thailand. The precursors are then transported to heroin refineries and ATS laboratories, many located in regions of Shan State which are under the control of armed militia groups or in other areas that are lightly policed. There are also mobile ATS laboratories along the Burma-Bangladesh border where law enforcement requires military security due to ongoing communal tensions.

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 ATS 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 from the DED, and retailers must also apply for a certificate to transport chemicals across and within Burma’s borders.

Official seizure statistics for 2015 related to ATS production also included 1.27 MT of pseudoephedrine, 111.94 kg of ephedrine, and 9.93 MT of caffeine powder. Burmese police also seized 49.95 million ATS tablets, 10,639 liters of precursor chemicals, and 2.26 MT of crystal methamphetamine during the reporting period.

Indonesia

Indonesia’s 2009 National Narcotics Law gave the country’s 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, the extent of enforcement is largely unknown. Some NGO officials who focus on precursor chemicals have expressed concern that Indonesian Customs is unable to tell whether an importer is genuine or not, and identify the end user.

The National Narcotics Board reports that it regularly conducts unannounced inspections to companies that are listed importers of precursor chemicals. Indonesia is 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.

Pakistan

Pakistan is one of the world’s top transit countries for the movement of acetic anhydride and other illicit precursor chemicals used in the production of heroin and amphetamine-type stimulants, such as methamphetamine. 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 participation in the Paris Pact Initiative, covering the importation of seven multi-use chemicals: acetic anhydride, pseudo-ephedrine, anthranilic acid, acetone, potassium permanganate, methyl-ethyl ketone, and toluene. Pakistan’s Anti-Narcotics Force (ANF) is charged with managing this precursor control mechanism and does so largely by conducting ground checks on importing businesses, licensing those businesses, and reviewing pre-export notifications requesting the sale of the above substances within Pakistan. During the first nine months of 2015, ANF received 123 PENs. It approved 103 shipments and denied 20. It is likely that significant imports of precursor chemicals circumvent the PEN Online via mislabeled shipping containers and small sailing boats unloading cargo along Pakistan’s largely unpatrolled coastline.

During this nine-month period, ANF reported that it seized 993.5 liters of acetic anhydride. In 2015, both ANF and Customs continued to provide information in the INCB’s PICS, which distributes real-time information on precursor seizures to law enforcement agencies worldwide.

Latin America

Bolivia

Bolivia continues to be a transit country for diverted precursor chemicals for cocaine processing. According to the Chemical Substances Investigations Group (GISUQ) of the counternarcotic police (FELCN), the majority of those chemicals originate from Peru (about 40 percent), followed by Paraguay (30 percent), Brazil (20 percent), and Argentina and Chile, with five percent each.

Diverted chemicals are most commonly seized by authorities en route to drug factories (where base paste is prepared) and cocaine labs (where base paste is transformed into cocaine hydrochloride) within Bolivia. The number of labs discovered within Bolivia has significantly increased over the last three years; these labs process Peruvian base paste as well as Bolivian coca into cocaine.

The most common chemicals found in cocaine factories and labs are: sulfuric acid, hydrochloric acid, sodium carbonate, caustic soda, ammonia, phenacetin, sodium metabisulfite, isopropyl alcohol, activated carbon, urea, ethyl acetate, and levamisole. The last seven products are not listed as controlled substances under Bolivian or international law, and GISUQ believes they are increasingly used as alternative processing agents to circumvent law enforcement controls.

In 2011, the GISUQ found drug traffickers using isopropyl alcohol, liquid ethyl acetate, sodium bisulphate, and cement to produce cocaine. In 2012, the GISUQ found traffickers using ethyl acetate to purify cocaine into HCL.

Drug traffickers have continued to use the aforementioned chemicals in addition to activated carbon and phenacetin. Traffickers use activated carbon to deodorize and discolor water and other liquids and phenacetin, a highly toxic analgesic, to increase volume of cocaine. Through the first 10 months of 2015, the GISUQ seized 481 MT of solid substances and 882,158 liters of liquid precursor chemicals. These respective amounts are a 42 percent and 82 percent increase respectively over the same period in 2014.

GISUQ coordinates activities with the General Directorate for Controlled Substances, a civilian entity under the Government of Bolivia that administers and licenses the commercialization 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 commercialization generates only an administrative violation, penalized by a fine and the possible loss of merchandise if 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 illegal commercialization of illegal methamphetamine. The United States urges Bolivia not only to introduce and pass stronger precursor chemical controls, but also to ensure that they are enforced.

