Commission hits back at criticism over tobacco track and trace proposal

MEP Grossetête: "Proof exist that many third parties, which could at first glance appear as ‘independent’, have indeed been linked or influenced at some level by the tobacco industry." [HM Revenue & Customs/Flickr]

The European Commission’s proposal for a tobacco track and trace system is fully in line with the WHO Framework Convention on Tobacco Control (FCTC) provisions, as it gives control over the system to the member states and not the tobacco industry, a Commission spokesperson told EURACTIV.

Under the Tobacco Products Directive that took effect on 20 May, legal cigarette sales in the EU will be tracked and traced from May 2019. Member states must specifically ensure that all unit packets of tobacco products are marked with a unique identifier.

“The Commission considers that the combination of the Tobacco Products Directive (TPD) and the Protocol to Eliminate Illicit Trade in Tobacco Products negotiated in the context of the Framework Convention on Tobacco Control (FCTC) are the best instruments to fight illicit trade by regulatory means,” the then Budget Commissioner Kristalina Georgieva noted.

The European Commission published the final two draft Implementing and Delegated acts on the track and trace system and a public consultation closed on 2 October. Several member states, including France, Germany and Italy criticised the proposal, citing its complexity and administrative burden.

In a letter to the Commissioner for Health and Food Safety Vytenis Andriukaitis, the EU distributors’ union said the executive’s proposal was “extremely cumbersome and costly and above all, will add little or no value to the fight against the illicit trade”.

The distributors stated that it totally ignored the internationally recognised standards, which are the only “way to secure interoperability between states and across industries”.

“Instead, the Commission proposal is considering tobacco products in complete isolation from all other products,” the distributors noted.

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The unique identifier

Under the Commission proposal, “a proper assignment of roles in relation to the marking of packages with a unique identifier is essential”. These unique identifiers (the code on each pack and sleeve) should be attributed to an independent third party appointed by the member states, a so-called “ID issuer”, within six months from the date of entry into force of the implementing act.

Critics claim that the specific criteria around the issuing of the unique identifier are not based on open standards, which means there will be limited interoperability with third countries.

“This is all the more important as 86% of illegal cigarettes come from third countries (such as Belarus, Ukraine, Turkey). These products will still enter the European market under the radar of the track and trace system,” an industry source told EURACTIV.

Focus on health and tax collection

The issue of independence from industry is of high importance. Referring to both the WHO FCTC and the Protocol of Illicit Trade, which clearly rule out any influence by the tobacco industry, several MEPs have expressed concerns about the “independence from commercial interests”.

French right-wing MEP Françoise Grossetête, for instance, stressed that the tobacco industry should not be considered a “normal” industry, operating under the same rules as any other.

“Proof exists that many third parties, which could at first glance appear as ‘independent’, have indeed been linked to or influenced at some level by the tobacco industry,” the MEP noted.

Contacted by EURACTIV, a European Commission spokesperson emphasised that the draft acts ensure full compliance with the WHO Framework Convention on Tobacco Control (FCTC) provisions, by placing control of the system in the hands of the member state authorities rather than giving it to the tobacco industry.

“Full compliance with the requirements of the Protocol – in particular the requirement for control of the system to be in the hands of the authorities (and not the tobacco industry) – has from the outset been a top priority for the Commission, and we are fully confident that the draft proposals achieve this,” the EU official said.

The Commission spokesperson explained, however, that it was necessary for the draft proposals to provide for a certain level of division of responsibilities between the authorities and the industry in order for the system to function and to minimise disruption (hence the title of ‘mixed solution’).

The spokesperson offered further explanation on why the draft proposals comply with the WHO convention: “The involvement of tobacco industry-affiliated solution providers/companies in any of the key functions of the system will be strictly excluded via the clear criteria on independence set out”.

The EU executive is also carrying out a cost-benefit analysis as part of its analysis under the Better Regulation process. “The tobacco traceability is considered to be an efficient and cost-effective tool in limiting the illicit trade,” the EU official said.

Referring to the distribution operators, the EU spokesperson noted that they seem to regard the system purely in terms of its costs, while its benefits are for the entire society and mainly consist of better protection of human health (e.g. by limiting access to artificially cheap tobacco) and improved tax collection.

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A ‘punitive’ timeframe

More than 40 months after the adoption of the Tobacco Products Directive, the system proposed by the European Commission faces strong scepticism among stakeholders about its feasibility.

According to a submission from Japan Tobacco International (JTI), the operators will foot the bill for the Commission’s delay as they will be forced to implement its proposal in “punitive timeline”.

“The cause of this impossible-to-meet timeline is clear; DG SANTE’s consultants did not work closely with the main stakeholders in this legislation – the manufacturers. Whether this was caused by inappropriate lobbying and the interests of commercial actors who have a great desire to secure lucrative contracts with the EU for track and trace, or whether this was based on a false interpretation of the Framework Convention on Tobacco Control”, JTI said.

The industry claims this is not the first time that the Commission has proposed a never tested and complex system related to tobacco products. This was the case with the ‘reporting system’ put in place by Article 5 of the Tobacco Products Directive.

Even though the Commission managed to publish its Implementing act on the format for ingredients and emissions reporting with a so-called data dictionary, the system was still not up and running on 20 May 2016, the legal deadline included in the Directive, leaving most manufacturers in a grey zone of legal compliance, industry sources stated.

EURACTIV has also learned that Germany requested that OLAF should be included in the project as it develops further, considering their expertise on the matter. Asked about OLAF’s involvement, the Commission official replied, “DG OLAF, along with other services, has been fully involved in preparations of the Commission’s draft acts and continues to closely follow the implementation work.”