Illicit trade: renewal of cooperation agreements between the EU and a cigarette manufacturer in question

Smoke Free Partnership, a coalition of European anti-smoking NGOs, is calling on the Commission to oppose the renewal of the cooperation agreement on illicit trade between the European Union and manufacturer Japan Tobacco International (JTI). The agreement, concluded in 2007, will expire in December 2022.

In 2007, three years after a similar proceeding with Philip Morris International, Japan Tobacco International reached a binding settlement to avoid prosecution by the European Union for its involvement in the illicit trade of its own products. In the 15-year settlement, the manufacturer committed to implementing a series of measures to combat cigarette smuggling. The signing of the settlement also committed Japan Tobacco International to contribute $400 million to initiatives to combat smuggling and counterfeiting.

Japan Tobacco International's involvement in global illicit trade

SFP calls on Johannes Hahn, the European Commissioner for Budget and Information, to oppose the renewal of this agreement for several reasons. First, the coalition stresses that this agreement allows the manufacturer to present itself as a credible actor in the fight against illicit trade in tobacco products, even though this agreement was signed precisely because of the cigarette manufacturer's involvement in smuggling.

SFP also points out that JTI appears to have continued its smuggling activities despite the agreement with the European Union. In 2011, an international investigative journalism network, OCCRP, showed that JTI employees and distributors were working directly with smugglers. The computers of people who investigated the manufacturer's activities were also hacked by a company paid $300,000 by JTI. The CEO of Japan Tobacco in Russia had also stated that these illegal activities did not concern him, since the profits made by breaking the law were greater than the penalties incurred by the manufacturer.

Agreements incompatible with the WHO Framework Convention

Furthermore, the SFP stresses that this cooperation agreement is incompatible with the implementation guidelines of Article 5.3 of the WHO Framework Convention on Tobacco Control, ratified by the European Union. Thus, these implementation guidelines stipulate that "the tobacco industry should not be a partner in any initiative related to the development or implementation of public health policies, given that its interests are in direct contradiction with public health objectives."

The demand for an independent fight against illicit trade in tobacco products

This agreement appears all the more obsolete in light of the evolution of the legal framework. Since 2007, the European Union has notably ratified the Protocol to Eliminate Illicit Trade in Tobacco Products, which requires the establishment of a monitoring and tracing system that is rigorously independent of the tobacco industry. This requirement of strict independence is also not respected by the European Tobacco Products Directive of 2014, which allows the tobacco industry to choose itself the companies intended to collect data on the storage and movements of tobacco products, but also to choose the external auditors mandated to control them (articles 15 and 16).

Agreements ineffective in reducing illicit trade

Beyond the legal issue, SFP also puts forward the ineffective nature of such agreements. Philip Morris International, which had signed these same cooperation agreements with the European Union in 2004 for a period of 12 years, had not been renewed in 2016. Among the reasons for the non-renewal was the absence of direct causality between the cooperation agreement and the decrease in the number of illicit tobacco products emanating from Philip Morris International factories.

FT