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14th Aug 2022

EU needs more time to assess €1 billion tobacco deal

  • A hearing on cigarette smuggling in the European Parliament, 2014. The commission is assessing what influence a deal with tobacco company PMI has had on smuggling (Photo: European Parliament)

The European Commission needs more time than foreseen to finish an assessment of a 12-year agreement with tobacco multinational Philip Morris International (PMI).

The deal, which made PMI, the EU and its member states allies in the fight against cigarette smuggling and involved PMI paying more than €1 billion, is set to expire in July.

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  • Georgieva is due to appear at a committee meeting at the European Parliament on 25 January (Photo: European Parliament)

The question is whether the EU wants to renew it. Member states have already indicated that they are positive towards opening negotiations for a renewal.

The commission has said it has not made a decision yet on prolongation and will do this only after looking at the merits and faults of the agreement.

But the date by which this assessment was to be published has been pushed forward at least twice.

In May, the commissioner overseeing the report, Kristalina Georgieva, said the commission was “going to finalise an assessment in a couple of weeks”.

In October, Georgieva told members of the European Parliament “we still aim to finalise and publish the assessment during the present quarter”, or by 31 December 2015.

As of Thursday (7 January), the assessment is not yet finished.

This website asked the commission why the assessment was not yet finished.

“The Commission is finalising the assessment, also taking into account the experiences of Member States, which are parties to the agreements. We are carefully analysing all inputs we have, aiming to arrive at an objective document, which rightly reflects the status quo and outlines the way forward”, a commission spokesperson wrote in an e-mailed answer Thursday.

“The Commission is working towards having it finalised as soon as possible,” the spokesperson added.

Lack of data

Because the issue involves the illegal act of cigarette smuggling and counterfeiting, there is a lack of independent data on how smuggling has changed over the past twelve years, let alone what impact the PMI deal has had on it.

In December, this website tried to assess the impact of the agreement on cigarette smuggling, but found that an independent judgement was difficult to form due to the lack of information.

In any case, even if the commission decides it wants to renew the deal, there is no guarantee that it will look similar to the current one. The annual payments that PMI has made, for example, were part of an out-of-court settlement, and one may wonder whether the company is eager to give the EU and national budgets more free money.

Georgieva is due to appear at a committee meeting at the European Parliament on 25 January. If the assessment is not done yet by then, she can expect some tough questions from MEPs.

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A ‘landmark’ agreement with tobacco company PMI was supposed to bring down cigarette smuggling. But it is very difficult to estimate the success of the deal, which is up for renewal in 2016.

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The European Union and its member states have so far received at least €1.4 billion from four tobacco giants as a result of anti-smuggling cooperation agreements. How have they spent that money?

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