Despite international FCTC treaty and criticism EU Ombudsman
EU still wide open to tobacco lobby
A year ago, EU Ombudsman Emily O’Reilly criticized the European Commission for being too accessible for tobacco lobbyists, in violation of the FCTC treaty. Documents obtained by the Tobacco Investigations Desk (the Netherlands) show that the EU’s tax officials have not changed their open door policy.
By Ivo van Woerden / Tobacco Investigations Desk
7 September 2016. Some forty representatives of Philip Morris, British American Tobacco, Japan Tobacco International and other tobacco and e-cigarette companies have come to Brussels to meet with four EU-officials. They have been invited to give their opinion about a possible revision of the European directive on tobacco excise duties. (Read more)
The 7 September 2016 meeting is part of an official consultation, organized by the European Commission, and offers such a chance. A report of it is among more than forty documents obtained by the (Dutch) Tobacco Investigations Desk under the Freedom of Information Act. Upon opening the meeting, the officials, representing the EU Taxation and Customs Union Department (TAXUD) make it clear that they are looking forward to ‘an open, constructive and collaborative discussion’ with as many stakeholders as possible.
Directive 2011/64/EU determines minimum percentages of these duties per product (Read more). Cigars, for example, are subject to a lower percentage than cigarettes. Since the directive’s last revision, in 2011, the tobacco market has changed. All across Europe, e-cigarettes and cigarillo’s have been introduced – the latter differ little from cigarettes, but benefit, as a type of cigars, from a lower rate. Last year, Philip Morris also launched their version of an e-cigarette, the IQOS or Heatstick, a device that heats tobacco instead of burning it. In The Netherlands, the IQOS duty amounts to € 0,60 per package of 20 sticks (HEETS), much less than the duty on cigarettes. The European Commission has decided to investigate whether these new products warrant another revision (Read more) the industry of course wants to prevent any duty increases, since these would make their products more expensive.
Such a revision requires three steps: the European Commission develops a proposal, the European Parliament suggest amendments and votes on them, and finally the European Council (the heads of state of all member states plus the chairman of the Commission) will have to accept it. In every phase lobbyists have a chance to influence the outcome.
In principle, it is of course a good thing that government officials and politicians listen to society and stakeholders before adopting new regulations. But when it comes to the tobacco industry a red flag should appear. The EU and its member states belong to the signatories – 180 in total (Read more) – of the Framework Convention on Tobacco Control (FCTC), an international treaty initiated by the World Health Organization (WHO) (Read more).
Paragraph 5.3 of the FTCT treaty (Read more) says: ‘in setting and implementing their public health policies with respect to tobacco control, Parties shall act to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law.’ In the guidelines and recommendations to implement this rule, states are advised not to have contacts with the tobacco industry while developing anti-smoking regulations. And if they do so anyway, they need to be transparent about them.
Anti-smoking regulations are developed by Health Ministries. Finance Ministries are also important. They deal with excise duties, the increase of which is, according to the WHO, ‘the most cost-effective way to reduce tobacco use, especially among young and poor people’ (Read more).
In article 6 of the FCTC-treaty the signatories acknowledge this. However, Finance Ministries have a different view on tobacco than Health Ministries. For them, it is a source of income. The industry realises this, of course. Page 20 of a leaked Philip Morris strategy document (read here) says: ‘move tobacco issues away from MoH’ (Ministries of Health). And page 12 states as a strategic goal: ‘ensure that tobacco taxation policy remains driven by MoFs’ (Ministries of Finance).
Because excise duties play an important role in anti-smoking regulations, the 7 September 2016 meeting is a direct violation of the FCTC-treaty. The EU-officials have initiated this violation themselves by inviting the tobacco lobbyists to come to Brussels. At other moments too, their attitude towards the lobbyists is proactive and open, the documents obtained by the Tobacco Investigations Desk show. When Stephen Quest, head of TAXUD (read here), receives an invitation on September 12th 2016 (read more) to attend a congress organized by UNITAB (the European Association for tobacco farmers), he replies that he cannot be there, but is very happy with their input at the 7 September meeting in Brussels: ‘I would like to assure you these contributions are looked at in depth by my services and I would very much welcome UNITAB’s further contribution to that process’ (read more). According to Tobacco Tactics, a research website affiliated to the University of Bath, UNITAB receives financial support from the tobacco industry (read more).
