Parliament debates tobacco agreement with Philip Morris

Written by Sophie Bolla on 26 February 2016 in EU Monitoring
EU Monitoring

On Thursday, the European Parliament's plenary discussed an agreement with Philip Morris to combat tobacco smuggling

Bart Staes (Greens/EFA, BE) thanked the Commission for publishing the evaluation report on the PMI agreement, saying that it was long time coming. He said that he is afraid that there is not sufficient information to justify prolonging the agreement. The number of confiscated cigarettes after 2004 fell by more than 20%, but up until the 1990s it had also gone down and it was not because of the PMI agreement. He argued that the good results are the consequence of the leadership of the EU and the fight against tobacco smuggling. It is also the consequence of the good work of the tobacco taskforce in OLAF as well as in the Commission and the Member States. These are the reasons behind the trend in the graph, he said

He then said that he is not sure that prolonging the agreement is going to help; what is needed is keeping the pressure up. There is legislation on tracing, he noted. Moreover, he is a big fan of the WHO Framework Convention on Tobacco Control, which is a worldwide campaign. They should not permit the tobacco industry to be our friend, he said, adding that there are the EU’s adversaries. Indeed, the industry is fighting against the Framework Convention on Tobacco Control as well as using the ISDS clause in several countries like Australia. They should push for implementation, a full compliance of the tobacco directive and the ratification of the Framework Convention on Tobacco Control, he said.

He concluded saying that the PMI agreement undermines the EU’s authority. Why should other countries ratify the WHO Convention if the EU has a side deal with PMI, he wondered. He also asked the Commission to wait until the vote on the resolution before it takes a decision.

Ingeborg Grässle (EPP, DE) said that the prolongation of the agreement is not a question of conscience but a pragmatic thing. We should not give more importance to this agreement than it needs be, she said. The EU needs to make sure that the Tobacco Directive comes into forces and that the WHO Convention is ratified and comes into force as well. The ratification process should not be endangered and therefore the EU should react to what the Director-General of the WHO had said the day before. The ratification should not be subject to any delays.

She then explained that she is concerned about tobacco smuggling. There is a lot to do and proper investigation and due diligence are needed. There are five producers of raw tobacco in the EU as well manufacturers of cigarette filters and paper. If we can keep tabs on these industries then we can make progress, she noted. She concluded that the EU can allow the tobacco agreement to run for another year, noting that it is important to keep control on the industry.

Piernicola Pedicini (EFDD, IT) reminded the house that this agreement is about smuggling of cigarettes by cigarette producers. Billions of euros are at play. PMI has tried to interfere politically in the EU and Member States, he added, noting the postponement of the publication of the PMI agreement. The Commission is spending money against fighting money smuggling and citizens do not know where the money has gone. He noted that, in Italy, PMI is investing in factories, worked with the Prime Minister and got discounts of 50% excise duty to enter its new products on the market. PMI has been promised it will be able to use its new identification system before the implementation of the Tobacco Product Directive and the ratification of the WHO Convention. The message seems to be: “Thank you for smoking”.

Inés Ayala Sender (S&D, ES) said the Parliament should also talk about the victims of smoking. She then stated that she was pleased to see the EU making an effort to do something about the issue of smoking. She recognised the work done by the Commission.

She then said that she is very concerned the EU needs such an agreement saying that the tobacco companies have an enormous impact on public health. The EU needs to be able to control smuggling activities. There are still legal gaps with regards to tobacco agreement and an enormous number of problems to be tackled and solved. She also asked what is going to happen to certain pending tobacco agreements, and wondered if they could do more to implement the Directive.

She also wondered whether the customs authorities are strong enough at the moment. There are now bigger port installations and it makes it more difficult to police. How can we deal with this situation, she asked. She then stated that it is important to ratify the WHO Convention. We have to make sure to have a proper rule of law and therefore new instruments are needed within the law to combat illegal trade in tobacco, she concluded

Martina Dlabajová (ALDE, CZ) thanked the Commission for publishing the assessment the day before but asked why it was published so late. The PMI agreement has partially met its goal because from the moment of its inception there has been a major decrease of smuggling in the EU. She noted the presence of new EU Tobacco Product Directive and the WHO FCT protocol ratified by 5 Member States. Unfortunately, she noted that there has been a major increase in the market share of unbranded cigarettes; the “cheap whites”.

The ALDE group has always been in favour of fighting human trafficking and illegal smuggling in goods and wants to continue in this zero tolerance approach, she explained, because it damages the economy and fuels the grey economy and black market. Any loopholes in the rule scan serve organised crime groups and that is why it is the EU duty to combat smuggling. She then noted that she does not find the Commission’s findings convincing that the PMI agreement is connected to the decreased volumes of confiscates. This is why she thinks that, before the enter into force of the WHO Convention, the EU should bridge this transition period with something else. She therefore asked the Commissioner to prepare a framework that is fully transparent.

Ryszard Czarnecki (ECR, PL) said that this is a very important topic. He added that the Parliament has asked questions time and time again to the Commission as regards the state of negotiations with PMI. Illegal trade in tobacco products means the EU and Member States lose some €10 billion in revenue per year. He noted that the worth of programmes such as Hercules III is 100 million euros for 2014-2020.

Tobacco smuggling is a serious offense which finances organised crime. It is also matter of public health as illegal tobacco products are more harmful, because no one really knows what is inside them and how they are manufactured. He agreed that the agreement with PMI did have some contribution to the fight against smuggled tobacco products and this is why he thinks the Parliament should support the Commission’s action for the extension of this agreement. However, it was concluded 12 years ago and now the market is completely different so it needs to be updated. He added that given the fact the WHO Convention will be ratified around 2020,  if our agreement expires this year, PMI will not be oblige to pay. Is this in our interest, he asked. 

(...)

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About the author

Sophie is a consultant at Dods EU Monitoring

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