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Member states urged to do more to enforce new tobacco legislation

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Some member states are failing to implement an EU law which bans flavours being added to tobacco products, it has been claimed, writes Martin Banks.

It is alleged that, despite the near year-old EU legislation, some tobacco companies have continued to launch extra menthol style products.

The Tobacco Products Directive (TPD), applicable in EU member states, imposed a ban on flavoured tobacco products.

The Directive includes measures on e-cigarettes, flavourings, additives and packaging.

Cigarettes and RYO (roll your own) tobacco may no longer have flavours such as menthol, vanilla or candy that mask the taste and smell of tobacco. It is hoped the move will help deter young people from taking up smoking by banning cigarettes with a ‘characterising flavour’ other than tobacco.

Governments across Europe, though, have criticised tobacco companies for allegedly trying to get around the ban. Member states are known to be now investigating the issue but have yet to take any firm action.

The European Commission, in turn, has deferred to member states,arguing that it is up to national capitals to enforce the EU wide legislation.

The directive, introduced last May, aims to prevent “characterising flavours” in cigarettes to make them less attractive to children and help smokers quit.

Some governments,including Ireland say they want the European ban on menthol cigarettes strengthened to stop tobacco companies side-stepping it.

The Irish Health Service Executive says it is “actively investigating” tobacco companies over alleged breaches of the menthol cigarette ban. Irish health minister Stephen Donnelly says that the directive is “being reviewed at EU level” and he would strongly support any revisions to the directive that would ensure that the provision in relation to the menthol ban is “robust”.

An appeal against the EU law change was attempted by Philip Morris, the manufacturer of cigarette brands such as Marlboro, but it was rejected by the European Court of Justice.

A number of member states are reportedly actively investigating products in their markets produced by some companies including Japan Tobacco International (JTI) which anti-tobacco campaigners and rival tobacco companies claim is in breach of the Tobacco Products Directive (TPD). 

Japan Tobacco International, the maker of Silk Cut, says it is “confident that all our cigarettes and rolling tobacco are fully compliant in the EU.”

Countries with new brands are believed to include Austria, Czech Republic, Estonia, France, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.

A 2021 “management plan” by the European Commission’s SANTE directorate said that “After the menthol ban took effect in May 2020, several Member States started procedures on determining characterising flavours in tobacco products.” 

A Commission official told this site that the “rules for the procedures and workflow for the determination process are laid down in Commission Implementing Regulation (EU) 2016/779 of 18 May 2016.

“The Commission has recently approved the methodology to assist in the determination of the characterising flavours in tobacco products. This is an important element going forward.”

The official added, “The Commission also works on the coordination of the efforts taken by individual Member States as regards their national procedures.”

Several member states have reported some suspected tobacco products containing characterising flavours on their respective markets and a few EU countries have started national investigation procedures about which they also informed the Commission.

A JTI spokesperson told this site, “We do not sell or plan to sell cigarettes or rolling tobacco with characterizing flavors in the EU. These products have been banned since May 20, 2016 (with a derogation for cigarettes and rolling tobacco with a characterizing flavor of menthol that expired on May 20, 2020). Some of our cigarettes and rolling tobacco still contain very low levels of menthol.”

The spokesman said, “This is permitted under the law, provided that the use of such flavorings does not produce a clearly noticeable smell or taste other than one of tobacco – which they do not. We provided the EU authorities with information on the ingredients of these products prior to selling them on the market, ensuring full transparency. We are therefore confident that all our cigarettes and rolling tobacco are fully compliant in the EU.”

The EU has claimed an overall successful application of the TPD even though there are still banned products thought to be circulating.

A commission press release last year said, “Cigarettes and roll-your-own (RYO) tobacco products may no longer have characterising flavours such as menthol, vanilla or candy that mask the taste and smell of tobacco. In the case of products with more than a 3% market share (e.g. menthol), the ban will apply as of 2020.”

A source at the European parliament said, “It seems that some companies are taking advantage of the slowness by member states to act and continue to launch extra menthol style products.

“The Commission may be looking to ban or restrict more products but surely it first needs to address the enforcement issue and the gaps in the current TPD.”

Flavouring is prohibited also in filters, papers, packages, capsules or any technical features allowing modification of the smell or taste of the tobacco products concerned or their smoke intensity1. The TPD bans characterising flavours ‘other than that of tobacco’, meaning that it is ‘an added component that cannot be found in natural tobacco leaves’.

According to the WHO, the tobacco epidemic is one of the biggest public health threats the world has ever faced, resulting in more than 8 million deaths each year. More than 7 million of those deaths are the result of direct tobacco use while about 1.2 million are the result of non-smokers being exposed to secondhand smoke.

