The EU's Tobacco Products Directive, agreed on Wednesday (18 December), leaves national authorities to decide whether refillable e-cigarettes should be considered as tobacco products or medicine.
The new directive seeks to regulate products that look and taste like tobacco with the aim of discouraging young people from taking up smoking in the first place.
But disagreement over e-cigarettes threatened to derail the talks between the European Parliament and the EU Council of Ministers, concluded on Monday evening.
The compromise stipulates that e-cigarettes will be considered like regular tobacco products if they contain nicotine in a concentration of more than 20 mg/ml.
However, individual member states can regulate e-cigarettes as medicines, if they are presented as having curative or preventive properties.
Refillable e-cigarettes will not be banned, but member states can ban specific types of cartridges for e-cigarettes, if they can justify the ban by safety concerns.
Furthermore, if at least three member states adopt a ban on a specific cartridge, the European Commission will be able to impose an EU-wide ban unilaterally, without seeking approval by Parliament or the member states.
The new directive also includes a ban on 'flavoured' cigarettes, like those containing menthol, and requests manufacturers to display large health warnings - picture and text - covering 65% of the front and the back of packages.
The compromise still has to be approved by EU member states and the European Parliament.
EU Health Commissioner Tonio Borg said the agreement on e-cigarettes will put in place "clear safety and quality standards for a growing sector of the market", and promised the the Commission will "closely monitor developments and trends in this emerging market".
Françoise Grossetête, a French centre-right MEP (European People's Party), said she was "disappointed" by the agreement on e-cigarettes. "I am disappointed because we had a valuable opportunity to align their status and it is clear that the agreement refuses to settle the issue," she said in a statement.
"The ball is back in the camp of the Member States who will be able to continue assimilating e-cigarettes to a medicine while others will continue to consider them as a tobacco product. It would have been useful to agree to harmonise e-cigarettes across the EU with clear rules. Today's agreement leaves the door open to diverging national legislation and does not provide legal certainty."
"Replacing traditional cigarettes with electronic cigarettes represents a benefit to health. However, the e-cigarette should be better regulated, as demanded by the European Parliament."
- March 2014: Final Parliament vote
- 2014: The EU's tobacco directive set to come into effect