Tobacco Products Directive
(TPD)

Entry into  force of the The Tobacco Products Directive (TPD – 2014/40/EU) on May 20, 2016. The TPD covers a wide range of regulatory issues and will have a significant impact on the industry and the entire supply chain.

CECCM supports sound regulation that is consultative, evidence-based, delivers its policy aims and that respects our rights as a legal business selling a legal product.

We stand by our belief that the Tobacco Products Directive (TPD) is a clear example of the EU overstepping the limits of its authority. The reality is that many elements of the Directive are disproportionate, distort competition, and fail to respect the autonomy of the Member States.

For the past 2 years, we have made the case – transparently – for a timely adoption of secondary legislation by the Commission and a swift transposition by Member States to allow the industry sufficient time to bring complex production processes in line with new requirements. Even though this has not happened, we worked towards compliance in line with the local transposition.

It is important to point out that a significant group of cigarette producers will not comply with TPD: the black market. The measures introduced today will only apply to the legitimate market, but like all other laws, it will be ignored by the criminals and terrorists who operate the global tobacco illicit trade.

Ingredients

CECCM member companies use tobacco ingredients to maintain the integrity of the product, to restore the quality of certain tobacco types after curing, to create a particular taste and flavour signature for their brands and to differentiate their products in the market.
They do not use ingredients in order to encourage non-smokers or minors to smoke
or to undermine the ability of smokers to quit.

CECCM rejects the notion of ‘attractiveness’ of tobacco products as a valid public policy objective against which ingredients should be regulated and believes that regulation should always be evidence-based and proportionate. ‘Attractiveness’ is an uncertain and arbitrary concept, lacking any evidential foundation. There is no reliable scientific evidence to show that tobacco additives and ingredients enhance addictiveness or that they influence smoking initiation or the ability of smokers to quit. Any decision to regulate the use of a specific ingredient should be based on a full scientific assessment of whether the ingredient increases the inherent risks associated with smoking.

The weight of the evidence supports the conclusion that the use of mentholated cigarettes compared to non-mentholated cigarettes is not associated with an increased risk of developing smoking-related disease. The 2020 EU ban on menthol will reduce consumer choice and the ability of manufacturers to distinguish their products, damage competition and impede innovation and the creation of new products. The ban will also have particular impact on certain Member States, where the market share of menthol cigarettes and therefore the tax receipts derived from their sale are relatively high, and will create further opportunities for illicit trade.

Labelling

Everybody should be appropriately informed about the risks of smoking. Health warnings and other labelling requirements play a role in this respect. Increasing the size of these warnings, however, will not bring public health benefits. There are alternative options available to target specific groups with information to remind them about the health risks of tobacco products, for example via television, radio, print and online media and cinema. Such media also enable the development of specific messages likely to resonate with particular target audiences. In addition, they can reach the population as a whole, whereas warning labels on cigarette packs reach only smokers.

There is no reliable evidence that increasing the size of health warnings will have any impact on smoking prevalence. Smokers are already aware of the health risks of smoking. The size and placement of warnings and other mandated labelling should not infringe on CECCM member companies’ intellectual property rights or reduce their ability to provide information to consumers via packaging. Packaging is the means by which adult smokers identify, obtain information about and choose tobacco products, easily and without confusion.

When labelling changes are brought about, appropriate transition periods should be provided to manufacturers to allow for all required changes to and to sell through products with existing health warning labels.

Traceability

CECCM believes that the tracking and tracing of tobacco products helps fight the illegal trade by identifying the point of diversion from the legal supply chain. To be efficient a track & trace system should allow the tracing of products acrossborders and therefore any legislation should only prescribe recognized international standards and ensure that global operators are free to choose their preferred system and suppliers. This will reduce costs and guarantee free competition while offering a state of the art tool for control by law enforcement agencies.

Plain Packaging

CECCM is against the Plain Packaging of tobacco products. We believe that:

  • There is no reliable evidence that plain packaging will achieve actual public health goals

The assumption that smokers begin, or continue, smoking because of the packaging is simply wrong.  There is no reliable evidence that underpins this assumption – nor any evidence that plain packaging will achieve legitimate public health objectives. Packaging is the means by which adult smokers identify, obtain information about and choose tobacco products, easily and without confusion.

  • Plain packaging would result in an unjustified infringement of the free movement of goods

Plain packaging will seriously damage free and fair competition and market dynamics in the EU. Without trademarks and the ability to differentiate their products, it becomes very difficult, if not impossible, for manufacturers to enter into new markets, thus creating barriers to the EU internal market. Restricting competition other than on price, it also makes it difficult for manufacturers with smaller market shares to strengthen their market position.

  • Plain packaging would violate trade mark rights and interfere with property rights guaranteed by EU law

Plain packaging violates the fundamental rights of property owners under EU law, for example, because it deprives the owner of the relevant trademark of the ability to use their intellectual property for its intended purposes, including in communicating quality and origin and in distinguishing their products from those of competitors.

  • Plain packaging is inconsistent with WTO obligations and is subject to WTO dispute resolution

The Australian plain packaging legislation introduced in 2012 is subject to a legal challenge under the WTO dispute settlement system. A final ruling is expected in 2016.