Colombia

Precursor chemical diversion continues to be a serious problem in Colombia. There are approximately 3,000 chemical companies authorized to handle controlled chemicals for legitimate use, down from 5,000 in early 2015. The number fell dramatically after the Government of Colombia implemented a new computer system to track the importation and sale of controlled chemicals, requiring sellers to enter all sales information and for buyers to acknowledge the purchase and receipt of the chemicals. The Colombian government inspected and audited 1,521 Colombian chemical companies during fiscal year 2015, and uncovered 71 firms with regulatory issues, resulting in the seizure of 331.2 MT of solid controlled substances and 5,818 liters of liquid controlled substances. In addition, the Colombian government immobilized 278,729 kg of solid controlled substances and 725,573 liters of liquid controlled substances.

Although chemical companies require government permission to import or export specific chemicals and controlled substances, the police have the burden to prove that seized chemicals were intended for illicit drug production. While the Government of Colombia tightened controls on coca processing chemicals as well as strengthened chemical control legislation, traffickers camouflage precursors to import them clandestinely into the country. Additionally, traffickers and clandestine laboratories recycle controlled chemicals and use non-controlled chemicals in place of controlled chemicals.

The Government of Colombia implements restrictions on other needed chemicals for coca processing, such as gasoline, cement, sulfuric acid, hydrochloride acid, and potassium permanganate. These restrictions include reduced numbers for production, distribution and storage of chemicals and, in some areas, prohibition of particular chemicals in certain zones. Additionally, 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, companies can import these precursors for the manufacture of pharmaceutical preparations, which can then be re-exported.

During the first nine months of 2015, Colombian authorities seized over 25,000 liters of liquid precursors and 74 MT of solid precursor chemicals.

Ecuador

Under Ecuadorian law, potassium permanganate and acetic anhydride are designated as controlled chemicals. Buying, selling, or importing such chemicals requires the permission of the National Council for the Control of Narcotic Drugs and Psychotropic Substances (CONSEP), the primary agency responsible for precursor chemical control in Ecuador. According to Article 219 of the 2014 Penal Code (COIP), using precursor chemicals to produce, manufacture, or prepare illicit materials like cocaine or heroin is punishable by three to five years in prison.

The chemical unit of the National Antinarcotics Directorate (DNA), under the Ecuadorian National Police, plays an active role in chemical control by carrying out investigations and intelligence operations. The DEA also plays a large role by, when possible, providing training and equipment to the DNA chemical unit.

Although DNA’s chemical unit is a highly competent entity, its small size and outdated technology hinder operations. The unit employs only 20 people, 10 in Quito and 10 in Guayaquil, but does not have a presence in northern Ecuador where drug labs and trafficking continue to pose a problem due to the porous land border with Colombia. Due to its small workforce, the chemical unit often uses police officers from other units; however, these officers generally do not have adequate chemical training. Furthermore, the chemical unit is using outdated technology, which makes testing for precursor materials a time consuming process.

Ecuador has been importing large quantities of potassium permanganate for at least the past 10 years. According to the Central Bank of Ecuador, between January and August of 2015, Ecuador imported 34.79 MT of potassium permanganate, compared to 35.96 MT during all of 2014. Potassium permanganate is a controlled chemical and requires an import license to be imported into the country. Most imports originate from China.

Between January and August, Ecuador imported 67.22 MT of acetic anhydride; in 2014, it imported 48.66 MT. It should be noted that during 2013, Ecuador only imported 370 kg, and in 2012, only 10 kg. Ecuadorian authorities have not been able to explain this significant jump. Most imports originate from India and the United States.

Peru

Peru remains a major importer of 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 United Nations study. Peru also produces sulfuric acid for this purpose. These chemicals are often diverted from legitimate channels, despite significant regulatory controls, to cocaine production primarily in Peru’s principal coca producing areas of the Upper Huallaga Valley and Valley of the Rivers Apurimac, Ene, and Mantaro.

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. Although it results in inferior quality cocaine, the PNP reports that cocaine purified with alcohol commands the same price in Peru’s production zones as cocaine made with potassium permanganate. In 2015, the Peruvian National Police (PNP) seized 2.43 MT of potassium permanganate, a slight decrease from the 2.7 MT seized in 2014. This may indicate increased use of alcohol as a substitute. The PNP identified the principal routes of precursor chemicals from Lima into the drug source areas and is building its capacity to intercept these shipments.