Moreover, the economic costs of tobacco use are substantial and include significant healthcare costs for treating the diseases caused by tobacco use as well as the lost human capital that results from tobacco-attributable morbidity and mortality.

coronavirus

EU approves €1.74 billion compensation scheme for Danish mink farmers

EU Reporter Correspondent

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The European Commission has approved, under EU state aid rules, an approximately €1.74 billion (DKK 13bn) Danish scheme to compensate mink farmers and mink-related businesses for measures taken in the context of the coronavirus outbreak. This follows the receipt of a complete notification from Denmark on 30 March 2021.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The Danish government took far reaching measures to prevent the spread of new coronavirus variants and new outbreaks among mink, which presented a serious threat to the health of citizens in Denmark and beyond. The DKK 13n scheme approved today (8 April) will enable Denmark to compensate mink farmers and related businesses for damages incurred in this context. We continue to work in close cooperation with member states to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The Danish support measures

Following the detection and rapid expansion of several mutated variants of the coronavirus among mink in Denmark, at the beginning of November 2020, the Danish authorities announced their intention of culling all mink in Denmark. In order to avoid a similar situation developing in 2021, the Government also issued a ban on the keeping of minks until beginning 2022.

On 30 March 2021, Denmark sent a complete notification to the Commission on a Danish scheme to compensate mink farmers and mink-related businesses in this context, given the significant economic impact and loss of employment caused by these extraordinary measures. The scheme consists of two measures:

  • The first measure, with a budget of approximately €1.2bn (DKK 9bn), will compensate mink farmers for the temporary ban on mink farming.
  • The second measure, with a budget of approximately €538 million (DKK 4bn), will support mink farmers and mink-related businesses who are willing to give up their production capacity to the state.

Support under both measures will take the form of direct grants.

Compensation to mink farmers for temporary ban

The direct grants to compensate for the ban on mink farming will cover all fixed costs for those mink farmers that will temporarily close production until the ban on mink farming is lifted on 1 January 2022. This period may be extended by one year.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors for the damage directly caused by exceptional occurrences.

The Commission considers that the coronavirus outbreak qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by member states to avoid the emergence of new coronavirus variants and prevent new outbreaks, such as the temporary ban on mink farming, and the compensation for the damages linked to these interventions are justified.

The Commission found that the Danish measure will compensate the damages suffered by mink farmers that are directly linked to the coronavirus outbreak, since the ban on the keeping of mink until beginning 2022 can be considered as a damage directly linked to the exceptional occurrence.

The Commission also found that the measure is proportionate, as an independent valuation commission, appointed by the Danish Veterinary and Food Administration and directly reporting to them, will make an assessment of necessary fixed costs and maintenance costs on the specific farms during the shutdown period, including by carrying out on-site inspections. This will make sure that the amount of compensation only covers the actual damage suffered by the farmers.

Support to mink farmers and related businesses who will give up their production capacity to the state

This scheme will compensate mink farmers who will give up their production capacity to the Danish State for the long-term, with a view to restructuring an industry prone to the appearance of new coronavirus variants that could threaten to prolong the current crisis and the disturbance to the Danish economy. It will be calculated based on two overall loss items of mink farmers: i) their loss of income for a ten year budget period; and ii) the residual value of the mink farmer's capital stock (buildings, machinery, etc.).

Mink-related businesses that significantly rely on mink production will also be eligible for support under this measure (specialised feed centers and providers, skinning factories, the auctioneer Kopenhagen Fur, etc). A valuation commission will assess that they fulfill a number of conditions, namely that at least 50% of the businesses' turnover in the period 2017-2019 is related to the Danish mink industry and that the business cannot directly convert the production into other activities. The aid will equal the value of the part of the business that cannot directly convert its production into other activities.

A precondition for receiving support under this measure is that the State takes over the assets (all production equipment, stables, machinery, etc.), which will no longer be available to the farmers or to related businesses, respectively.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) TFEU, which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy. The Commission found that the Danish scheme is in line the principles set out in the EU Treaty and is well targeted to remedy to a serious disturbance to the Danish economy.

The Commission found that the Danish measure will offer support that is directly linked to the need to remedy a serious disturbance in the economy of Denmark and safeguard the European and global efforts towards the end of the pandemic also thanks to an effective vaccine, by restructuring an industry that is prone to the appearance of new coronavirus variants. It also found that the measure is proportionate, based on a clear method of calculation and safeguards to ensure that the aid does not exceed what is necessary. In particular, the calculations of the aid are tailored to the mink farming sector and related businesses, based on representative reference data, individual appraisals and acceptable valuation and depreciation methods.

The Commission therefore concluded that the measure will contribute to managing the economic impact of the coronavirus in Denmark. It is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the general principles set out in the Temporary Framework.

On this basis, the Commission concluded that the two Danish measures are in line with EU state aid rules.

Background

These measures are complementary to those already taken by the Danish authorities under Article 26 of the Agricultural Block Exemption Regulation (ABER), by which direct grants will be awarded for the culling of minks on public health grounds, as well as an “additional” bonus for their rapid culling. See SA.61782 for more information.

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission's approval under EU State aid rules. In all these cases, Member States can act immediately. When State aid rules are applicable, Member States can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework.

On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities.

In this respect, for example:

  • Member states can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
  • State aid rules based on Article 107(3)(c) TFEU enable member states to help companies cope with liquidity shortages and needing urgent rescue aid.
  • This can be complemented by a variety of additional measures, such as under the de minimis Regulations and the Block Exemption Regulations, which can also be put in place by member states immediately, without involvement of the Commission.

