The European Commission has concluded that there is no need to prolong the Anti-Contraband and Anti-Counterfeit agreement between Philip Morris International (PMI), the Commission and EU Member States, after it expires on 9 July 2016. The weekly meeting of the European Commission on 5th July 2016 backed the proposal of Vice-President Kristalina Georgieva to allow the agreement to expire without any prolongation.

Vice-President Georgieva said:

This agreement has served its purpose, reducing PMI contraband on the illicit tobacco market and providing public revenues of around USD1 billion to Member States and the EU budget. In a changing legal and market environment, we will redeploy our resources and continue to fight illegal tobacco trade by focusing on cheap whites, strict law enforcement and strengthened international cooperation.

The Commission had previously prepared a technical assessment which was published on 24 February 2016. The assessment indicated that the PMI Agreement has effectively met its objective of reducing the prevalence of PMI contraband on the illicit EU tobacco market. At the same time the reduction of PMI contraband did not lead to an overall reduction of illicit products in the EU. A key concern today in the fight against illicit tobacco trade is the growing prominence on the European Union black market of cigarettes from other manufacturers not covered by any anti-fraud agreement (so-called "cheap whites").  

The Commission considers that the combination of the Tobacco Products Directive and the Protocol to Eliminate Illicit Trade in Tobacco Products negotiated in the context of the Framework Convention on Tobacco Control (FCTC) are the best instruments to fight illicit trade by regulatory means going forward. Under the Tobacco Products Directive legal cigarette sales in(to) the EU will be tracked and traced as from May 2019. The FCTC Protocol will in the future offer tools to try to better police the illicit tobacco trade among participating countries.

Background

The Anti-Contraband and Anti-Counterfeit Agreement and General Release of 9 July 2004 was concluded between Philip Morris International and affiliates (PMI), on the one hand, and the Commission, on behalf of the European Community, and all Member States, on the other hand (the "PMI Agreement"). The agreement was innovative at the time and lessons have been learned from the implementation of the agreement, especially in terms of global tracking and tracing.

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