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The revision of the Tobacco Products Directive: A chance to deal a body blow to Big Tobacco in 2021?

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In a study published on 6 January, scientists from King’s College London have finally put to rest the myth that smokers enjoy a degree of protection from COVID-19. Their research was clear: smokers who contract the novel coronavirus are more likely to suffer severe symptoms than non-smokers, and are twice as likely to end up in hospital. However, despite the whopping 209 million smokers in the wider European region (29% of total population), governments seem to have done precious little to ruffle the feathers of the tobacco industry throughout 2020. Will 2021 be different, writes Louis Auge.

Early signs are not looking great. A report published in late November by a coalition of NGOs looking at 57 countries warned that the tobacco industry managed to capitalise on governments’ preoccupation with the Covid-19 pandemic to further their agendas and curry favour with regulators. Many European countries figure either near the bottom of the list (Romania) or have opted for light-touch regulations (Germany, Spain), much to the disservice of public health. According to the NGOs, Big Tobacco used a mix of tactics to achieve its objectives, such as donating medical equipment, hiring former public officials or aggressively lobbying for its heated tobacco products.

However, with the upcoming revision of the EU’s Tobacco Products Directive (TPD) – slated for later this year – member states can wield the renewed interest that the coronavirus pandemic has sparked in efficient public health policies to set the record straight. While the regulatory fight is set to be a messy one, one arena has emerged in recent months as the leading candidate that could deal a blow to Big Tobacco’s stranglehold: the parallel tobacco trade.

A tale of two trades

The parallel tobacco trade refers to the act of purchasing cigarettes in a different country to that in which they are smoked. Thanks to price differences between neighbouring EU members, lucrative shadow markets have popped up all over the continent, contributing to the high prevalence of smoking and costing governments billions in lost tax revenue.

While the tobacco industry has long tried to deflect attention from the problem, by commissioning studies from KPMG (that have been exposed as relying on falsified data and faulty methodologies) to argue the phenomenon is caused by an increase in counterfeit cigarettes, the reality is much simpler. It is the tobacco companies themselves that oversupply certain countries so that smokers residing in areas with higher cigarette prices can benefit from lower prices. In Luxembourg, for example, customers who do not live in the country buy 80% of all cigarettes sold there.

A spate of recent scandals in France has put the parallel tobacco trade back on the agenda of the European Union. In late December, French MP François-Michel Lambert launched a suit against Philip Morris International (PMI) for their role in the parallel trade, in a case that could have severe repercussions for the tobacco giant. Next, in early January, the French ‘Association of Angry Tobacconists’ (ABEC), announced that they had filed a complaint in Brussels against tobacco price differentials between member states.

They have a point. According to statistics, the French smoke 54 billion cigarettes every year, but only purchase 38 billion from the 24,000 tobacconists who make up their official tobacco sales network. This means that 16 billion cigarettes smoked in France come from across the border. Half of these smokes can be traced to France’s immediate neighbours - Belgium, Luxembourg, Germany, Italy, Spain, Andorra - which all have lower tobacco taxes and entice smokers with lower prices.In reaction, the deputy leader of the MoDem parliamentary group, Bruno Fuchs, has said he will table a bold law that would have far-reaching effects across the continent if passed. The proposed law calls for the strict implementation of a key part of the 2018 WHO Protocol to eliminate illicit trade in tobacco products. Specifically, Fuchs is demanding the setting up of country-by-country tobacco delivery quotas, pegged exclusively to domestic consumption, in order to prevent tobacco companies from oversupplying certain countries. The WHO protocol has already been ratified by 60 countries (and the EU), so it would just be a case of enforcing the letter of the treaty. And because this international document sits higher up in the pecking order of international law than European directives and national laws, that shouldn’t pose legal problems.

Fuchs’ crusade has found allies within the European Parliament, where two leading MEPs, Cristian Busoi and Michèle Rivasi, have long called for the strict implementation of the Protocol. According to them, the TPD is currently incompatible with the WHO document, as the main European countermeasure for the parallel trade, a tracking and tracing mechanism free of industry interference, has been infiltrated by companies with strong ties to Big Tobacco. In a joint webinar organized at the end of December, the two MEPs pointed to the fact that Article 15 of the TPD allows the tobacco industry to choose the companies mandated to store tracking and traceability data. In addition, manufacturers have the ability to choose the auditors who are supposed to control them and with whom they also maintain close relations.

Fuchs, Busoi and Rivasi clearly show that the political appetite for taking on Big Tobacco is alive and well in Europe, and the proven correlation between tobacco use and the novel coronavirus is yet another example of the devastating impact smoking has on the human body. Revising the TPD in 2021 in accordance with the WHO Protocol would actually kill two birds with one stone: it would be a boon for public health by leading to lower smoking rates across Europe, and deal a financial blow to the war chest Big Tobacco has used to stall meaningful regulations. It’s a no-brainer.

