30 Customs: illicit trade in tobacco
products
| Committee's assessment
| Legally and politically important |
| Committee's decision | Not cleared from scrutiny; further information requested
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| Document details | (a) Proposal for a Council Decision on the conclusion of the Protocol to eliminate illicit trade in tobacco products to the World Health Organisation's Framework Convention on Tobacco Control for provisions relating to matters falling under Title V of Part III of TFEU (the Title V Decision);
(b) Proposal for a Council Decision on the conclusion of the Protocol to eliminate illicit trade in tobacco products to the World Health Organisation's Framework Convention on Tobacco Control for provisions relating to matters not falling under Title V (the non-Title V Decision)
|
| Legal base | (a) Articles 82(1), 83, 87 and 218(6)(a) TFEU; EP consent; QMV
(b) Articles 33, 113, 114, 207, 218(6)(a) and 218(8) TFEU; EP consent; unanimity
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| Department | HM Revenue and Customs
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| Document numbers | (a) (36831), 8563/15 + ADDs 1-2, COM(15) 193
(b) (36832), 8565/15 + ADDs 1-2, COM(15) 194
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Summary and Committee's conclusions
30.1 In May 2003, the World Health Assembly, the governing forum
of the World Health Organisation (WHO), adopted the Framework
Convention on Tobacco Control (FCTC), designed to reduce tobacco-related
deaths and diseases around the world. There are 177 signatories
to the Convention.
30.2 The FCTC recognises that the elimination of
the illicit trade in tobacco products is an essential component
of tobacco control. The parties to the Convention therefore established
an Intergovernmental Negotiating Body to draft a protocol to eliminate
this illicit trade. The Protocol was adopted in November 2012.
30.3 The Protocol contains provisions on the control
of the supply chain of tobacco products and of equipment for the
manufacture of those products. In particular, the measures in
the protocol would:
· Introduce
a licensing or control scheme for anyone involved in the manufacture,
import and export of tobacco products and manufacturing equipment;
· Require
anyone engaged in the supply chain to conduct customer due diligence;
and
· Establish
within five years a global tracking and tracing scheme for tobacco
products.
30.4 Because document (a), the Title V Decision,
contains provisions of a binding JHA nature, the UK's opt-in applies.
The UK must notify the EU institutions of its decision by 6 August
2015. The Government has stated that it will take opt-in decisions
on a case-by-case basis. However, it notes that the UK is bound
by the entirety of the Protocol in any event, so that a decision
not to opt into the Title V Decision would mean that the UK would
simply enact relevant JHA provisions as a separate party rather
than on an EU-wide basis.
30.5 We recognise the importance of eliminating
the illicit trade in tobacco products as part of the wider goal
of controlling tobacco. In pursuance of this goal, we welcome
the provisions of the Protocol.
30.6 We note the deadline of 6 August for the
UK to notify its opt-in decision in respect of document (a), the
Title V Decision. We would like to hear from the Minister in advance
of that notification:
a) if the Government comes to the view that
there are any provisions in document (b), the Non-Title V Decision,
which have JHA content, whether those provisions can be migrated
to document (a) or whether instead the Government will assert
the opt-in in relation to document (b), in the absence of a Title
V legal base, in accordance with the previous Government's opt-in
policy; and
b) if the Government is minded to opt in,
what further factors have influenced that decision.
30.7 We also ask whether the Minister intends
that the EU should only act by those Decisions in respect of which
it has exclusive competence; and, if so, how that is made clear
by the texts of the Decisions or the Declaration of Competence
that accompanies the Protocol. We request that the Minister writes
to us in good time for our first meeting during the September
sitting to answer these questions. Meanwhile we retain these documents
under scrutiny.
Full
details of the documents: (a) Proposal
for a Council Decision on the conclusion, on behalf of the European
Union, of the Protocol to Eliminate Illicit Trade in Tobacco Products
to the World Health Organisation's Framework Convention on Tobacco
Control, in so far as the Provisions of the Protocol which fall
under Title V of Part III of the Treaty on the Functioning of
the European Union are concerned: (36831), 8563/15 + ADDs 1-2,
COM(15) 193; (b): Proposal for a Council Decision on the Conclusion,
on behalf of the European Union, of the Protocol to Eliminate
Illicit Trade in Tobacco Products to the World Health Organisation's
Framework Convention on Tobacco Control, in so far as the Provisions
of the Protocol which do not fall under Title V of Part III of
the Treaty on the Functioning of the European Union are concerned:
(36832), 8565/15 + ADDs 1-2, COM(15) 194.
