House of Commons - Thirtieth Report of Session 2012-13

Thirtieth Report of Session 2012-13 - European Scrutiny Committee Contents

3 The manufacture, presentation and sale of tobacco and related products

(34587)

18068/12

COM(12) 788

+ ADDs 1-7

Draft Directive of the European Parliament and of the Council on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products

Commission Staff Working Documents: Impact Assessments

Legal base Article 114 TFEU; QMV; co-decision

Document originated 19 December 2012

Deposited in Parliament 2 January 2013

Department Department of Health

Basis of consideration EM of 21 January 2013

Previous Committee Report None

Discussion in Council No date set

Committee's assessment Legally and politically important

Committee's decision Not cleared; further information requested

Background

3.1 One of the objectives of the European Union is to establish an internal market in which, subject to any limitations imposed by the EU Treaties, goods, persons, services and capital circulate freely. In order to achieve this objective, Article 114 of the Treaty on the Functioning of the European Union (TFEU) empowers the European Parliament and Council to adopt measures approximating Member States' laws, regulations and administrative provisions. Measures concerning, amongst other things, health, safety and consumer protection, must ensure a high level of protection and take account of any new developments based on scientific facts.

3.2 In 1989, the Council determined that differences in the rules applied by Member States for the labelling of tobacco products constituted a barrier to trade and impeded the establishment and functioning of the internal market. It adopted a Directive requiring all tobacco products to carry a general health warning and all cigarette packets to indicate tar and nicotine yields and to include a more specific health warning.[15] Shortly afterwards, in 1990, the Council adopted a further Directive establishing a maximum tar yield for cigarettes marketed in the EU.[16] In 1992, the Council strengthened the health warnings to be included on the packaging of tobacco products and banned the marketing of tobacco for oral use.[17]

3.3 The existing Tobacco Products Directive, adopted in 2001, repealed the earlier Directives and established more stringent rules for products containing tobacco. The Directive:

set a maximum yield per cigarette for tar, nicotine and carbon monoxide;
required the tar, nicotine and carbon monoxide yields to be printed on cigarette packets;
required all products containing tobacco, other than oral tobacco or smokeless tobacco products, to carry a general health warning ("Smoking kills/Smoking can kill" or "Smoking seriously harms you and others around you") and one of fourteen additional health warnings set out in an Annex;
required oral tobacco products (where their use is permitted)[18] and smokeless tobacco products to carry the following general health warning: "This tobacco product can damage your health and is addictive";
stipulated the minimum surface area to be covered by the general health warning (30% of the front side of the packet on which it is printed) and the additional health warning (40% of the reverse side);
set out requirements to ensure the visibility and legibility of the health warnings;
required tobacco products to be marked in a way that enables them to be identified and traced;
required manufacturers and importers of tobacco products to provide Member States each year with a list of ingredients and quantities used for each product, by brand name and type, and to include toxicological data; and
prohibited the use on packaging of words, symbols or trademarks which suggest that a particular tobacco product may be less harmful than others (for example, "mild" or "light").

3.4 Member States remained free to introduce more stringent public health rules on the manufacture, import, sale or consumption of tobacco products in areas which were not harmonised. For example, they could add pictorial health warnings, such as colour photographs or illustrations, or prohibit the use of particular ingredients which make tobacco products more addictive.

3.5 The Commission is required to publish a report every two years on the application of the Directive, which may include any proposals the Commission deems necessary "to adapt it to developments in the field of tobacco products, to the extent necessary for the establishment and operation of the internal market, and to take into account any new development based on scientific facts and developments on internationally agreed product standards."[19]

3.6 In February 2005, the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC) entered into force. It establishes a framework for Contracting Parties (including the EU and all Member States) to implement tobacco control measures which are designed to prevent and reduce tobacco consumption, nicotine addiction and exposure to tobacco smoke. According to the WHO, action at an international level is justified because the production, sale and marketing of tobacco products, as well as the growth in the movement of counterfeit and contraband products, have significant cross-border effects.[20]

