Monday

20th Nov 2017

Expiration of tobacco deal is nigh but future still unclear

  • The anti-smuggling deal between the EU and Philip Morris International is due to expire. (Photo: European Parliament)

Nine days before a twelve-year old cooperation agreement on tobacco smuggling between the EU and tobacco giant Philip Morris International (PMI) is due to expire, its future is still unclear.

EU Commission spokesman Alexander Winterstein said on Friday (1 July) he was unable to “give you a very concrete answer here”.

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  • Juncker has yet to put the EU-PMI deal on the agenda for his weekly meeting of commissioners. (Photo: European Parliament)

He noted that the president of the commission, Jean-Claude Juncker, decides what is put on the agenda for the weekly meeting of commissioners, the so-called college.

“He puts items there when he thinks it is the right moment. I'm not aware of this being on the agenda,” said Winterstein.

The college of commissioners is meeting on Tuesday 5 July in Strasbourg. It will be their last meeting before the EU-PMI deal expires.

It was signed on 9 July 2004, for a period of twelve years.

The agreement cemented cooperation between PMI on one hand, and national customs authorities and anti-fraud agency Olaf on the other.

It also included annual payments from PMI into EU and national budgets, totalling around €1 billion over the twelve-year period. The two sides agreed that the payments may be used by governments to combat tobacco smuggling, although no earmarking was done.

Member states in general have been supportive of the agreement, and are in favour, or have no strong objections against, a renewal.

But the European Parliament has turned against the deal, which they say is anachronistic. In March, it adopted a non-binding text which called on the commission not to extend or renew the deal.

Reasons included that new legislation covers many of the aspects from the agreement, but also that the EU should not cooperate closely with an industry that has questionable tactics – tobacco firms had challenged the new tobacco products directive in court, but failed.

The parliament said in its resolution that since the deal was concluded in 2004 "the market and regulatory environment have experienced substantial changes" and noted "that the agreement does not address important characteristics of the illicit tobacco trade today", like brandless cigarettes being smuggled.

In the resolution, the MEPs asked the commission "not to renew, extend or renegotiate it beyond its current date of expiry".

The commission does not need the parliament's consent to renegotiate the deal, which it concluded on behalf of national governments. But it is likely that the commission is taking the potential political fallout of going against the wishes of the parliament into consideration.

Although commission spokesman Winterstein was unable on Friday to say whether the deal would be renewed, or even if there would be enough time to renegotiate it before 9 July, he did provide a statement that may slightly bolster the hopes of those opposed to a renewal.

“What I can tell you is that the president has read with great interest the resolution of the European Parliament,” said Winterstein.

Update: On Tuesday 5 July, Winterstein was asked about the future of the agreement again, and repeated his previous answer.

Last year, EUobserver published a four-part series of articles about the EU's agreement with tobacco company PMI

Part one: Will EU renew $1.25bn deal with tobacco firm PMI?

Part two: EU sleuths ignore special powers on tobacco smuggling

Part three: Scant evidence EU tobacco deal curbed smuggling

Part four: How did the EU spend its €110 million in tobacco money?

Tobacco firms defend value of EU deals

With an EU anti-smuggling deal with Philip Morris due to expire, EUobserver talked to tobacco lobbyists from two competing firms that have similar arrangements.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

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