In 2015, the PNP Chemical Investigations Unit (DIVICDIQ) continued its chemical enforcement and regulatory operations, leading to the seizure of 2,786 MT of precursor chemicals, including calcium oxide (808 MT), sulfuric acid (65 MT), hydrochloric acid (13.6 MT), and acetone (70.8 MT). The counternarcotics police (DIREJANDRO) 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 2015, this operation resulted in the arrest of 61 chemical traffickers and the seizure of 40 MT of acetone, 11 MT of hydrochloric acid, and 40.4 MT of sulfuric acid.

Peruvian law enforcement conducted chemical enforcement operations, including with Brazil and Colombia, resulting in seizures that included several floating gas stations and 374,277 liters of gasoline. 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’s 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 Global Trade Atlas (GTA), compiled by Global Trade Information Services, Inc. (WWW.GTIS.COM), provides export and import data on pseudoephedrine and ephedrine collected from major trading countries. However, given the reporting cycles by participating countries, data often lags behind one year. The most recent year for which full-year data is available is 2014. 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.

During the preparation of the 2016 CMEA report, data for U.S. exports and imports for both ephedrine and pseudoephedrine for calendar years 2012-2014 were updated in light of revised estimates provided by DEA. It is also important to note that not all countries agree with the GTA’s estimates, and there are a number of countries that believe their data was not correctly captured by the database. For example, Singapore reported 11,337 kg of ephedrine exports in 2013, whereas 31,150 kg were reported by the GTA database for the same year and 10,325 kg in 2014. Such discrepancies create irregularities when comparing import or export totals across years and, in this case, signals that there was likely no significant decrease of the quantity of ephedrine exported in 2014 as compared to the previous year in Singapore.

Obtaining data on legitimate demand also remains problematic. Such data 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 on their reasonable estimates about the trade in the end products that form the basis of legitimate demand – although each year the number of countries reporting 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 Drug Convention. Therefore, reporting licit market trade and demand for ephedrine and pseudoephedrine as well pharmaceutical products derived from them is voluntary. Even so, the trend toward better reporting has been positive.

According to the 2015 INCB report, in 2014, 27 countries reported seizing shipments of ephedrine (either as raw material or in the form of pharmaceutical preparations) totaling nearly 35 MT. The bulk of the seizures of ephedrine as raw material was reported by China (31.5 MT). China also accounted for nearly the entire amount of reported seizures of ephedrine in the form of pharmaceutical preparations (3.2 MT). Also in 2014, 16 countries reported seizing shipments of pseudoephedrine, including 350 kg of pseudoephedrine as raw material and 1.3 MT of pseudoephedrine in the form of pharmaceutical preparations.

Since the passage of the 2006 CND resolution sponsored by the United States, and as of November 2015, 157 of the 183 signatories to the 1988 UN Drug Convention had reported import requirements to the INCB for the bulk chemicals ephedrine and pseudoephedrine. Despite all governments not having provided the annual legitimate requirements (ALR) estimates for both substances, 149 countries provided estimates for ephedrine raw material, and 142 countries provided estimates for pseudoephedrine raw material (refer to ALR table below). This also includes “zero” estimates. 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 that 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. 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.

Thus far, the economic analysis required by the CMEA remains challenging because of insufficient, unreliable, and changing data. Often the collection and reporting of such data requires a regulatory infrastructure that is beyond the means of some governments. 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 to secure explanations for anomalies between reported imports and reported licit domestic requirements, and to follow the development of other chemicals used in the production of methamphetamine. The United States also will seek ways to assist developing countries obtain the expertise and technical capacities necessary to produce such commercial estimates.

This report provides export and import figures for both ephedrine and pseudoephedrine for calendar years 2012-2014. 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 major producers will not release this proprietary data.


Top Five Exporting Countries and the United States

Ephedrine and Its Salts 2012-2014

Reporting Country

Unit

Quantities

2012

2013

2014

         

India

KG

49,231

58,829

84,600

Germany

KG

82,300

91,900

40,200

Singapore

KG

10,295

31,150

10,325

United Kingdom

KG

3,000

1,200

3,900

Taiwan

KG

1,500

1,700

2,151

Top Five Total

 

146,326

184,779

141,176

         