The draft Directive

3.7 The Commission considers that scientific, market and international developments necessitate substantial changes to the 2001 Tobacco Products Directive. It therefore proposes to repeal it and replace it with a new and more comprehensive Directive. The draft Directive continues to cite an internal market legal base (Article 114 TFEU) because the Commission considers that it will improve the functioning of the internal market in the following ways:

updating harmonised rules on such matters as the display of tar, nicotine and carbon monoxide levels, the size and content of health warnings, and the traceability of tobacco products to take account of scientific and international developments;
extending the scope of harmonised rules to include specific products (such as nicotine-containing or herbal products) or product requirements (labelling and ingredients) where necessary to remove obstacles to the free movement of goods; and
including measures on such matters as cross-border distance selling, traceability and security features designed to prevent the marketing of tobacco and related products which are not compliant with EU legislation.

3.8 Whilst emphasising the internal market dimension, the Commission also underlines the importance of ensuring a high level of health protection and, in particular, of discouraging tobacco consumption by young people (it estimates that 70% of smokers start before the age of 18).

3.9 The Commission suggests that further action at EU level is justified for four reasons:

Member States are unable to act unilaterally to strengthen or update rules which have already been harmonised;
differing regulatory approaches by Member States in areas which have not yet been harmonised have created obstacles to cross-border trade as industry has to produce different product lines for different markets;
restrictions imposed at a national level, for example, on internet sales or on tracking and tracing tobacco products when they move across borders, are difficult to enforce unilaterally; and
common action at EU level ensures greater consistency and legal certainty.[21]

3.10 Member States would retain some flexibility to legislate at national level in the following circumstances:

by maintaining or introducing more stringent national provisions applicable to all products covered by the Directive "on grounds of overriding needs relating to the protection of public health" — the provisions would have to be notified to the Commission to determine whether they are justified, necessary and proportionate; and
by maintaining or introducing national provisions concerning aspects not regulated by the Directive if justified by "overriding reasons of public interest", provided they are necessary and proportionate.[22]

The main elements of the draft Directive

3.11 The main changes proposed by the Commission concern five policy areas:

smokeless tobacco products, novel tobacco products and non-tobacco products;
packaging and labelling requirements;
ingredients and additives;
cross-border distance sales; and
traceability and security features.

3.12 Title II of the draft Directive establishes harmonised rules for tobacco products covering ingredients and emissions, labelling and packaging, tobacco for oral use, cross-border distance sales, and novel tobacco products.

Ingredients and emissions - Articles 3-6

3.13 The maximum yield per cigarette for tar, nicotine and carbon monoxide, and the methodology for measuring the yields, remain the same as in the 2001 Tobacco Products Directive. However, there is a new requirement for Member States to notify the Commission of the maximum yields they set, and the methods of measurement they use, for other cigarette emissions and for emissions from other tobacco products. This information may be used as part of a broader scientific assessment to change the existing yields, or introduce new ones, in order to prevent an appreciable increase in the toxic or addictive effect of particular tobacco products.

3.14 The draft Directive maintains the obligation imposed on manufacturers and importers by the 2001 Tobacco Products Directive to provide Member States with a list of ingredients and quantities used for each product, by brand name and type, but with an additional requirement to ensure that such information is made available before a new or modified tobacco product is placed on the market. Moreover, manufacturers and importers of tobacco products are also required to make available market research and other studies indicating consumer preferences concerning ingredients used in their products as well as sales volume data for each product. Member States are entitled to charge a fee to cover the costs associated with handling the information. The Commission suggests that mandatory reporting, and the introduction of a harmonised reporting format, will "create a level playing field and facilitate collection, analysis and monitoring of data" whilst also reducing administrative burdens.[23]

3.15 The draft Directive introduces, for the first time, a prohibition on:

the marketing of cigarettes, roll-your-own tobacco and smokeless tobacco "with a characterising flavour", that is with a distinguishable aroma or taste other than tobacco (for example, fruit flavourings or menthol); and
the use of flavourings in the component parts of cigarettes, roll-your-own tobacco and smokeless tobacco, for example, filters, papers, packages and capsules.