EU Ombudsman investigation
This attitude is particularly remarkable, since by then, EU Ombudsman Emily O’Reilly is about to finish a two-year investigation into the way the European Commission and its officials manage their contacts with the tobacco industry (read more).
On 7 December 2016, three months after the Brussels meeting, O’Reilly characterizes the Commission’s and its officials’ weak compliance with the FCTC-treaty’s requirements as ‘maladministration’ (read more). Even then, her judgement does not seem to make an impression. The EU tax officials leave their doors wide open, for example for PA International. This lobby foundation has renowned former politicians on its board, like Frits Bolkestein (former EU-commissioner) and Andries van Agt (former Dutch prime minister). On 12 December 2016, PA-lobbyists visit TAXUD to promote – on behalf of a cigar manufacturer – a special duty on cigarillos (read more).
Making these more expensive, will have two advantages, they argue: they will be less attractive to young people, and diminish their competitive threat to the cigar producer (later, PA International’s secretary-general Rio Praaning Prawira Adiningrat tells us by email that the manufacturer is a friend of Mark Eyskens, former prime minister of Belgium and PA’s chairman).
On 6 March 2017, Philip Morris representatives are welcome to meet with TAXUD officials to present their latest product, IQOS. According to the manufacturer, using this device is less harmful than smoking regular cigarettes. The representatives want to convince the EU-officials that it should be put in a lower excise duty category. They use this opportunity to inquire why they have not received an answer to a letter they sent the Commission earlier. A TAXUD official says that ‘a reply should have been issued and that he would look into the matter’ (read more) – again evidence of TAXUD’s openness towards the tobacco industry, in spite of the FCTC-treaty.
Probably the most interesting document is a report of a meeting on 17 January 2017 (read more) during which British American Tobacco and Imperial Brands gave a presentation on the impact of raising excites taxes on their products. TAXUD officials had invited them to come over and ‘share new information concerning raw tobacco and e-cigarettes such as data and experiences with national taxation of new products’, and ‘to present their view on a possible harmonized taxation of e-cigarettes.’ To do so, the tobacco companies put together a shiny Powerpoint presentation.
Initially, it is unclear who attended the meeting, but after an appeal by Tobacco Investigations Desk TAXUD releases the list. Apart from tobacco lobbyists and EU officials (from TAXUD and the EU health department SANTE), it contains 38 officials from various member states (read more).
The meeting not just constitutes a violation of FCTC in itself. The treaty also requires that reports of all meetings of EU-officials with the tobacco industry be made public. TAXUD did not do this until after our FOIA request.
On 12 January 2018 the European Commission decided to leave the tobacco tax directive as it is (read more).
Has the industry lobby failed? On the contrary, says Luk Joossens, a well-known Belgian expert on tobacco lobby tactics, this is exactly what the industry wanted: ‘postponement is always good for them because it means they can also postpone any sales price increases. Plus, a delay can become indefinite.’ On page 12 of its strategy document Philip Morris says that preferably, countries should determine their own duty policies – in other words: without EU-interference. The company also employs the strategic adage: ‘roadblocks are as important as solutions’ (read more) – meaning: if we cannot stop anti-smoking measures, we can at least try to stall them.
* In a reaction tot his article a European Commission spokesperson replies: “As set out in its letter to the European Ombudsman of 29 January 2016, the Commission continues to believe that it complies in full with its obligations under the FCTC and therefore does not agree with the findings and the recommendation of the Ombudsman.” Note that this letter was sent in the middle of the investigation, well before the Ombudsman reached her final conclusion.
© Onderzoeksredactie Tabak (Tobacco Investigations Desk). This article may be copied, distributed and displayed, provided the licensor is given credit.