United States

KG

171

265

11,208

Analysis of Export Data: The top-five exporters of ephedrine in 2014 were India, Germany, Singapore, the UK, and Taiwan. According to the GTA database, ephedrine exports decreased 17.8 percent in 2014, due to a decrease in exports from Germany and Singapore. Germany’s exports decreased to 40,200 kg in 2014 from 91,900 kg in 2013, making it the second global exporter of ephedrine. Following modest increases between 2012 and 2013, India’s exports increased by 43.8 percent between 2013 and 2014. India is now the world’s top exporter of ephedrine. Singapore continues as the third leading exporter, although it had a 66.8 percent drop between 2013 and 2014. The Government of Singapore advised that the correct amount of ephedrine exports in 2013 was 11,337 kg, and not 31,150 kg as reported by the GTA database. The United Kingdom is the fourth leading exporter, with an increase from 1,200 kg in 2013 to 3,900 kg in 2014. Taiwan also increased its ephedrine exports from 1,700 kg in 2013, to 2,151 kg in 2014. The top-five countries in 2013 included: Germany, India, Singapore, Denmark, and China.

The aggregated amount of ephedrine exported by the top-five countries in 2014 was 141,176 kg. This was a decrease of 23.6 percent compared to 2014, and 3.5 percent compared to 2013. According to the GTA database, U.S. exports increased substantially from 265 kg in 2013 to 11,208 kg in 2014; a 97.6 percent increase. As a result, the United States moved from tenth place to third place on the overall exporting list. Despite the fact that the GTA reported a substantial ephedrine increase in U.S. exports, the DEA advises that the numbers of U.S. ephedrine exports reported to the INCB were 5 kg in 2012, 2 kg in 2013, and 1 kg in 2014. Based on those numbers, the United States did not increase its ephedrine exports, but rather decreased them by 70 percent in 2012, 99.2 percent in 2013, and 99.99 percent in 2014. This would have ranked the United States at 15th place in 2012, 14th place in 2013, and 15th place again in 2014 in the overall list of top exporters.

Top Five Exporting Countries and the United States

Pseudoephedrine and Its Salts 2012-2014

Reporting Country

Unit

Quantities

2012

2013

2014

         

India

KG

409,736

440,132

356,074

Germany

KG

308,000

389,100

313,500

United Kingdom

KG

2,800

51,500

312,200

Taiwan

KG

77,924

88,604

66,275

China

KG

67,309

90,650

65,678

Top Five Total

 

865,769

1,059,986

1,113,727

         

United States*

KG

11,809

6,597

1,819

Analysis of Export Data: According to the GTA database, the aggregated volume of worldwide exports for the top-five exporters increased from 1,059,247 kg in 2013 to 1,113,727 kg in 2014; a 4.9 percent increase. The top-five exporters of pseudoephedrine in 2014 were India, Germany, the UK, Taiwan, and China. In 2013, the top-five were India, Germany, Singapore, China, and Taiwan. Except for the UK, all top-five exporters decreased their pseudoephedrine exports in 2014. India and Germany’s exports decreased 19 percent and 19.4 percent respectively. The UK’s exports increased from 51,500 kg in 2013 to 312,200 kg in 2014. Since 2014, the UK started classifying preparations containing pseudoephedrine and ephedrine as Category 4 precursor chemicals, which requires a PEN notification. This requirement could be the reason for a significant increase in pseudoephedrine exports. Taiwan has also decreased its exports from 88,604 kg in 2013 to 66,275 kg in 2014. China has also substantially decreased its exports from 90,650 kg in 2013 to 65,678 kg in 2014; a 27.5 percent decrease.

According to the GTA database, the United States continues to substantially decrease its pseudoephedrine exports from 6,597 kg in 2013 to 1,819 kg in 2014; a 72.4 percent drop. The U.S. is now ranked tenth in the overall pseudoephedrine worldwide exporting list. However, the DEA advises that the numbers of U.S. exports reported to the INCB were 31,431 kg in 2012, 20,882 kg in 2013, and 17,683 kg in 2014. Based on those numbers, the United States did not decrease its pseudoephedrine exports, but rather increased them by 62.4 percent in 2012, 68.4 percent in 2013, and 89.7 percent in 2014. The numbers the U.S. reported to the INCB would have ranked the country at 7th place in 2012, 8th place in 2013, and 8th place again in 2014 in the overall list of top exporters.

