Annex A
Letter from Deborah Arnott, Director,
ASH to John Healey MP, Economic Secretary, HM Treasury
RE: PHILIP
MORRIS AGREEMENT
WITH THE
EC
You may remember that I wrote to you almost
exactly a year ago when the UK government signed a Memorandum
of Understanding (MOU) with Imperial Tobacco. This was because
of our concerns that the MOU was not sufficiently rigorous to
prevent the diversion of Imperial Tobacco cigarettes on to the
smuggled market.
I am writing again because having seen the detailed
agreement running to more than 50 pages between Philip Morris
International and the EC we are now convinced that the Imperial
Tobacco MOU, and indeed those with BAT and Gallaher too, are inadequate.
We feel the time has now come for the UK government
to reopen negotiations with all three companies. Nothing less
than the terms of the Philip Morris agreement with the EC is now
acceptable. We are the victims in this country of some of the
highest levels of smuggling in Europe—each year the government
loses over £3 billion in taxes because of smuggling. The
MOUs the UK has with UK tobacco manufacturers are pitiful compared
to the PMI agreement. They rely entirely on the goodwill of the
companies, there are no penalty payments incurred for cigarettes
diverted into the smuggled market, no properly monitored systems
and no measurable outcomes. (For more detail see the attached
ASH brief)
Furthermore, although the UK is not party to
the PMI agreement because it was not one of the 10 Member States
which entered into the civil action in the US, entering into the
agreement is easy and we would recommend that the UK do so as
soon as possible, given the benefits that accrue from it.
"Section 13.15 Additional Participating
Member States
Any Member State may become a Participating
Member State by executing a copy of this Agreement in the appropriate
form and delivering a counterpart thereof to Philip Morris International
and the other Parties thereto. "
This agreement is a major step forward in the
control of smuggling and will set a standard for negotiating an
effective smuggling protocol as part of the Framework Convention
on Tobacco Control, which will shortly be ratified.
9 July 2004
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