Background
30.8 The World Health Organisation's Framework Convention
on Tobacco Control was adopted in May 2003. It is an international,
legally-binding treaty intended to reduce deaths and disease relating
to tobacco worldwide. There are 177 parties to the FCTC, and these
include the UK and the European Union. The EU acceded to the FCTC
by Council Decision 2004/513/EC in June 2004.
30.9 Article 15 of the FCTC recognises that a vital
part of tobacco control is the elimination of illicit trade in
tobacco products, including smuggling, illegal manufacturing and
counterfeiting. It requires parties to the Convention to introduce
effective measures to eliminate this illicit trade. Article 33
of the FCTC allows for a conference of the parties to adopt protocols
to the Convention. On these bases, the Conference of the Parties
decided in June/July 2007 to establish an Intergovernmental Negotiating
Body to draft a protocol to eliminate the illicit trade in tobacco
products.
30.10 The illicit trade in tobacco products, and
in particular cigarette smuggling both into and within the EU,
causes huge losses in revenue for the Union and for Member States
in unpaid taxes and duties. These losses are estimated at €10
billion per annum. Most Member States are in some way affected
by this illicit trade, whether as points of entry, transit or
destination. The illicit products generally originate outside
the EU, so international cooperation is essential if the illicit
trade it to be tackled.
30.11 Our predecessor Committee scrutinised the Council
Decisions on the signing of the Protocol by the EU. The then Economic
Secretary to the Treasury (Nicky Morgan), affirmed the Government's
intention to sign and implement the Protocol as soon as possible.
The Government said that it was likely to maintain a default setting
of opting out of the Title V aspects of the Protocol at that time,
while retaining the right to opt in when the substantive measures
required to implement the Protocol were debated and finalised
at EU level. Our predecessor Committee endorsed that approach
and looked forward to considering the opt-in possibilities at
the next stage, which has now been reached.
The current documents
30.12 The Protocol to eliminate illicit trade in
tobacco products is designed to create a framework for the international
regulation of tobacco production and distribution and for cooperation
between enforcement authorities. It requires the introduction
of a licensing or control system by a competent authority for
anyone involved in the manufacture, import or export of tobacco
products and manufacturing equipment; it requires anyone engaged
in the supply chain of tobacco, tobacco products and manufacturing
equipment to conduct customer due diligence; and it provides for
the establishment of a global tracking regime for all tobacco
products manufactured in or imported into the territory of the
parties to the Protocol (this system to be in place within five
years of the Protocol coming into force).
30.13 The provisions of the Protocol fall into two
categories. The first, contained in document (a), falls under
Title V of Part III of the Treaty on the Functioning of the European
Union. These would therefore require the UK to opt into the measures
for them to have force in the UK. The second, contained in document
(b), does not engage Title V.
30.14 The first category, partly or fully falling
within the areas of judicial cooperation in criminal matters,
the definition of criminal offences and police cooperation, represents
the following measures:
· Due
diligence;
· Unlawful
conduct including criminal offences; and
· Law
enforcement cooperation.
30.15 The other measures do not fall under Title
V.
30.16 The final text of the Protocol was adopted
by the Conference of the Parties in November 2012. The UK and
the EU signed the Protocol in December 2013. These Council Decisions
will bring the Protocol into force.
The Government's view
30.17 In his Explanatory Memorandum of 27 May 2015,
the Exchequer Secretary to the Treasury (Damian Hinds), says that
the Government is considering whether the split of content between
the Title V and non-Title V Council Decisions is correct. He notes
that it is committed to taking opt-in decisions on a case-by-case
basis. It will have regard to whether the aspects of the Protocol
which engage the opt-in are most efficiently and effectively implemented
at an EU level or by domestic legislation. However, it also notes
that the UK is a signatory to the FCTC and therefore is bound
by its provisions in any case. Therefore a decision not to opt
in would simply mean that the UK would have to enact relevant
JHA provisions as a separate party.
30.18 As the UK is a signatory to the FCTC, the Minister
explains that the Government is broadly supportive of the provisions
of the Protocol. It notes that many of the provisions of the Protocol
are already in place in the UK. The Government has already announced
plans for a registration system for those who use or deal in raw
tobacco, which is required by the Protocol, and intends to consult
on a registration scheme for tobacco manufacturing machinery.
Previous Committee Reports
None, but see (35218), 12605/13 and (35219), 12606/13:
Nineteenth Report HC 83-xviii (2013-14), chapter 17 (23 October
2013); Fourteenth Report HC 83-xiv (2014-14), chapter 12 (11 September
2013).
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