  • Plain packaging will have other serious negative consequences, including illicit trade and down-trading

Plain packaging would increase illicit trade, as counterfeit products would become easier to make, distribute and sell.  Counterfeiters could take manufacturer’s branding and sell fake, branded product. Both counterfeiters and contraband operators would assume, correctly, that plain packaging would result in a significant increase in demand for cheap (but illicit) products, in particular amongst particular groups, such as minors, that many regulatory measures seek to protect.

Taxation

Tax levels and structures have a significant influence on the ability of Governments to achieve revenue objectives. As there are wide    differences between individual countries, for instance in terms of income, affordability of tobacco products and regional sensitivities such as cross-border and illegal trade, the optimal tax levels and structures will vary across countries.

CECCM believes that Member State regulators should take into consideration all of the above factors when determining their tobacco tax policies. CECCM is against one-size-fits-all global recommendations, such as the ones advocated by non-fiscal international bodies, as this approach ignores the intricacies of European tobacco markets.

EU regulation on tobacco taxation sets the definitions and requirements for the tax structure and minimum rates. CECCM believes that future EU legislation should continue to respect the fundamental tenets of a sound tax policy, such as tax sovereignty and affordability, while allowing the Member States to take into consideration national circumstances.

Excessively high levels of tax that do not take into account the affordability of products may negatively impact tax revenue and distort the legal market. CECCM believes that policy makers need to pay close attention to the proven link between excessive taxation and increasing levels of illicit trade and the criminal activity that this encourages.

Prevention of sales to children

Children should not smoke. CECCM believes that the decision to use tobacco products is a choice for adults. Our members actively support appropriate penalties for retailers who knowingly sell tobacco products to minors.

The scientific literature mentions the following main drivers of youth smoking: peer pressure, parental influence, social and cultural norms, price and access. Packaging and flavourings are not among them. Plain packaging is not based on, or consistent with, a credible and scientifically rigorous understanding of smoking behavior.

We support proportionate, evidence-based measures that will prevent children from smoking. There are legislative measures available which meet accepted principles of Better Regulation and are based on credible evidence. We believe the industry and retailers have a role to play with regard to implementing effective solutions to prevent minors’ access to tobacco products. Programs supported by the tobacco industry and retailers, in cooperation with national authorities, include:

  • Increasing enforcement resources;
  • Reinforcing retail access prevention measures for minors, including penalties for proxy purchases;
  • Imposing penalties for retailers who knowingly sell to minors;
  • Increasing penalties for retailers who are convicted of illicit trade of tobacco products;
  • Introducing a negative licensing system for retailers.

CECCM believes that distance sales of tobacco products should be regulated to prevent access to minors. Access to vending machines for tobacco products should also be strictly controlled to prevent sales to children. The use of age verification functions in vending machines is the most proportionate way of achieving this goal.

CECCM is concerned that the illicit tobacco trade has no such standards of care for youth access – in fact quite the opposite. Illicit tobacco is sold indiscriminately – undermining all the solid work of governments, retailers and our member companies.

The access to vending machines is to be strictly controlled, especially with regard to the prevention of youth access.

There are effective solutions which prevent minors from purchasing cigarettes from vending machines such as systems with electronic age verification, ID coin mechanisms and remote control.

Measures such as the criminalization of proxy purchasing[1] and negative licensing[2] can be effective in preventing sales to minors.

1 Proxy purchasing is the act of an adult who buys cigarettes on behalf of a minor.
2 Negative licensing is withdrawing the tobacco license of retail outlets which are caught selling to minors.

Illegal trade

  • Excessive tax levels are the main factor behind illegal trade.
  • Illegal trade is detrimental to everyone: governments, consumers and legitimate businesses.
  • Illegal Trade is a complex problem, often linked to much larger criminal activities such as corruption, organized crime and even terrorism and human trafficking.
  • Illegal Trade is an international problem that governments can’t solve alone. The industry takes an active role in helping governments, regulators and law enforcers by sharing information and developing a strict control of supply chains.
  • Counterfeit cigarettes are not subject to regulation governing ingredients, emissions and quality controls. Consumers never know what they are buying.

International trade

International trade rules ensure that governments treat products equally upon importation irrespective of their origin. Following importation, governments cannot treat imported and domestically produced products differently by putting in place barriers or encumbrances that would disadvantage imported products. As any other commodity traded internationally, tobacco and tobacco products are subject to these rules. CECCM strongly supports this system.

The EU is a key player in protecting and advancing international trade rules both at the World Trade Organization (WTO) and through the negotiation of Free Trade Agreements (FTAs).  CECCM supports these efforts of the EU as the further development of a rules-based, non-discriminatory and liberal international trading system is beneficial to the growth of the European and global economy.

Other issues:

CECCM member companies always encourage people to respect the needs of both smokers and non-smokers everywhere. 

Adults who smoke should show consideration and courtesy to other people and in particular should exercise care to avoid smoking around children.

People should be able to smoke in a dedicated place without disturbing those who do not wish to be exposed to smoke.

Smoking bans can have a negative impact on the economic and social life of a community. In addition, they discriminate against smokers.

Many countries have implemented successful alternatives to smoking bans, including properly ventilated smoking areas for those who choose to smoke.