In November 2000 the European Union (EU) filed a law suit at a US court against three cigarette companies for their smuggling activities. Some months later, secret negotiations between the EU and Philip Morris International (PMI) started and culminated in the settlement of the smuggling disputes in exchange for a legally binding agreement in July 2004. In 2016, this agreement with PMI terminates.
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Today the EU Parliament in Strasbourg adopted a resolution not to renew the agreement with PMI.
We congratulate our colleagues of several health organisations surrounding Smoke Free Partnership, Smoke Free Partnership, Association of European Cancer Leagues and European Public Health Alliance for their success.
Agreements between corporations and the EU
Currently, the EU has agreements with four corporations to cooperate in combating the illicit trade in cigarettes. In essence, the corporations have
a) bought their way out of the criminal prosecution for a cheap price: from 2004 to 2030 the tobacco companies will have to pay a sum of approx. 1.9 billion Euro to the EU and its member states as “compensation for the loss in revenue”, while the EU suffers a loss in revenue from cigarette smuggling amounting to 10 billion Euro each year.
b) committed to pay fines when smuggling continues: If original cigarette packs are confiscated by the customs authorities, seizure payments are due. The yearly medium of these payments amounts to 8.3 million Euro.
c) committed to track and trace their products and supply chain: The industry developed its own tracking and tracing system Codentify and thus controls its effectiveness.
Additionally, the agreements and their management suffer from a lack of transparency. The treaty texts are only public in parts and the communication between the European anti-fraud agency OLAF and the tobacco companies remains in great parts secret.
Industry was pleased
Those agreements are successful Corporate Social Responsibility of the corporations. They present themselves as part of the solution to a “common” problem. But they are a part of the problem.
For example the seizure payments:
- They are only due for genuine cigarettes. The decision which cigarette packs are genuine and which are counterfeit is taken by the tobacco companies.
- They are only due for a seizure of more than 50.000 pieces. Meanwhile smuggling activities have been adjusted to smaller sizes with the highest average lower than 10.000 pieces.
- The payments are out of all proportion to the tax revenue lost. The seizure payments are equal to 0,08% of the tax revenue lost by cigarette smuggling in the EU.
The agreements offer the tobacco industry a perfect tool to lobby against better health policies. They provide access to political decision makers under the pretext of combating illicit trade and foster a normalisation of their relations with th EU.
Germany is part of the game
The German EU-Parliamentarian Ingeborg Graessle (CDU), the influential president of the Budgetary Control Committee, vigorously argued in May 2015 against a prolongation of the agreement and for more transparency in the contacts between OLAF and the tobacco industry.
In December 2015 her office explained, she awaited the technical assessment of the EU Commission and didn’t have a final position concerning the renewal.
On 27. January 2016 the representation office of the German state of Baden-Wuerttemberg in Brussels turned to become a lobbying venue for the tobacco industry. Invited by Graessle, MEPs, tobacco companies, NGOs, the OLAF agency, and representatives of the WHO Framework Convention on Tobacco Control met and exchanged secretly their opinions. So much for transparency.
On 24. February 2016 the Commission published its technical assessment – six month too late and just one day before the scheduled plenary debate. Meanwhile the contributions to the debate have been framed into two countering resolutions.
For today’s plenary session, it was MEP Graessle who introduced the resolution promoting the extention of the agreement. Her rationale: the agreement is necessary as long as the International Protocol to Eliminate Illicit Trade in Tobacco Products has not come into force. Nobody dares to say how much the influence of tobacco industry lobbying is behind this change of mind.
End the agreements – start investigation!
The goals of the agreements – deterrence from and decline in smuggling – have not been reached. The contacts between tobacco companies and political decision makers are intransparent and contradict Article 5.3 of the WHO FCTC. The Protocol to Eliminate Illicit Trade in Tobacco Products is open for ratification. The new EU Tobacco Products Directive demands a tracking and tracing system.
From all this, Mrs. Graessle took the conclusion that the extention of the PMI agreement is necessary.
We don’t. We conclude:
- The agreement with PMI must not be renewed! It is used by the cigarette company to polish its prestige and to have access for lobbying.
- On the contrary: criminal investigation against PMI has to be opened as soon as continuous smuggling acitivities emerge.
- Germany needs to immediately ratify the Protocol and to contribute that the EU ratifies it quickly.
We are pleased about the adopted resolution, requesting the EU Commission not to negotiate a renewal and to bring legal action against any smuggling activities involving PMI.
The resolution of the EU Parliament is not binding, but with a surprisingly clear result of 414 yes, 214 no votes and 66 abstentions the resolution is a very strong signal to the Commission.
More information:
PMI: We have common ground with EU on tobacco smuggling (euobserver.com, 18.02.2016)
EU tobacco control policy must separate foxes from chickens (euobserver.com, 23.02.2016)
Anti-tobacco lobby urges MEPs to reject Philip Morris deal (euobserver.com, 03.03.2016)