3.16 The prohibition may be extended to other tobacco products if justified by a substantial change of circumstances, such as an increase in sales volumes or use by young people. In addition, all tobacco products are subject to a prohibition on:

the use of vitamins or other additives that suggest a tobacco product may have a health benefit or reduce health risks;
the use of stimulants, such as caffeine and taurine, associated with energy and vitality; and
the use of additives that release colourful substances.

3.17 Moreover, Member States are required, on the basis of scientific evidence, to prohibit the marketing of tobacco products containing additives in quantities that appreciably increase the toxic or addictive effect of the product when consumed.

3.18 The Commission suggests that it has framed the prohibitions in such a way as to target those products most attractive to young people, whilst allowing industry some margin to differentiate between different tobacco products, and that the degree of harmonisation proposed is necessary because of disparities in the way that Member States regulate the use of additives.[24]

Labelling and packaging - Articles 7-13

3.19 The draft Directive strengthens the requirements for health warnings for tobacco products, with the most stringent measures reserved for cigarettes and roll-your-own tobacco. All cigarette packets and packaging for roll-your-own tobacco must include a general health warning ("Smoking kills - quit now") and an additional information message ("Tobacco smoke contains over 70 substances known to cause cancer") which together cover 50% of the surface on which they are printed. They must also carry a combined health warning comprising one of fourteen possible text warnings and a corresponding colour photograph covering 75% of both the outer front and back surfaces, as well as information on stopping smoking. The mandatory inclusion of a pictorial warning is new and will replace the current requirement to display tar, nicotine and carbon monoxide yields on packaging. The Commission cites new evidence demonstrating that "bigger and pictorial warnings are more effective" and that references to yields are misleading.[25]

3.20 The health warning and labelling requirements contained in the 2001 Tobacco Products Directive are broadly maintained for other tobacco products: they must carry the general health warning ("Smoking kills - quit now") and an additional text warning, each covering between 30% and 40% of the front and back surface areas, as well as information on stopping smoking. As regards smokeless tobacco products, the size and content of the health warning remains unaltered, but it must be printed on both sides of the packaging. The draft Directive includes provision for the more stringent requirements applicable to cigarettes and roll-your-own tobacco to be extended to other tobacco products if justified by a substantial change of circumstances.

3.21 Apart from health warnings, the draft Directive seeks to restrict additional product information or labelling on tobacco products or their packaging. It prohibits any elements or features that:

are false, misleading or deceptive;
suggest that a particular product is less harmful than another or has positive health or social effects;
refer to flavour or taste; or
resemble a food product.

3.22 The draft Directive specifies the shape of a cigarette packet (cuboid) and roll-your-own tobacco (a rectangular pouch) and their minimum content (at least 20 cigarettes or 40g of tobacco).

3.23 The Commission emphasises that Member States would be able to introduce their own national rules on the surface area of packaging not regulated by the draft Directive, provided these rules are compatible with the EU Treaties. It adds that the draft Directive does not prevent manufacturers from displaying their own trademark on the packaging.

Traceability and security features - Article 14

3.24 The draft Directive introduces detailed rules on the traceability of tobacco products and security features to ensure their authenticity. It requires every cigarette packet or pouch containing roll-your-own tobacco products to be marked with a unique identifier so that it can be tracked and traced back through the supply chain to the manufacturer, and to carry a visible, tamper-proof security feature. Data recording the movement of tobacco products, from the manufacturing stage to the pre-retail stage, would be held by an independent third party in a data storage facility located within the EU. The obligations concerning traceability and security features would be extended to all tobacco products five years after the deadline for Member States to implement the Directive.

