Explanatory Memorandum to COM(2013)539 - Signing of the Protocol to Eliminate Illicit Trade in Tobacco Products, in so far as the provisions are concerned which fall under Title V of Part III of the TFEU - Main contents
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| dossier | COM(2013)539 - Signing of the Protocol to Eliminate Illicit Trade in Tobacco Products, in so far as the provisions are concerned which fall ... |
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| source | COM(2013)539  |
| 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. 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 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 that are covered by EU legislation based on Article 114 of the TFEU concerning tracking and tracing and sales by Internet, telecommunications and other evolving technology.
Regarding heading (b), the Protocol contains provisions covered by EU legislation on indirect taxation, notably licensing, record-keeping, duty free sales, and administrative cooperation based on Article 113 of the TFEU.
Regarding heading (c), the Protocol contains provisions that are covered by existing EU legislation based on Articles 33 and 207 of the TFEU concerning control and verification measures applicable to the international transit or transhipment of tobacco products and manufacturing equipment, and on international cooperation including mutual administrative assistance.
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).
The above matters fall under Titles II and VII of Part IV and Title II of Part V of the TFEU. Therefore, in so far as its provisions which do not fall under Title V of Part III of the TFEU are concerned, the Protocol should be signed, on behalf of the Union, by means of a separate Council Decision, which is the subject of a separate proposal.
Regarding heading (d), the Protocol contains provisions that are covered by existing EU legislation 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.
The Protocol contains provisions on the definition of unlawful conduct that may be established by the Parties as a non-criminal or a criminal offence, including establishing the liability of both natural and legal persons. As regards criminal offences, the EU has competence in this area on the basis of Article 83 of the TFEU. The list of unlawful conducts also includes the laundering of proceeds of the unlawful conduct established as a criminal offence. Under Council Framework Decision 2001/500/JHA[2] of 26 June 2001 on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds of crime, Member States shall ensure that certain money laundering offences are sanctioned by criminal penalties.
The Protocol contains measures concerning judicial cooperation in criminal matters (mutual legal assistance and extradition). The EU has competence in this area based on Article 82 (1) of the TFEU. Under Council Framework Decision 2002/584/JHA[3] of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States, Member States may issue an arrest warrant for certain offences defined in the Decision, such as fraud and participation in a criminal organisation, if certain conditions are fulfilled. Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence i, establishes the rules under which Member States will recognise and execute in their territory a freezing order issued by a judicial authority of other Member States in the framework of criminal proceedings for the purpose of securing evidence or subsequent confiscation of property. Council Framework Decision 2006/783/JHA of 6 October 2006 on the application of the principle of mutual recognition to confiscation orders[5] establishes the rules under which Member States shall recognise and execute in their territory a confiscation order issued by a court competent in criminal matters of other Member States. The Convention established by the Council in accordance with Article 34 of the Treaty on European Union on Mutual Assistance in Criminal Matters between the Member States of the European Union[6] supplements and facilitates the application of the already existing instruments described in its Article 1. Mutual assistance can be provided in proceedings brought by the administrative authorities in respect of acts which are punishable under the national law of the requesting or the requested Member State, or both, by virtue of being infringements of the rules of law, and where the decision may give rise to proceedings before a court having jurisdiction in particular in criminal matters. Mutual assistance can also be provided in connection with criminal proceedings and proceedings which relate to offences or infringements for which a legal person may be held liable in the requesting Member State.
The Protocol provides for measures on police and customs cooperation in criminal matters that fall under EU competence based on Article 87 (2) of the TFEU. Council Decision 2009/917/JHA of 30 November 2009[7] on the use of information technology for customs purposes is the legal basis for the establishment and use of the Customs Information System to assist the Member States in preventing, investigating and prosecuting serious contraventions of national laws. Under Council Act 98/C 24/01 of 18 December 1997 drawing up, on the basis of Article K3 of the Treaty on European Union, the Convention on mutual assistance and cooperation between customs administrations[8], the Member States provide each other with mutual assistance and cooperate with one another through their customs administrations, with a view to preventing and detecting infringements of national customs provisions, and prosecuting and punishing infringements of Community and national customs provisions. Cross-border cooperation is permitted under the Convention for the prevention, investigation and prosecution of infringements in the case of illegal cross-border commercial trade in taxable goods to evade tax or to obtain unauthorised State payments in connection with the import or export of goods, where the extent of the trade and the related risk to taxes and subsidies is such that the potential financial cost to the budget of the European Communities or the Member States is considerable (Article 19).
Council Framework Decision 2006/960/JHA[9] of 18 December 2006 on simplifying the exchange of information and intelligence between law enforcement authorities of the Member States of the European Union ("Swedish Initiative") establishes rules under which Member States' law enforcement authorities may exchange existing information and intelligence effectively and expeditiously for the purpose of conducting criminal investigations or criminal intelligence operations.
Articles 82 (1), Article 83 and Article 87 (2) therefore constitute the legal basis under Title V of Part III of the TFEU for the EU to sign the Protocol.