Thursday

22nd Nov 2018

Tobacco firms defend value of EU deals

  • British American Tobacco, which owns the Lucky Strike brand, is one of four tobacco firms that have anti-smuggling deals with the EU (Photo: andre toledo)

Three weeks are left before an anti-smuggling agreement between the European Union and tobacco firm Phillip Morris International (PMI) expires.

While the EU commission is yet to announce whether it wants to negotiate for a renewal or extension, EUobserver spoke to representatives of two of the other four big tobacco firms. They are quite happy with the cooperation so far.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Alan Hardacre, head of strategy and public affairs at Imperial Tobacco, called his company's deal with the EU “on balance ... very effective”. Both him and his colleague at British American Tobacco believe the agreements have contributed to the decrease in the share of brand products among seized smuggled cigarettes.

“A key component of the agreements - ours plus the other companies' - was the companies taking additional steps to impose stronger controls around the supply chain to prevent smugglers from getting access to legitimate industry products,” said Ronan Barry, head of corporate affairs at British American Tobacco (BAT).

“The effectiveness … is demonstrated by the prevalence of industry brands as a component of the total amount of illicit trade, which has dropped by 45 percent from 2010 to 2015,” said Barry.

An EU commission assessment report of the PMI deal published in February, said it “effectively met its objective”, but may not be the appropriate tool for the future.

PMI was the first tobacco multinational to sign a deal with the EU and its member states, back in 2004.

The agreement settled a legal dispute: PMI had been accused of smuggling its own cigarettes, dodging tax and customs payments.

The PMI agreement was taken as a model for the three other deals, with Japan Tobacco International in 2007, and with BAT and Imperial Tobacco in 2010.

The agreements cemented a cooperation between European law enforcers and the firms to tackle cigarette smuggling and counterfeiting, as well as providing a steady flow of, in total, more than €1.4 billion from the tobacco industry into government budgets.

Generally speaking, national governments would favour a renewal or extension, but the European Parliament is against it. MEPs say that the most important provisions of the agreements, all four of which are similar although not identical, are covered by upcoming legislation.

PMI decision as 'precursor'

Barry, of BAT, said he did not follow the public debate about the PMI deal in great detail.

“Our agreement doesn't come up for renewal until 2030. We don't plan that far ahead. That's almost 15 years away,” he said, adding that his company has not received any signal from the EU commission that it may want to alter the agreement or terminate it prematurely.

Alan Hardacre of Imperial Tobacco, is following the debate more closely.

“If there is a decision not to renew the PMI agreement, then I suspect we would have to prepare ourselves for our agreement to be terminated when it comes to an end as well,” Hardacre told this website in a phone interview in May.

“It's one of the reasons why we are following what is happening with the PMI agreement. I would imagine it would be a precursor for everybody else's agreement,” he added.

Cheating 'is not in our DNA'

Both rejected criticism that public authorities have come to rely too much on the tobacco industry.

Whenever smuggled cigarettes are seized and found to be genuine, the tobacco company under the agreements has to pay a fine. However, the tobacco firms themselves provide the analysis of whether seized cigarettes are genuine or counterfeit.

A conflict of interest?

“We have a high interest in knowing to what extent our brands are being counterfeited. We need to know. There is no question of us not engaging with law enforcement on a 100 percent truthful and honest basis,” said Ronan Barry, of BAT.

EUobserver asked if BAT's forensic experts have an incentive to say seized cigarettes are counterfeit, because that would avoid the company from having to pay the fine.

“It's just not the way companies behave. I can't imagine a responsible legal industry lying to law enforcement. It's not in our DNA. ... I would say it is impossible in our company”, Barry said.

Imperial Tobacco agreed. It had forensics and compliance manager Alex McDonald call EUobserver after the interview.

McDonald said that law enforcement authorities generally trust his team's analyses, but that EU and national authorities are always able to scrutinise a decision made by the forensics experts of the tobacco companies.

“Whilst the EU is not constantly breathing down our neck, that opportunity does exist,” he said.

Meanwhile, BAT's Barry said he didn't believe the EU agreement would be impacted by a British exit from the EU.

“In terms of the broader Brexit debate, BAT hasn't taken a clear position, principally because we don't expect it will have a huge impact on our business in the UK, which is quite small, despite our name,” Barry said.

EU states 'unlikely to block new tobacco deal'

Diplomatic sources from over half of the EU member states say they broadly back renewing an anti-smuggling agreement with tobacco firm PMI, which will expire in July.

News in Brief

  1. UK shell firms at heart of Danske Bank scandal: whistleblower
  2. Google pledges transparency on EU political ads
  3. EU urges Hungary to respect law on Macedonia PM 'asylum'
  4. Bannon's EU campaign illegal in nine countries: report
  5. EU court overturns Austria's anti-migrant law
  6. Kosovo punishes Serbia with trade tariffs in Interpol row
  7. Italy happy to 'confront' EU on budget
  8. Spain threatens Brexit deal over Gibraltar

Stakeholder

An open China brings opportunities to Europe

Some 60 years ago, the first major World Fair after World War II was held in Brussels. Sixty years on, China International Import Expo (CIIE), the first world expo dedicated to expanding imports, will open in Shanghai, China.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSNordic Region has chance to become world leader when it comes to start-ups
  2. NORDIC COUNCIL OF MINISTERSTheresa May: “We will not be turning our backs on the Nordic region”
  3. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  4. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  5. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  6. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  7. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  8. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  9. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  10. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  11. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  12. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue

Latest News

  1. Revealed: 98% of EU 'expert groups' take place in private
  2. EU commission warns Italy on budget, moves towards fines
  3. Challenges for new Franco-German eurozone plan
  4. EU parliament vote strengthens whistleblower protection
  5. Deutsche Bank dragged into Danish bank scandal
  6. New EU human rights sanctions to focus on Africa
  7. Boycott threats mount on eve of Interpol election
  8. EU parliament to renege on transparency promises

Stakeholders' Highlights

  1. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  2. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  3. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Join EUobserver

Support quality EU news

Join us