Explanatory Memorandum to COM(2013)538 - Signing of the Protocol to Eliminate Illicit Trade in Tobacco Products, in so far as the provisions are concerned which do not fall under Title V of Part III of the TFEU - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)538 - Signing of the Protocol to Eliminate Illicit Trade in Tobacco Products, in so far as the provisions are concerned which do ... |
|---|---|
| source | COM(2013)538  |
| date | 18-07-2013 |
The World Health Assembly adopted in 2003 the Framework Convention on Tobacco Control (FCTC), which aims at reducing tobacco-related deaths and diseases around the world in a comprehensive manner. To date the FCTC has been ratified by 176 Parties. The EU concluded the FCTC by Council Decision 2004/513/EC of 2 June 2004 ([1]).
The FCTC recognises in its Article 15 that the elimination of illicit trade in tobacco products, including smuggling, illicit manufacturing and counterfeiting, is an essential component of tobacco control, and obliges Parties to adopt and implement effective measures to eliminate illicit trade. Article 33 of the FCTC provides for the possibility for the Conference of the Parties to adopt protocols to the Convention. On the basis of these Articles, the Conference of the Parties (COP) to the FCTC, at its second session in June-July 2007 decided to establish an Intergovernmental Negotiating Body (INB) to negotiate and draft a protocol to eliminate illicit trade in tobacco products (hereinafter referred to as ‘the Protocol’).
The Council authorised the Commission to negotiate the Protocol on behalf of the EU in its Decision of 20 December 2007. This Decision amended the negotiating directives for the FCTC with regard to the Protocol. The directives for the FCTC were adopted by the Council on 22 October 1999 and supplemented on 21 April 2001. After its fifth session, the INB decided to recommend that the draft Protocol on which a consensus was obtained be considered at the fifth COP of the FCTC. Accordingly, the fifth COP held in Seoul, Republic of Korea, adopted the Protocol on 12 November 2012.
According to Article 43, the Protocol is open for signature by the Parties to the FCTC in New York until 9 January 2014. By 10 June 2013, 18 Parties had already signed the Protocol. The EU should sign the Protocol as soon as possible.
The Protocol consists of core provisions on the control of the supply chain of tobacco products and of equipment for manufacturing those products (Part III: Supply Chain Control). It requires the introduction of a licensing, equivalent approval or control system by a competent authority for any natural or legal person involved in the manufacturing and in the import and export of tobacco products and manufacturing equipment (Article 6 – Licensing). It, furthermore, requires all natural and legal persons engaged in the supply chain of tobacco, tobacco products and manufacturing equipment to conduct due diligence with regard to their customers (Article 7 – Due diligence). It provides for the establishment of a global tracking and tracing regime, within five years of the entry into force of the Protocol, consisting of national tracking and tracing systems controlled by the Parties for all tobacco products manufactured in or imported into their territory (Article 8 – Tracking and tracing).
Those articles are complemented by provisions on record-keeping and security and preventive measures, including anti-money-laundering measures, and reporting of suspicious transactions (Articles 9 and 10). Further provisions concern sales by Internet, telecommunication or any other evolving technology (Article 11), duty free sales of tobacco products and the obligation to implement effective controls on tobacco and tobacco products in the free zones, including not mixing tobacco products with non-tobacco products at the time of removal from a free zone (Article 12).
Part IV of the Protocol defines the conduct to be established as unlawful under the Parties’ legislation (Article 14) and obliges the Parties to ensure that natural and legal persons are held liable for such unlawful conduct, including criminal offences (Articles 15 and 16). Further provisions concern seizure payments (Article 17), the handling of confiscated tobacco (Article 18) and special investigative techniques (Article 19). Part V of the Protocol contains provisions for the exchange of relevant information between the Parties (Articles 20 to 22), cooperation and mutual assistance (both administrative and legal in relation to criminal matters – Articles 23 and 24, and Articles 27 to 29), jurisdiction (Article 26) and extradition (Articles 30 and 31).
Coordination with Member States throughout the negotiations took place in the Council Working Party on Customs Union and in local coordination meetings during the sessions of the Intergovernmental Negotiating Body and the Intersessional Working Groups.
The European Parliament was informed about the outcome of the negotiations.
