Title 3--The President Hong Kong and U.S. law enforcement agencies continued to cooperate ef- fectively on investigations into the movement of illegal drugs and on money-laundering cases. The Mutual Legal Assistance Agreement received legislative approval in Hong Kong and will enter into force in early 2000. The Transfer of Sentenced Persons Agreement with the United States and with Sri Lanka came into force. Hong Kong also concluded similar agree- ments with other countries and the European Union. In 1999 Hong Kong continued to implement new initiatives to strengthen its already outstanding counter-drug efforts, and Hong Kong authorities at all levels continued their close cooperation with the United States and other countries to defeat drug trafficking. India India is the world's largest producer of licit opium. Located between Af- ghanistan and Burma, the two primary world sources of illicitly grown opium, India also is a transit point for heroin, generally destined for Eu- rope. Heroin is produced in and trafficked through India, but evidence to indicate that significant quantities of heroin from India reach the United States is scant. The Government of India (GOI) has a cooperative working relationship with DEA, and India is a party to the 1988 UN Drug Conven- tion. The GOI uncovered a trafficking network operating in several Indian cit- ies to ship locally-produced heroin to Sri Lanka, and seized a related her- oin lab and over \17700 kg of heroin. The GOI also broke up and arrested an international trafficking operation routing Afghan heroin to North America and seized 77 kilograms of heroin. Overall, heroin seizures rose 7 percent. More importantly, two well-organized trafficking operations were dis- rupted. The GOI tightened controls on the precursor ephedrine hydrochloride by listing it as a controlled substance under its Narcotic Drugs and Psycho- tropic Substance Act. The GOI traced 9 tons of acetic anhydride intended for Afghanistan and had it seized in Dubai. The GOI enacted money-laun- dering legislation at the end of \177999. The GOI annually takes forceful steps to prevent illicit cultivation and production. The GOI appears to have had genuine success in reducing il- licit poppy cultivation, which in \177999 was just a fraction of what it was five years ago. India met formally with Pakistan in \177999 to discuss drug matters and is committed to continuing the process and to developing prac- tical results, whichhave been limited to date. In 1999 India also met with Burmese officials to discuss cross-border counter-drug issues. Production and stockpile of licit opium in India has clearly not exceeded licit demand. On the contrary, India's stockpile has been barely adequate for some time. The GOI did not make as much progress as hoped for this year in rebuilding its depleted buffer stock of licit opium. With excellent weather, the harvest should have been \177300 metric tons, but at least in part due to some diversion from licit production, the harvest was only 97\177 tons, too small to rebuild stocks to levels recommended by the International Nar- cotics Control Board (INCB). The GOI did boost opium production from 260 to 97\177 metric tons, sufficient to satisfy international demand for licit opium, even if carry-over stocks remain inadequate. 37O
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