Top Five Importing Countries and the United States

Ephedrine and Its Salts 2012-2014

Reporting Country

Unit

Quantities

2012

2013

2014

         

India

KG

44,019

82,283

24,422

Egypt

KG

3,694

6,057

21,843

South Korea

KG

28,150

22,811

21,250

Indonesia

KG

9,279

12,612

10,502

Singapore

KG

11,704

11,512

9,606

Top Five Total

 

96,846

135,275

87,623

         

United States

KG

11,731

15,972

18,119

Analysis of Import Data: According to the GTA database, the top-five ephedrine importers in 2014 were India, Egypt, South Korea, Indonesia, and Singapore. India’s imports dropped significantly; going from 82,283 kg in 2013 to 24,422 in 2014. India, South Korea, Indonesia, Singapore, and Egypt were the top-five ephedrine importers in 2013. Egypt’s ephedrine imports went from 6,057 kg in 2013 to 21,843 kg in 2014; a 72.2 percent increase. The reason for the increase is unknown.

According to the GTA database, U.S. ephedrine imports continue to increase from 11,731 kg in 2012 to 15,972 kg in 2013, and to 18,119 kg in 2014. However, the DEA advises that the numbers of U.S. imports reported to the INCB were 4,180 kg in 2012, 2,299 kg in 2013, and 2,520 kg in 2014. Based on those numbers, the United States would have not increased its ephedrine imports, but rather decreased them by 64.3 percent in 2012, 85.6 percent in 2013, and 86.1 percent in 2014. It would have ranked 8th in 2012, 14th in 2013, and 14th again in 2014 in the overall list of top importers.


Top Five Importing Countries and the United States

Pseudoephedrine and Its Salts 2012-2014

Reporting Country

Unit

Quantities

2012

2013

2014

         

Switzerland

KG

60,056

93,322

71,275

Turkey

KG

30,269

38,226

47,264

Egypt

KG

42,290

39,679

37,419

Singapore

KG

49,624

61,671

36,293

South Korea

KG

38,975

41,951

35,302

Top Five Total

 

219,649

294,077

227,553

         

United States

KG

185,306

166,424

175,859

Analysis of Import Data: The quantity of pseudoephedrine imported by the top-five pseudoephedrine importers decreased in 2014. The aggregated amount of pseudoephedrine imported by the top-five countries in 2014 was 227,553 kg; a 22.6 percent decrease compared to 2013. The new rank of top pseudoephedrine importers in 2014 includes Switzerland, Turkey, Egypt, Singapore, and South Korea. Except for Turkey, all other top-five importing countries decreased their pseudoephedrine imports. The 2013 list included Switzerland, Singapore, Indonesia, South Korea, and the UK.

According to the GTA database, the United States remained the top importer of pseudoephedrine, with imports of 175,859 kg in 2014; a 5.3% increase compared to the previous year. It should be noted, however, that the United States no longer manufactures pseudoephedrine. Nonetheless, the DEA advises that U.S. imports reported to the INCB were 168,759 kg in 2012, 157,908 kg in 2013, and 158,647 kg in 2014. Based on these numbers, the United States would have imported 8.9 percent in 2012, 5.1 percent in 2013, and 9.7 percent in 2014, less than was reported by the GTA database, but the U.S. would still remain the top pseudoephedrine importer.


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: 21 December 2015

       
 

Country or territory

Ephedrine

Ephedrine preparations

Pseudoephedrine

Pseudoephedrine preparations

3,4-MDP-2-Pa

P-2-Pb

               
 

Afghanistan

0

50

0

3 000

0

0

 

Albania

6

0

4

0

0

0

 

Algeria

20

 

17 000

 

0

1

 

Argentina

16

0

12 000

125

0

0

 

Armenia

0

0

0

0

0

0

 

Ascension Island

0

0

0

0

0

0

 

Australia

2

11

5 500

1650

0

0

 

Austria

122

200

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

2

25

20

0

0

 

Belgium

300

200

9 000

8 000

5

5

 

Belize

   

P

P

0 i

 
 

Benin

2

2

8

35

0 i

 
 

Bhutan

0

0

0

0

0

0

 

Bolivia

25

1

702

1340

0

0

 

Bosnia and Herzegovina

25

1

1 502

1225

1

1

 

Botswana

300

     

0 i

 
 

Brazil

900c

 

22 000 c

 

0

0

 

Brunei Darussalam

0

5

0

320

0

0

 

Bulgaria

200

296

25

0

0

0

 

Cambodia

200

50

300

900

0 i

 
 

Cameroon

25

   

1

0 i

 
 

Canada

1 330

5

16 000

 

0

1

 

Chile

90

0

8 364

82

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

2 e

2912 d

P

0

0

 

Cook Islands

0

0

0

1

0

0

 