Cigarettes

Illicit tobacco trade: Nearly 370 million cigarettes seized in 2020

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International operations involving the European Anti-Fraud Office (OLAF) led to the seizure of nearly 370 million illegal cigarettes in 2020. The majority of the cigarettes were smuggled from countries outside the EU but destined for sale on EU markets. Had they reached the market, OLAF estimates that these black market cigarettes would have caused losses of around €74 million in customs and excise duties and VAT to EU and member state budgets.

 OLAF supported national and international customs and law enforcement agencies from across the world in 20 operations during 2020, in particular providing vital information on the identification and tracking of lorries and/or containers loaded with cigarettes misdeclared as other goods at the EU borders. OLAF exchanges intelligence and information in real time with EU member states and third countries, and if there is clear evidence that the shipments are destined for the EU contraband market, national authorities are ready and able to step in and stop them.

OLAF Director-General Ville Itälä said: “2020 was a challenging year in so many ways.  While many legitimate businesses were forced to slow or halt production, the counterfeiters and smugglers continued unabated. I am proud to say that OLAF’s investigators and analysts played a vital role in helping to track and seize these illegal tobacco shipments, and that OLAF’s cooperation with authorities across the globe has remained strong despite the challenging conditions. Our joint efforts have not only helped save millions of euros in lost revenues and kept millions of contraband cigarettes of the market, they have also helped us get closer to the ultimate goal of identifying and closing down the criminal gangs behind this dangerous and illegal trade.”

A total of 368,034,640 cigarettes destined for illegal sale in the EU were seized in operations involving OLAF during 2020; of these 132,500,000 cigarettes were seized in non-EU countries (primarily Albania, Kosovo, Malaysia and Ukraine) while 235,534,640 cigarettes were seized in EU member states.

OLAF has also identified clear patterns with regard to the origins of this illicit tobacco trade: of the cigarettes seized in 2020, some 163,072,740 originated in the Far East (China, Vietnam, Singapore, Malaysia), while 99,250,000 were from the Balkans/Eastern Europe (Montenegro, Belarus, Ukraine). A further 84,711,900 originated in Turkey, while 21,000,000 came from the UAE.

The main cigarette smuggling operations reported by OLAF in 2020 involved collaborations with authorities in Malaysia and Belgium, Italy and Ukraine, as well as a number involving authorities from across the EU and elsewhere.

OLAF mission, mandate and competences

OLAF’s mission is to detect, investigate and stop fraud with EU funds.

OLAF fulfils its mission by:

  • Carrying out independent investigations into fraud and corruption involving EU funds, so as to ensure that all EU taxpayers’ money reaches projects that can create jobs and growth in Europe;
  • contributing to strengthening citizens’ trust in the EU Institutions by investigating serious misconduct by EU staff and members of the EU Institutions, and;
  • developing a sound EU anti-fraud policy.

In its independent investigative function, OLAF can investigate matters relating to fraud, corruption and other offences affecting the EU financial interests concerning:

  • All EU expenditure: the main spending categories are Structural Funds, agricultural policy and rural
  • development funds, direct expenditure and external aid;
  • some areas of EU revenue, mainly customs duties, and;
  • suspicions of serious misconduct by EU staff and members of the EU institutions.

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Cigarettes

Does #COVID-19 represent a mortal threat to the #tobacco sector?

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The SARS-CoV-2 pandemic has spelled bad news on the whole for smokers and the industry which supplies them. The most recent developments include the debunking of research that suggests smokers are supposedly less susceptible to the virus – accompanied by revelations that in fact the habit exacerbates the effects of the disease – as well as a public smoking ban in Galicia that has now spread across the whole of Spain.

With over one million smokers in the UK having reportedly kicked the habit since the onset of COVID-19, how great a threat does the current crisis represent to the industry which profits from their addiction? Public awareness of the dangers of smoking have never been higher, meaning the time is ripe for authorities in Europe and elsewhere to introduce measures aimed at curbing the deadly practice – but they must be wary of interference and prevarication from the ever-tenacious tobacco industry itself.

'Big Tobacco' under threat

At the outset of the coronavirus outbreak, smokers may have been initially cheered to hear the results of a study from China, where they were disproportionately underrepresented among sufferers of Covid-19. Subsequent research has not brought nearly such positive news; more than one peer-reviewed paper has found smokers are roughly twice as likely to experience coronavirus symptoms as non-smokers. This aligns with other studies, which found that smokers with the virus were twice as likely to be hospitalized and 1.8 times more likely to die than their non-smoking counterparts.

