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The European Union is set to implement a system to track and trace tobacco products all along the supply chain this May, in line with the Tobacco Products Directive it passed in 2014. According to EU officials, the scheme meets a mandate from the WHO Framework Convention on Tobacco Control (FCTC) Protocol to Eliminate Illicit Trade in Tobacco Products, to which the EU is a party.
Track and trace systems have the potential to be vital tools in the fight against the illicit tobacco trade. Under-the-table smokes are “the commodity of choice” for organised crime groups, deprive governments of badly-needed tax revenue, and undermine public health initiatives by making tobacco products available at cheap prices, most importantly to highly price-sensitive groups such as young people.
The EU is by no means immune to the parallel trade in tobacco products, which costs the bloc’s governments an estimated €10 to 20 billion a year; illicit smokes make up roughly 10% of European consumption. What’s more, in some areas of the Union, the situation is getting worse. Tobacco smuggling across the Lithuanian-Belarusian border nearly doubled in 2018, and there are grave concerns a no-deal Brexit could lead to rampant illicit trade across the Irish border.
Parliamentary dissent
Against this backdrop, the May rollout of the EU’s track-and-trace scheme is welcome news. Unfortunately, the system the European bloc is planning to implement has already drawn substantial criticism from MEPs and public health bodies, who argue that the scheme is not independent from the tobacco industry. The WHO Protocol specifies any track-and-trace system must be clearly separate from the tobacco sector’s influence; tobacco manufacturers’ long history of obstructionism and complicity in the smuggling of their own products indicate that they simply can’t be trusted. As recently as 2014, British American Tobacco (BAT) was fined in the UK for deliberately oversupplying overseas markets which it knew would make it into the hands of smugglers.
These various concerns underpinned Romanian MEP Cristian-Silviu Busoi’s January seminar on how to stamp out the parallel tobacco trade. Another, similar, debate will be held on Wednesday, February 27th, helmed by MEP Younous Omarjee. Both Busoi and Omarjee are suggesting that the Tobacco Products Directive may need to be modified in order to ensure the EU’s track-and-trace scheme is made compliant with the WHO Protocol, a higher legal norm, and does not unduly entrust responsibilities to the tobacco industry.
As Omarjee’s stated in a press release, the MEP “wants to understand why the European Commission is going out of its way to entrust the fight against the parallel trade in tobacco, fed by cigarette manufacturers, to the tobacco lobby and people close to it.”
The WHO’s approach
NGOs present at the January seminar, from the European Network for Smoking Prevention to the European Cancer League (represented by prominent anti-tobacco activist Luk Joossens), agreed that among the many key changes to the Directive would include making sure that data storage providers are not selected and paid by tobacco manufacturers. The International Tax Stamp Association (ITSA), which has challenged the EU system before the European Court of Justice on the grounds that it is in breach of the WHO Protocol, agreed that, among other things, any track and trace system should be placed under the protocol signatories’ direct control. Against the backdrop of this plethora of concerns, the European Commission representative at Busoi’s conference noted that the EU system is up for review in 2021.
Our exclusive new infographic illustrates the shortcomings of the EU track & trace system. Leaving aside the security features aspect of the system, which is controversial in and of itself, the infographic highlighting its numerous discrepancies with the scheme provided for by the WHO Protocol.
The WHO calls for a logical, linear process in which it defines a set of requirements for the Protocol’s parties to enforce. A public, open and competitive tender by the parties to the Protocol is supposed to select the best service providers, entirely independent from the tobacco industry, which then take on the key missions of “track and trace”: generating unique identifier codes, printing or affixing these codes to tobacco products, verifying on the production line that the codes are linked to the right products and providing governments with a database and related alert system. Public authorities, including customs, police forces and the judiciary, then have the means to control tobacco products all along the supply chain and convict those responsible for illicit trade.
Europe’s problematic alternative
In contrast, the European system is highly convoluted. Member states only carry out tenders for the service providers charged with generating the codes, while the European Commission oversees the selection of database providers. Most problematically, the EU scheme requires the tobacco manufacturers to both affix and verify the codes in their factories—two of the most essential steps of tracking and tracing tobacco products. The industry also has a hand in selecting and remunerating both the data storage providers and the auditors intended to oversee the system.
Under this scheme, unlike that outlined by the WHO, separate databases are required, while tobacco manufacturers each select their own preferred partners for data storage, which transfers its data to the secondary repository for public authorities. The involvement of the tobacco industry and its network of preferred suppliers in three of the four core missions in the EU proposal understandably raise serious doubts about whether the data generated by the system will truly be objective, and whether its use by judicial authorities will be efficient in tackling the illicit tobacco trade.
EU Health Commissioner Vytenis Andriukaitis has underlined that tobacco consumption is the single biggest cause of avoidable death in the EU, and expressed his hope that the implementation of track and trace would help Brussels crack down on the illicit trade which furthers it. Unfortunately, as it stands, the EU proposal falls short of what’s needed to effectively regulate the sector —and fails to fulfil the bloc’s obligations under the WHO Protocol.
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