Tobacco for oral use - Article 15

3.25 The draft Directive maintains the prohibition on the marketing of tobacco for oral use, subject to the derogation given to Sweden at the time of its accession to the EU.

Cross-border distance selling of tobacco products - Article 16

3.26 The draft Directive introduces a new requirement for retail outlets intending to sell tobacco products to consumers in another Member State to register with the competent national authorities in their home State and in the State of destination. They must also be equipped with an age verification system to ensure that they only sell to consumers who are old enough to purchase tobacco products according to the laws in the State of destination. The Commission suggests that these provisions will facilitate legal activity, in particular by addressing underage purchasing, without removing any existing sales channels.[26]

Novel tobacco products - Article 17

3.27 The draft Directive includes a new notification procedure for "novel tobacco products" introduced to the market for the first time after the Directive takes effect. Whilst these products are also subject to the requirements of the Directive, manufacturers and importers must give Member States six months' advance notification of their intention to place them on the market and provide a detailed product description, as well as information on toxicity, addictiveness and the potential appeal of the product to different consumer groups. Member States may introduce a system of authorisation and a proportionate fee, and may require additional testing to be carried out or further information to be made available.

Non-tobacco products - Articles 18 and 19

3.28 Title III of the draft Directive establishes harmonised rules for the marketing and sale of two categories of non-tobacco products: nicotine-containing products and herbal products.

3.29 The draft Directive specifies that products contacting nicotine above a certain level or concentration may only be placed on the market if they have been authorised as medicinal products on the basis of their quality, safety and efficacy in accordance with the procedures established in Directive 2001/83/EC on medicinal products for human use.[27] The Commission says that these thresholds take account of the nicotine content of medicinal products used as an aid to stop smoking (nicotine replacement therapies). Products containing a lower level or concentration of nicotine can continue to be sold as consumer products, but must carry a prominent health warning ("This product contains nicotine and can damage your health") on the front and back of the packaging. The Commission believes that its proposal will create greater legal certainty by addressing the different regulatory approaches taken by Member States to nicotine-containing products, whilst also ensuring that consumers are made aware of their toxic and addictive properties.[28]

3.30 The draft Directive specifies that herbal products for smoking should also carry a prominent health warning ("This product can damage your health") on the front and back of the packaging. Neither the product itself, nor its packaging, should include elements or features that:

are false, misleading or deceptive;
suggest that it is less harmful than another product or has positive health or social effects; or
resemble a food product; and the packaging must not state that the product is free from additives or flavourings. The Commission suggests that its proposal will enable consumers to make more informed choices, taking into account the adverse health effects of herbal products for smoking, and will create greater homogeneity within the internal market.[29]

Future changes to the Directive - Articles 21-23

3.31 The draft Directive empowers the Commission to adapt or update a substantial number of provisions by means of delegated acts, in most cases to take account of scientific and technical developments and internationally agreed standards. The delegated powers conferred on the Commission are for an indeterminate period. The Commission is also required to publish a report five years after the deadline for Member States to implement the Directive, highlighting any areas where legislative changes may be needed.

The Government's view

3.32 The Parliamentary Under-Secretary of State for Public Health (Anna Soubry) says that the Government broadly welcomes the draft Directive, adding that the 2001 Tobacco Products Directive,

"has remained largely unchanged for a decade and no longer reflects the nature of tobacco products and markets in the EU as well as it once did."[30]

3.33 Whilst endorsing the objective of reducing the appeal of tobacco products for children and young people, the Minister indicates that the Government intends to carry out its own analysis of the impact that the changes put forward by the Commission on packaging, labelling, ingredients and additives would have for the UK. The Government also intends to consider carefully whether each element of the draft Directive falls within the established boundaries of Article 114 TFEU, ensures respect for the principle of subsidiarity and confers appropriate implementing or delegated powers on the Commission.