The addiction isn’t just damaging to those holding the cigarette, either. With bar patrons urged to keep their voices down and even theme park goers warned against screaming for fear of transmitting the virus orally, the huge clouds of smoke emitted by tobacco enthusiasts could be an ambient epidemic waiting to happen. Aware of the danger, South Africa took immediate action to ban tobacco sales in late March, although it has since revisited those restrictions. More recently, the Spanish region of Galicia and the Canary Islands archipelago both announced public smoking would be prohibited, with the rest of the country considering following suit.

The pandemic hasn’t just prompted a response from lawmakers – smokers are also reconsidering their relationship with tobacco in light of the dangers posed by the highly contagious and deadly respiratory disease. In the UK, over a million smokers have quit in the last six months, with 41% of those claiming fears of coronavirus were their primary motivation for doing so. Meanwhile, the University College London found that more people have given up smoking in the year up to June 2020 than in any other 12-month window since records began over a decade ago.

Underhanded tactics at play

Never one to take such setbacks lying down, Big Tobacco has resorted to its tried and tested tactical playbook. Among other machinations, that playbook involves obfuscating and influencing the science by funding favorable studies on the subject of coronavirus and smoking, delaying anti-tobacco regulations and claiming the industry comprises an “essential business” to avoid lockdown measures in places as diverse as Italy, Pakistan and Brazil.

At the same time, major tobacco firms have been accused of crisis-washing. Philip Morris International (PMI) donated a reported $1 million to the Romanian Red Cross and 50 ventilators to a Greek hospital, as well as an estimated €350,000 to a Ukrainian charity, with other big players reportedly having done the same. Critics claim these apparently altruistic contributions are nothing more than opportunistic PR stunts which capitalize on a global tragedy to paint Big Tobacco in a positive light – something which the industry itself vehemently rejects.

Regardless of the intent behind the donations, there are heavy suspicions that they may have contravened the Framework Convention on Tobacco Control (FCTC) protocol, which specifically prohibits governments or government-owned bodies from taking funds from the tobacco industry. Unsurprisingly, this kind of chicanery is nothing new for Big Tobacco, who have been ploughing a similar furrow for decades. Unfortunately, it’s one that continues to yield advantages for those behind the yoke, despite efforts to curb their influence.

Ineptitude and inefficiency in the EU

EU policymakers have, disappointingly, demonstrated themselves to be particularly susceptible to the tobacco industry’s malignant influence. As detailed by the OCCRP, the EU has effectively handed over large parts of its track and trace (T&T) system for illicit tobacco to firms with close ties to the industry. The system, which the FCTC has highlighted as an integral step in clamping down on a black market that costs the bloc more than €10 billion per annum in lost public revenue, is intended to monitor a packet’s progress at each stage of the supply chain via a unique identifier, thus eliminating any opportunity for wrongdoing.

A central element of any successful T&T system, as defined by the Illicit Trade Protocol (ITP), is its complete independence from the industry itself. However, the OCCRP investigation has uncovered how key firms developing T&T software and handling the process have ties to the tobacco industry, including seven out of eight of the companies tasked with storing the all-important cigarette data. Meanwhile, one of the main companies monitoring hundreds of supply lines into the EU – Inexto – appears to be at least partially funded by Big Tobacco, while the very software it uses to carry out its obligations was purchased from PMI themselves for a rumored fee of just one Swiss franc.

The whole process is so riddled with inefficiencies that nine months after its implementation, insiders have said they have no idea how effective it has been in clamping down on the illegal trade, while one official from the UK’s trading standards office has called it “completely useless”. Nonetheless, EU officials have travelled the world touting the benefits of their system and several nations have already bought into the myth, with Inexto winning contracts from Mexico, Pakistan, Russia, and governments in Western Africa to date. The Pakistani contract, at least, has since been invalidated by court order.

A vaccine for industry influence

At a time when the Covid-19 crisis has thrown health concerns into sharp relief, governments and health groups should be taking a page out of the obesity debate book and generating momentum towards cutting smoking rates in their territories. While that momentum does seem to be gaining ground, it sadly does not appear to have escaped the pervasive and pernicious influence of the industry itself, which undermines the entire process.

Big Tobacco’s stratagems are widely documented and well understood – but this knowledge does not seem to be capable of preventing their success all the same. In addition to a vaccine for this deadly new coronavirus, it seems immunity against industry intervention should also be on the EU’s priority list.

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Electronic cigarettes

Berlin conference charts the way forward for European #tobacco control

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European policymakers’ attention has understandably been monopolised by the coronavirus crisis. Brussels is nevertheless trying to keep its finger on the myriad other issues affecting the bloc. On March 24th, for example, ministers cheered the green light given to accession talks with Albania and North Macedonia as an encouraging sign that the European institutions are still able to move forward on important policy matters during the pandemic.

