The European Commission will focus on the new tobacco directive, as well as accords with the World Health Organisation to fight against illicit tobacco trade, following the expiration a 12-year deal with Marlboro-maker Philip Morris.
The Commission decided last week to end an anti-smuggling deal with tobacco firm PMI.
On 9 July 2004, the executive concluded an Anti-Contraband and Anti-Counterfeit Agreement with Philip Morris International (PMI), in an effort to reduce the prevalence of PMI contraband on the illicit EU tobacco market.
The EU has similar agreements with other tobacco companies such as JTI, which expires in 2022, and with BAT and Imperial Brands, both ending in 2030.
Asked by EURACTIV.com whether this decision would affect the other deals, a European Commission source replied: “This is a question for the future.”
“Fight against illegal trade in tobacco will continue,” the EU source explained.
World Health Organisation had not responded to a EURACTIV request for comment by the time of publication.
The EU has the tools
EURACTIV has learnt that the College took note of Budget Commissioner Kristalina Georgieva’s intention not to seek prolongation of this agreement and to work towards swift implementation of the Tobacco Products Directive and the World Health Organisation Protocol to Eliminate Illicit Trade in Tobacco Products (FCTC Protocol).
Last week, Georgieva sent a letter to member states claiming that there was no need for a prolongation of the PMI agreement.
In her letter, the Commissioner stressed that the EU now has the means and the tools to tackle illicit tobacco trading.
“To continue the effort to fight against illegal tobacco trade, it is, therefore, my intention to concentrate on cheap whites, strict law enforcement and strengthened international cooperation and implementation of the Protocol to Eliminate Illicit Trade in Tobacco Products to the WHO Framework Convention on Tobacco Control,” Georgieva wrote.
Smugglers found other ways
A technical assessment published on 24 February found that the PMI Agreement had effectively met its objective of reducing the prevalence of PMI contraband on the illicit EU tobacco market and “will by its expiry date have provided financial benefits to public revenue of around $1 billion to Member States and, to a lesser extent, the EU”.
But the reduction of PMI contraband did not lead to an overall reduction of illicit products in the EU.
“The market and legislative framework has changed significantly since the entry into force of the agreement,” Georgieva stressed, adding that a key concern today in the fight against illicit tobacco trade is the growing prominence on the European Union black market of cigarettes from other manufacturers not covered by any anti-fraud agreement (“cheap whites”).
“The Commission considers that the combination of the Tobacco Products Directive 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 Georgieva noted.
Under the Tobacco Products Directive, which took effect on 20 May, legal cigarette sales in the EU will be tracked and traced as from May 2019. In particular, member states must ensure that all unit packets of tobacco products are marked with a unique identifier.
According to the latest data, member states are still struggling to adapt their national legislation to the EU’s tobacco products directive.
Eight EU countries have completed their legislative procedures while ten member states have done it partially.
The FCTC Protocol will in the future offer tools to try to better police the illicit tobacco trade among participating countries, Georgieva added.
Parliament welcomes the decision
In a resolution in March, the European Parliament opposed the continuation of the agreement ,requesting the Commission not to renew, extend or renegotiate it.
“I am happy that our actions… have helped push back interference by tobacco industry in the work of government,” French Socialist MEP Gilles Pargneaux said in a statement.
Pargneaux added that in their resolution, EU lawmakers expressed their concern about the fact the European Anti-Fraud Office (OLAF) is partly funded by annual payments from the tobacco sector. “This could lead to conflicts of interest,” he said.
“We had also expressed serious doubts about the effectiveness of the agreement with PMI, given the evolution of the illicit cigarette market,” Pargneaux underlined, stressing that a renewal of the agreement would have sent a “negative and contradictory signal”, damaging the image of the European Union.
PMI: Tobacco directive a “huge opportunity”
In a statement to the press, Philip Morris International stressed that the supply chain control measures outlined in the agreement will remain an integral part of the company’s business in the EU and around the world.
“In its twelve years of implementation, the anti-illicit trade agreement with the EU has worked to significantly reduce the flow of PMI counterfeit and contraband cigarettes,” the statement reads.
PMI noted that the agreement led to consistent seizures of illegal product, factory raids and the dismantling of criminal organizations, while EU authorities enjoyed free and unimpeded access to factory data and information on product movement.
“We also believe that the anti-illicit trade provisions of the new EU Tobacco Products Directive represent another significant opportunity for governments and industry to build effective, lasting solutions to counter the complex issue of illegal tobacco trade,” the statement concludes.
Bart Staes, public health and transparency spokesperson of the Group of the Greens/European Free Alliance, stressed:
"This decision is a victory for common sense. There have been major doubts about the effectiveness of the Philip Morris International agreement in reducing the illicit trade in tobacco products. Beyond this, the agreement is superfluous, having been superseded by provisions in the EU's tobacco products directive and the WHO's Framework Convention on Tobacco Control.”
“In addition, the convention itself explicitly states that such agreements with the tobacco industry are in conflict with the aims of the convention and threaten progress in tobacco control. With Philip Morris and others having taken an unsuccessful legal challenge against the recently-agreed EU tobacco rules, it would have been inappropriate to conclude a parallel new bilateral agreement with the industry in this context. We welcome the Commission's willingness to listen to parliament on this matter and to back down,” he added.
Inés Ayala Sender, a Spanish MEP from the Group of the Progressive Alliance of Socialists and Democrats (S&D), noted:
"In March we made clear that although the previous agreement with Philip Morris had been useful in the fight against the smuggling of cigarettes, it was no longer the right tool for the job. Changes in the market mean that the biggest challenge we now face is not from bootlegged brand cigarettes but from unmarked cigarettes that are sold cheaply on the black market, known as 'cheap-whites'. The agreement with Philip Morris cannot help in the fight against these. We are therefore delighted that the Commission has followed our recommendations.”
“Despite this welcome news, there is still work to be done. New regulatory tools such as the Tobacco Products Directive and the WHO protocol on tobacco will mean that deals such as the Philip Morris one are not necessary in the future. However, these are not yet in force and we would like to see the Commission put forward temporary measures in order to ensure there is no gap between this agreement ending and the new rules coming into force,” she added.
S&D Group spokesperson for the Tobacco Products Directive, Linda Mcavan, stressed:
"This decision is a huge victory for health campaigners working on tobacco control across the EU. Agreements with the tobacco industry are no answer in the fight against illicit trade and so I am pleased that the Commission is taking a firm stance. I hope this means the days when big tobacco companies have undue influence over policy making are now coming to an end."
- 2022: Expiry date for an anti-smuggling deal between the EU and JTI
- 2030: Expiry date for anti-smuggling deals between the EU and British American Tobacco and Imperial Brands