Tax stamp trade body calls for veto of proposed tobacco track and trace delegated regulation

On 9 March 2016, the European Parliament voted against the co-operation agreement with Philip Morris International. On 7 June 2016, over 600 MEPs voted for the ratification of the WHO Protocol to Eliminate Illicit Trade in Tobacco Products. 

It is only logical that the European Parliament should take a consistent line and veto the delegated act on key elements of data storage contracts adopted under the Tobacco Products Directive as it violates both the letter and spirit of the Protocol.

In 2012, the World Health Organisation (WHO) adopted a Protocol to Eliminate Illicit Trade in Tobacco Products. This Protocol, ratified by the EU in June 2016, calls for establishing track and trace systems under very strict conditions: the systems must be under the control of States, it must not be entrusted or delegated to the tobacco industry, and any participation by the tobacco industry in the system must be limited to the extent strictly necessary. 

An inception impact assessment followed in July 2016, with the Commission giving a consultancy, Everis, the task of drawing up the technical specifications. This led to the presentation of three options: a system operated exclusively by industry, a mixed system partially involving industry, and an independent State-run system. But the first two options are contrary to the Protocol.

Yet in May 2017, Everis recommended a mixed system that entrusts key responsibilities to the tobacco industry, which the European Commission’s DG SANTE used as the basis to draft two implementing acts and a delegated act as envisaged by the TPD. 

During the public consultation in September 2017, several health NGOs (Smoke Free Partnership, Association of European Cancer Leagues, European Network for Smoking Prevention), MEPs and providers of technology to combat illicit tobacco trade (represented notably by the International Tax Stamp Association) criticised the proposals on the grounds of incompatibility with the Protocol and lack of security in the system leading to its inability to substantially reduce illicit tobacco trade. 

They highlighted the fact that the system is not under the control of Member States and is not independent of the tobacco industry.

Indeed, not only would industry select most of the technology and system providers, but they would also have effective control over the technical specifications. Only slightly amended, the final versions of the implementing acts were adopted by the Commission despite being contrary to the Protocol. On 15 December 2017, the Commission adopted the delegated act on key elements of data storage contracts, sending it to the European Parliament for scrutiny. The deadline for issuing a veto (objection) runs until 15 April 2018.

In November 2017, ITSA urged EU Member States not to accept the draft measures on track and trace, security features and data storage, proposed under the EU Tobacco Products Directive (TPD).  The Association was concerned that, as the proposals currently stand, there would be no guarantee of independence from the tobacco industry, as well as no guarantee of a completely interoperable system based on open standards. 

A spokesperson for ITSA said: “Given the arguments, it is be unthinkable to allow the delegated act to enter into force, because it would be in direct violation with the WHO Protocol to Eliminate Illicit Trade in Tobacco Products”. “We would like to see MEPs perform their democratic duty and prevent this situation from arising by supporting a veto.”

Over 140 billion tobacco and alcohol stamps in the form of securely affixed labels are issued every year by over 150 provincial and national revenue agencies around the world. Such devices, which are used by large and small tobacco producers in 23 EU Member states, can be adapted to swiftly meet the requirements to tackle illicit trade in tobacco products. 

ITSA believes, as experience has proven, that only a combination of authentication and track and trace technologies, composed of both physical and digital features and operated by an independent third party, can effectively meet the needs of both the WHO FCTC Protocol and the EU Tobacco Products Directive.