Costa Rica

0

0

676

29

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

10

5

500

270

0

0

 

Czech Republic

26

4

750

390

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

4

300

175

0

0

 

Ecuador

10

6

600

2 500

0

0

 

Egypt

4 500

0

55 000

2 500

0

0

 

El Salvador

P(6) f

P(10) f

P

P

0

0

 

Eritrea

0

0

0

0

0

0

 

Estonia

5

5

0

500

0

0

 

Faroe Islands

0

0

0

0

0

0

 

Falkland Islands (Malvinas)

 

1

 

1

0 i

 
 

Finland

4

60

1

650

0 i

1

 

France

3 500

10

20 000

500

0

0

 

Gambia

0

0

0

0

0

0

 

Georgia

5

25

2

15

0

0

 

Germany

1 000

 

7 000

 

1

8

 

Ghana

4 500

300

3 000

200

0

0

 

Greece

100

 

3 000

 

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

800

 

Iceland

0

0

0

0

0

0

 

India

2 200

112 729

333 585

1 092

0

0

 

Indonesia

10 500

0

52 000

6 200

0

0

 

Iran (Islamic Republic of)

2

1

17 000

1

1

1

 

Iraq

3 000

100

14 000

10 000

0

P h

 

Ireland

1

3

1

1145

0

0

 

Israel

25

5

2913

80

0 i

 
 

Italy

1 000

0

26 000

18 000

0

250

 

Jamaica

50

150

300

300

0

0

 

Japan

1 000

 

12 000

 

0 i

 
 

Jordan

150

 

10 600

 

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

20

27

65

350

0

0

 

Lebanon

26

5

240

700

0

0

 

Lithuania

1

1

1

650

1

1

 

Luxembourg

1

0

0

0

0

0

 

Madagascar

150

2

0

178

0

0

 

Malawi

1 000

     

0 i

 
 

Malaysia

20

15

4536

3169

0

0

 

Maldives

0

0

0

0

0

0

 

Malta

 

220

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

100

0

0

 

Montserrat

0

1

0

1

0

0

 

Morocco

41

14

2 642

0

0

0

 

Mozambique

3

     

0 i

 
 

Myanmar

2

11

0

0

0

0

 

Namibia

0

0

0

0

0

0

 

Nepal

 

1

5 000

 

0 i

 
 

Netherlands

200

1 107

 

43 259

0

0

 

New Zealand

50

0

800

 

0

3

 

Nicaragua

Pg

Pg

P

P

0

0

 

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

12 000

 

48 000

500

0 i

 
 

Panama

6

6

400

500

0

 
 

Papua New Guinea

1

 

200

 

0

0

 

Paraguay

0

0

2 500

0

0

0

 

Peru

54

 

2 524

1 078

0 i

 
 

Philippines

72

0

149

0

0

0

 

Poland

160

0

5 170

0

1

4

 

Portugal

   

15

 

0 i

 
 

Qatar

0

0

0

80

0

0

 

Republic of Korea

22 650

 

44 100

 

1

1

 

Republic of Moldova

0

0

0

600

0

0

 

Romania

197

 

10 906

 

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

0

20 000

0

0

0

 

Senegal

82

0

0

304

0

0

 

Serbia

25

0

1 265

0

0

1

 

Singapore

10 565

5

35 000

1 700

1

1

 

Slovakia

4

6

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

205

 

4956

 

0

111

 

Sri Lanka

 

0

 

0

0

0

 

Sweden

193

165

1

1

1

13

 

Switzerland

3 100

 

85 000

 

1

500

 

Syrian Arab Republic

1 000

 

50 000

 

0 i

 
 

Tajikistan

38

     

0 i

 
 

Thailand

53

0

1

0

0 i

0

 

Trinidad and Tobago

       

0 i

0

 

Tristan da Cunha

0

0

0

0

0

0

 

Tunisia

1

18

4 000

0

0

30

 

Turkey

250

0

22 000

4 000

0

0

 

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

1 500

2 000

100

0 i

 
 

United States of America

5 000

 

224 507

 

0

34 375

 

Uruguay

0

0

1

0

0

0

 

Uzbekistan

0

0

0

 

0

0

 

Venezuela (Bolivarian Rep. of)

60

1 000

3 060

2 000

0

0

 

Yemen

75

75

3000

2000

0 i

 
 

Zambia

50

25

50

100

0 i

 
 

Zimbabwe

150

150

150

50

0

0

               
               

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.