Wednesday

21st Feb 2024

EU questions 'continued relevance' of tobacco deal

  • Philip Morris advertisement from 1942. The EU and its member states began an anti-smuggling deal with PMI in 2004. (Photo: Joe Haupt)

A long-awaited report assessing an agreement between tobacco multinational Philip Morris International (PMI), the European Union and its member states says the deal “effectively met its objective”, but may not be fit for the future.

“The evidence suggests, even if no direct causality can be established, that the PMI Agreement has effectively met its objective of reducing the prevalence of PMI contraband on the illicit EU tobacco market, as shown by a drop of around 85% in the volume of genuine PMI cigarettes seized by Member States between 2006 and 2014,” the commission said in the report, published on Wednesday (24 February).

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The agreement is due to expire in July, and the commission has promised to take the assessment into account in its decision over whether or not to attempt to renew it.

While the “technical assessment” published on Wednesday does not contain a decision in favour or against renewal, it questions “the continued relevance” of the deal.

The EU executive has assessed the costs and benefits of the tobacco agreement, which made the EU and PMI partners in the fight against cigarette smuggling and counterfeiting, and whose benefits have included payments from PMI to national budgets and the EU budget of around €1 billion, in total. The EU budget received 9.7 percent of this amount.

The report says that PMI used the agreement “on multiple occasions” to give national and EU anti-fraud authorities “information of direct investigative value”.

“This information has regularly led to seizures by Member States' enforcement authorities, and in many cases to arrests and criminal indictments,” the report says, without quantifying what constitutes regularly.

“Transnational criminal organisations were dismantled and potential losses to Member States' and the EU budget of several million euros were prevented,” the authors write. Elsewhere in the report, they say that cigarette smuggling is costing national and EU budgets more than €10 billion annually, in lost public revenue.

They also add “it can also be argued that PMI's incentives in this type of assistance to enforcement might as well be independent from the existence of the PMI Agreement”.

Costs

There was little cost involved on the side of the EU, the report notes, but that is also because in the first ten years of the PMI-EU deal, the EU could have made better use of the investigative powers it was granted under the agreement.

“Low administrative costs were also partly due to the fact that the Commission has in the past underinvested in the full implementation of the PMI Agreement including the auditing of the compliance by PMI with the obligations under the Agreement, to which only limited resources were dedicated,” the report says.

“The Commission has in recent years brought improvements to the way how the PMI Agreement is managed in practice, even if resources remain stretched,” it adds.

In its assessment, the commission also says that while the deal may have worked well in the past, the world has changed since it was signed in 2004.

“The market and legislative framework has changed significantly since the entry into force of the Agreement,” it said. Many of the rules in the agreement are now EU law, and some parts of the deal contradict international obligations that are expected to come into force soon.

The report also acknowledges criticism that the deal allows too cozy a relationship between tobacco companies and the EU, but says this is “essentially a matter of political appreciation and falls outside the scope and mandate of this technical assessment”.

It does state dryly “that the tobacco industry has launched a legal challenge against the 2014 Tobacco Product Directive (TPD), which prompts some to question whether it is opportune for the EU to enter into a contract with an entity on policy issues related to the ones legally challenged”.

MEPs

The assessment has been long-awaited by several members of the European Parliament, who have been critical of the deal.

The EU commissioner Kristalina Georgieva responsible for the deal is due to appear in front of the plenary session of the European Parliament on Thursday (25 February).

Last December, 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?

How did EU spend its €110mn of tobacco money?

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?

MEPs split on tobacco deal with PMI

With less than five months until a deal with tobacco company PMI expires, MEPs and commissioner Georgieva discussed how to fight illegal cigarette trade after its expiration date.

Opinion

'Crying wolf' win for chemicals lobby at Antwerp EU meeting

EU politicians will cosy up with Big Toxics at a secretive event on Tuesday to discuss a new 'European Industrial Deal' — a blatant showcase of corporate capture and an attempt to shift the political agenda in a profit-minded direction.

France's Le Maire 'goes German' with austerity budget

The French government announced €10bn in further spending cuts. However, defence spending is set to increase significantly, up to €413bn from €295bn, while €400m was cut from a fund meant for renovating schools, carpooling infrastructure, and other environmental projects.

Latest News

  1. EU's €723bn Covid recovery fund saw growth, but doubts remain
  2. Von der Leyen rejects extremist parties, leaves door open to ECR
  3. Russian oligarchs failed to get off EU blacklist
  4. Podcast: Navalny, Ian Bremmer and "more Europe"
  5. Only Palestinians paying thousands of dollars leave Gaza
  6. Ukraine refugees want to return home — but how?
  7. African leaders unveil continent-wide plan to buy medicines
  8. EU urban-rural divide not bridged by cohesion policy, report finds

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us