This holds true even in the public health sector. From February 19th to 22nd, the 8th European Conference on Tobacco and Health (ECToH) took place in Berlin. The event gathered European anti-tobacco associations, health professionals as well as representatives from the European Commission and pharmaceutical laboratories under the umbrella of the European Cancer League, led by famous anti-tobacco czar Luk Joossens.

This collection of allies in the fight against tobacco use—the most significant cause of premature death in the EU—used the occasion to launch a new Tobacco Control Scale which quantifies the tobacco control efforts of some 36 European countries.

The ranking system features the addition of a new criteria by which European tobacco control policies are judged: their efforts to tackle the illicit tobacco trade, which costs the EU some €10 billion a year and undermines its public health initiatives.

While many European countries scored points in this category thanks to their ratification of the WHO Protocol to Eliminate Illicit Trade in Tobacco Products, they fell short in other areas. For example, none received credit for having implemented a system to track and trace tobacco products which follows the guidelines set out in the WHO Protocol. The EU’s track-and-trace system is thus not considered compliant with international public health regulation, a situation which spurred MEPs to prepare a modification of the Tobacco Products Directive.

 

Abiding by public health priorities or industrial interests?

The principal flaw in the European bloc’s track-and-trace system is that it’s not adequately safeguarded against the tobacco industry’s perpetual attempts to influence public policy.

Europe has more broadly failed to shield its public health decision-making from Big Tobacco’s attempts to promote its own interests. ECToH host country Germany’s long history of tight ties to the tobacco industry partly explains its position at the very bottom of the European Tobacco Control scale.

Though the conference was held in Berlin, where the tobacco industry still looms large—one public health expert dubbed Germany a “developing country” when it comes to tobacco regulation—NGO representatives in attendance widely criticized the lag with which Germany is applying effective tobacco control policies. Some of Berlin’s missteps were singled out for particular criticism; stunningly, Germany is the only country in the EU which still allows tobacco advertising on billboards and in cinemas.

The consistent delays with which Germany has implemented tobacco control measures—it was also one of the last EU countries to adopt a smoking ban in restaurants—have made it clear that European Commission president Ursula Von der Leyen’s native country is far from spearheading action on Europe’s leading public health concerns.

 

Tobacco spies in disguise

The lengths to which the tobacco industry is willing to go to subvert Europe’s public health agenda were on full display at the recent gathering in Berlin. Indeed, the conference’s organiser interrupted presentations from NGO representatives to denounce the presence of envoys from the tobacco industry in the plenary room. These industry representatives had apparently managed to get inside the conference venue under the umbrella of the so-called Foundation for a Smoke Free World.

The name of this organisation is carefully crafted in order to make it sound like an anti-tobacco crusader. In reality, however, the Foundation for a Smoke Free World has been unmasked as a front group for tobacco industry giant Philip Morris. The foundation, which the WHO has warned governments not to partner with, seeks to influence regulation in the tobacco industry’s interest. It focuses on two main objectives: gathering intelligence on tobacco control efforts and building a market for new tobacco products, such as electronic cigarettes and heated tobacco devices.

The Foundation for a Smoke Free World contests the accusations.

 

The alignment of new tobacco products’ regulation to traditional ones

The global tobacco industry was counting on these next-generation products, such as Philip Morris’s IQOS or British American Tobacco’s Glo, to expand the pool of nicotine consumers as public health initiatives are finally bearing fruit in the form of falling smoking rates. European authorities had initially seemed receptive to the industry’s arguments. Public Health England even rolled out campaigns—newly revealed to have been produced in conjunction with a lobby group associated with Philip Morris—arguing that vaping was “95% less harmful than smoking”.

Following a spate of serious vaping-associated lung injuries, which began in the United States in summer 2019, however, the public health community has increasingly become convinced that these novel tobacco products require serious handling.

The WHO has warned that these products increase the risk of heart and lung conditions, and has recommended that they be regulated in the same way as traditional cigarettes. Doing so would bear important consequences in terms of how these products are taxed, what sort of health warnings they should display, and how they are tracked and traced throughout their supply chains. Whether the EU will follow through on ratcheting up oversight on e-cigarettes remains to be seen. The bloc’s stumbles on measures such as track-and-trace, in any event, suggest a bumpy road ahead.

 

The way forward after Berlin?

The recent ECToH conference closed its doors with the unanimous adoption of a declaration setting the stage for the future of European anti-tobacco policy. Delegates notably committed to align all new regulation of tobacco products (electronic cigarettes as well as heated tobacco) with regulations on traditional tobacco products, with explicit references to excise taxes, health warnings, and advertising restrictions.

Amidst the spread of the coronavirus pandemic and early data indicating that both tobacco smoke (from traditional or heated tobacco productions) and e-cigarettes makes people more likely to suffer severe complications from COVID-19, the urgency for such reinforced oversight couldn’t be clearer.

 

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