The Protocol contains a complex set of measures and rules. The main objective of the Protocol is to contribute to the overall tobacco control efforts by combatting all forms of illicit trade in tobacco products and manufacturing equipment. This objective is pursued through several sets of measures which are equally important and complementary to each other. These measures fall into different areas of EU activity which may be subdivided as follows:
(a) the manufacture, presentation and sale of tobacco (and related) products,
(b) harmonised taxation and related rules,
(c) customs controls and cooperation including through mutual administrative assistance in customs matters,
(d) approximation of criminal offences, judicial cooperation in criminal matters and police cooperation.
Individual provisions usually fall under one or, in a few cases, more of those headings. As a consequence, the EU has external competence to deal with these matters. In some cases this competence is of an exclusive nature, in accordance with Article 3 of the Treaty on the Functioning of the European Union (TFEU).
Regarding heading (a), the Protocol contains provisions covered by EU legislation based on Article 114 of the TFEU. For example, as regards tracking and tracing (Article 8 of the Protocol). Directive 2001/37/EC on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco products[2] grants power to the Commission to adopt technical measures related to traceability and identification. The Commission presented on 19 December 2012 a proposal to revise that Directive (COM/2012/0788 final — 2012/0366 (COD). This Commission proposal contains an article on traceability and security features, including provisions on tracking and tracing, and is based on Article 114 of the TFEU. The functioning of the single tracking and tracing mechanisms envisaged in the Directive (and the one proposed by the Commission) could be affected if Member States could individually negotiate tracking and tracing systems. Other measures in the Protocol (sales by internet, telecommunications and other evolving technology: money laundering and cash control) are also covered by EU measures based on Article 114 of the TFEU. The EU shall therefore sign the Protocol on the basis of Article 114 of the TFEU.
Regarding heading (b), the Protocol contains provisions covered by existing EU legislation on indirect taxation, notably licensing, record-keeping, duty free sales, and administrative cooperation based on Article 113 of the TFEU. Certain of these harmonised rules, at least, may be affected by the provisions of the Protocol. Generally speaking, the non-coordinated implementation of the provisions of the Protocol in this area could lead to the malfunctioning of the internal market and to inefficiencies. Article 113 therefore provides a second legal basis for the EU to sign the Protocol.
Regarding heading (c), the Protocol contains the obligation to exercise effective controls in free zones. It prohibits the intermingling of tobacco products with non-tobacco products at the time of removal from free zones. It contains the obligation to apply control and verification measures to the international transit or transhipment of tobacco products and manufacturing equipment. Under EU law, goods brought into the customs territory of the EU (including where transhipment is involved) are, from the time of their entry, subject to customs supervision (Article 37 of the Customs Code[3]). Under Article 59(1) of that Code, all goods intended to be placed under a customs procedure (including transit) must be covered by a declaration for that procedure. Moreover, control and verification measures in respect of goods coming in the EU from third countries fall within the area of the common commercial policy under Article 207 of the TFEU. The Protocol also contains provisions on international cooperation including mutual administrative assistance (Part V, Articles 20 to 31) which also extend to the customs area. These customs aspects are covered by EU legislation based on Article 33 of the TFEU, insofar as assistance and cooperation between the Member States and between Member States and the Commission is concerned, and on Article 207 of the TFEU, insofar as such assistance or cooperation is to be provided to third countries. Articles 33 and 207 of the TFEU therefore provide a third and a fourth legal basis for the EU to sign the Protocol.
The Protocol also contains provisions on the definition of unlawful conduct that may be established by the Parties either as a non-criminal or as a criminal offence. As far as non-criminal offences are concerned they fall under EU activity in the fields described under headings (a) to (c).
Regarding heading (d), the Protocol contains provisions concerning approximation of criminal offences, law enforcement cooperation and judicial cooperation in criminal matters (respectively Chapters 4 and 5 of Title V of Part III of the TFEU). Title V of Part III of the TFEU is governed by a special regime because Denmark, the United Kingdom and Ireland do not participate in measures under that Title. However, the United Kingdom and Ireland have the possibility to take part in the adoption and application of the measures. Therefore together with this proposal, a separate proposal for a Council Decision is presented on the signing of the Protocol, on behalf of the European Union, in so far as those provisions of the Protocol which fall under Title V of Part III of the TFEU are concerned.