PMI-EU agreement under spotlight

A report assessing the anti-illegal trade agreement between Philip Morris International on one side and the EU Commission and member states on the other has concluded that the deal ‘effectively met its objective of reducing the prevalence of PMI contraband’ but questioned its ‘continued relevance’, according to an EUobserver.com story relayed by the TMA.

The Commission report of February 24 did not include a decision in favour of or against renewal of the agreement, which was signed in 2004 and expires in July 2016.

The volume of genuine PMI cigarettes seized by EU member states between 2006 and 2014 was said to have declined by about 85 percent.

Under the agreement, PMI paid about €1 billion (US$1.1 billion) to the Commission and member states, of which the Commission received 9.7 percent.

PMI used the agreement ‘on multiple occasions’ to give anti-fraud authorities in the EU ‘information of direct investigative value, the report said without quantifying.

The report said also ‘it can also be argued that PMI’s incentives in this type of assistance to enforcement might as well be independent from the existence of the PMI agreement’.

The commission said that while the deal might have worked well in the past, the ‘market and legislative framework has changed significantly since the entry into force of the agreement’ in 2004, with many of the rules in the agreement now part of EU law, and some parts of the deal contradicting international obligations.

The report also acknowledges criticism that the agreement allows a cozy relationship between companies and the EU.

And it notes that ‘the tobacco industry has launched a legal challenge against the 2014 Tobacco Product Directive (TPD), which prompts some to question whether it is opportune for the EU to enter into a contract with an entity on policy issues related to the ones legally challenged’.