In case of particularly severe economic situations, such as the one currently faced by all Member States due the coronavirus outbreak, EU state aid rules allow member states to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.

On 19 March 2020, the Commission adopted a state aid Temporary Framework based on Article 107(3)(b) TFEU to enable member states to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April, 8 May, 29 June13 October 2020 and 28 January 2021, provides for the following types of aid, which can be granted by member states: (i) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies; (iii) Subsidized public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments; (xii) Support for uncovered fixed costs for companies facing a decline in turnover in the context of the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.61945 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

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World Health Day: Statement by Commissioner Stella Kyriakides

EU Reporter Correspondent

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On the occasion of World Health Day (7 April), Health and Food Safety Commissioner Stella Kyriakides (pictured) made the following statement: “Since day one of the COVID-19 pandemic, it has been clear that collaboration and solidarity offer the surest path out of this crisis and towards healthier and more equal societies. Yet tomorrow, as we celebrate World Health Day, health inequalities remain a daily reality for so many of our citizens in the European Union. Even before COVID-19 put our health systems and hospitals to the test, access to quality healthcare services was not a given for everyone in the EU. Whilst the pandemic has affected each and every one of us, vulnerable groups in our society have been more exposed to the disease. The measures taken to keep the pandemic under control have had a more detrimental effect on those in already vulnerable positions, including those from poor or disadvantaged backgrounds and ethnic minorities. On our side, by joining forces through the EU Vaccines Strategy, we are ensuring that all Member States have access to safe and effective vaccines, under the same conditions and at the same time, with a clear priority given to the most vulnerable and exposed persons. Over the past year, we have also been working with member states to improve access to health services and to mitigate the negative consequences of the pandemic on our health systems. As we are learning from our experience with this crisis, we are laying the foundations for a stronger European Health Union. We will enhance the protection of citizens by supporting member states to ensure high quality health care and making health systems more resilient to face future crises. And beyond our own borders, we will continue to support global cooperation on health challenges by supporting COVAX and by helping other countries to make their health systems more responsive and resilient. By doing so, we are clearly committed to improving health, reducing inequalities, increasing protection against global health threats and building a fairer, healthier world for everyone.”

The full statement is available here.

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World powers and Iran hold 'constructive' talks on reviving nuclear deal

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Iran and world powers held what they described as “constructive” talks on Tuesday (6 April) and agreed to form working groups to discuss the sanctions Washington might lift and the nuclear curbs Tehran might observe as they try to revive the 2015 nuclear deal, write Francois Murphy, Parisa Hafezi, John Irish and Arshad Mohammed.

European intermediaries have started shuttling between Iranian and US officials in Vienna as they seek to bring both countries back into compliance with the accord, which lifted sanctions on Iran in return for curbs to its nuclear programme.

Former U.S. President Donald Trump withdrew from the deal in 2018, prompting Iran to steadily overstep the accord’s limits on its nuclear program designed to make it harder to develop an atomic bomb - an ambition Tehran denies.

Tuesday’s talks included a meeting of the remaining parties to the original deal: Iran, Britain, China, France, Germany and Russia in a group called the Joint Commission that is chaired by the European Union. The United States did not attend.

While neither Washington nor Tehran say they expect any quick breakthroughs from the talks, both they and the EU described the early exchanges in positive terms.

“Constructive Joint Commission meeting. There’s unity and ambition for a joint diplomatic process with two expert groups on nuclear implementation and sanctions lifting,” said EU chief coordinator Enrique Mora said on Twitter.

“I will intensify separate contacts here in Vienna with all relevant parties, including US,” he added.

Factbox: Indirect US-Iran talks aim to chart way back to 2015 nuclear deal
US calls Iran indirect nuclear talks constructive, potentially useful step

The two expert-level groups have been given the task of marrying lists of sanctions that the United States could lift with nuclear obligations Iran should meet, and reporting back on Friday, when the Joint Commission will meet again.

“The talks in Vienna were constructive ... our next meeting will be on Friday,” Iran’s chief nuclear negotiator Abbas Araqchi told Iranian state television.

“It is a welcome step, it is a constructive step, it is a potentially useful step,” State Department spokesman Ned Price told reporters in Washington even as he repeated the U.S. expectation that the indirect talks would be “difficult.”

A resolution of the nuclear issue could help ease tensions in the Middle East, notably between Iran and Israel as well as with U.S. Sunni Arab allies such as Saudi Arabia who fear the possibility of Shi’ite Iran obtaining nuclear weapons.

In a possible sign of such strains, an Iranian cargo ship came under attack in the Red Sea, Al Arabiya TV reported, citing unnamed sources, and semi-official Iranian news agency Tasnim said the vessel was targeted by a limpet mine.

Al Arabiya cited its sources as saying the ship was attacked off Eritrea and was affiliated with Iran’s Revolutionary Guards, but gave no evidence to support the assertion.

Speaking on condition of anonymity, US officials told Reuters the United States did not carry out such an attack.

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