3.34 The Minister supports the continued ban on oral tobacco products, but suggests that the proposed inclusion of non-tobacco nicotine-containing products and herbal products for smoking will require further examination. In relation to the former, she says that there may be legal issues and that the Government's approach will be informed by scientific and market research being coordinated by the Medicines and Healthcare products Regulatory Agency regarding the levels of nicotine that have physiological effects. She also questions whether the Commission's objective of gaining maximum potential public health benefits from nicotine-containing products is an appropriate basis for regulating these products.

3.35 The Minister notes that the Government has recently consulted on the standardisation of packaging for tobacco products and is keen to ensure that the draft Directive gives Member States the flexibility to legislate for this, should they wish to.[31] As regards the introduction of an EU-wide tracking and tracing system for tobacco products, the Minister suggests that the system proposed may well exceed the requirements of a recent Protocol to the WHO Framework Convention on Tobacco Control concerning illicit trade, which is still under negotiation.

3.36 Finally, the Minister says that the impact of the Directive will be wide-ranging and promises to provide a more detailed analysis of the expected costs and benefits for the UK. Meanwhile, she summarises the main impacts as follows:

simplifying cross-border trade for UK tobacco product manufacturers, although costs will increase in the short term as production systems are adapted to new labelling and packaging requirements;
longer term loss in revenue for manufacturers of tobacco products and other industries providing services (such as packaging and printing) as stricter tobacco controls reduce the prevalence of smoking;
increased costs for those in the supply chain required to comply with the new tracking and tracing system;
job losses within the tobacco industry as the demand for tobacco products decreases (but this may be off-set by jobs in other sectors where consumption is increasing);
reduced NHS expenditure on smoking-related diseases and better levels of public health; and
less revenue from duty paid on tobacco products.

3.37 The Minister indicates that the Irish Presidency is keen to reach a common position within the Council before the end of its Presidency in June.

Conclusion

3.38 We note that the Government broadly welcomes the draft Directive but we are disappointed that the Minister is unable to provide a clearer indication of the Government's position on the main changes proposed by the Commission. Whilst we appreciate the need for the Government to carry out a thorough analysis of the evidence base for EU action, we are also conscious that the Irish Presidency has proposed an ambitious timetable for reaching an initial agreement on the draft Directive within the Council.

3.39 Given the significance of the draft Directive, we may wish to recommend it for debate. Before doing so, however, we ask the Minister to tell us whether the Government accepts that Article 114 TFEU is the appropriate legal base for all elements of the draft Directive, or whether an additional legal base should be cited, and to identify any specific provisions which give rise to subsidiarity concerns. We also ask the Minister to clarify the Government's position on those elements of the draft Directive which introduce new, or more stringent, requirements than those contained in the existing 2001 Tobacco Products Directive. Meanwhile, the draft Directive remains under scrutiny.

15 See Council Directive 89/622/EEC, OJ No. L No. 359, 08.12.1989. Back

16 See Council Directive 90/239/EEC, OJ No. L 137, 30.05.1990. Back

17 See Council Directive 92/41/EEC, OJ No. L 158, 11.06.1992. Back

18 Sweden is the only Member State permitting the use of oral tobacco or "snus", a consequence of a derogation contained in its Act of Accession to the EU. Back

19 See Article 11 of the 2001 Directive. Back

20 See http://www.who.int/fctc/en/. Back

21 See p.11 of the Commission's explanatory memorandum accompanying the draft Directive and pp.46-7 of ADD 1. Back

22 See Article 24 of the draft Directive. Back

23 See p.5 of the Commission's explanatory memorandum accompanying the draft Directive. Back

24 See p.6 of the Commission's explanatory memorandum accompanying the draft Directive. Back

25 See p.7 of the Commission's explanatory memorandum accompanying the draft Directive. Back

26 See p.9 of the Commission's explanatory memorandum accompanying the draft Directive. Back