The Euro Economy

Days after the UK wrapped up the “Stoptober” campaign to end tobacco consumption, France – still known in some quarters as “Europe’s chimney” – launched Mois Sans Tabac to encourage citizens to quit smoking and bring down national smoking rates from current levels. Tobacco use in the country is still unacceptably high, hovering around 30% and roughly 50% higher than in the UK, where one in five adults smoke. Even worse, according to government figures, about 40% of 17-year-olds use cigarettes, suggesting that the problem isn’t going to disappear anytime soon.

In an effort to bring these numbers down, this year, Paris announced new legislation to raise the price of cigarettes to 10 euros a pack within three years – pushing tobacco costs among the highest in the continent – and enacted a nationwide ban on branded packaging (also known as plain packaging).

Yet Big Tobacco is not willing to stand a third blow to its business and has a new scheme up its sleeve to safeguard its bottom line – this one in response to a threat that stems not from Paris, but from Brussels. While portraying itself as a key partner in the fight against the illegal tobacco trade, the industry is in fact trying to insert itself in the decision making process and subvert efforts to crack down on the illegal trade.

The latest bastion in that fight is something called track and trace, a sophisticated system that ensures the traceability of tobacco products from factory door to the end user that could spell the end of the illegal trade. In France, roughly 88% of cigarettes that are not purchased from official tobacconists – which amounts to 25% of total sales – are contraband. Typically, smugglers purchase most of these cigarettes in bulk from lower-priced countries and sell them under the table in France. Over the years, Big Tobacco has been regularly accused of being directly or indirectly involved with this kind of smuggling, given the fact that even illicit trade in cigarettes means the prospect of higher sales.

To combat this issue – which costs governments billions in lost taxes and makes cigarettes far more affordable for smokers – the World Health Organization’s (WHO) 2012 Framework Convention on Tobacco Control (FCTC) sets out guidelines for how governments should combat the illicit tobacco trade. Among others, the convention calls on its members to enact track and trace measures. The legally binding document was signed by the EU and has been a major positive factor in reducing smoking rates worldwide.

And after years in the making, the European Commission’s Tobacco Working Group will meet later this month to put the finishing touches on the EU’s track and trace proposal. Once enacted (May 2019), the system will hold tobacco companies to account: cigarette packs will be marked with a unique identifier, which will no longer allow cigarette producers to smuggle their own goods to avoid the tax man.

Unfortunately, in its current form, the European Commission’s proposal falls short of the spirit of the FCTC. After all, one of the main goals of the FCTC is to prevent Big Tobacco from playing any role in how governments regulate the industry. Yet the wording of the draft legislation is different from the FCTC in a number of ways and contains several loopholes that will allow tobacco companies, rather than member states, to maintain control over the track and trace system.

For instance, the legislation considers track and trace providers to be independent from Big Tobacco as long as their revenues from the industry make up less than 20% of total annual revenues – an arbitrary amount that leaves a backdoor for cigarette companies to remain involved.

As a result, during a public consultation on the track and trace system, several member states, including France, Germany, and Italy, as well as a number of key stakeholders, slammed the proposal for failing to align with the FCTC. “Proof exists that many third parties, which could at first glance appear as ‘independent’, have indeed been linked to or influenced at some level by the tobacco industry,” charged French MEP Françoise Grossetête. Yves Martinet, president of the French National Anti-Smoking Committee, also denounced the legislation, saying that it had been negotiated under “heavy pressure from the tobacco lobby.” Raising the sordid history of the industry, which has long been clandestinely involved with the illicit tobacco trade, he said it was “out of the question” to allow them to be involved with track and trace.

So why is Big Tobacco still allowed a seat at the table, in contradiction to FCTC rules? For one thing, the tobacco industry still enjoys heavy influence both at the member state and EU-wide level. For another, given the highly complex nature of tobacco regulation and track and trace systems, many policymakers could be tempted to hand over the technical aspects of draft legislation to industry insiders.

Meanwhile, even though the European Commission claims that the bill gives power to member states over the tobacco industry, the reality is murkier. According to a Commission spokesperson, the draft legislation will still require a certain level of dialogue and division of responsibilities between government and industry for the system to work and to avoid disruption – which explains why the bill is referred to as a “mixed solution.”

Especially for a country like France, which still sees far too many of its citizens dying under the thumb of Big Tobacco, the answer is clear: they can’t settle for anything less than a track and trace system that’s completely free from industry influence.

 

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