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EU to end anti-smuggling deal with Philip Morris

After months of wavering, the European Commission has decided not to renew its controversial agreement with Philip Morris International on tobacco smuggling and counterfeit products.

According to an EU official, commissioners meeting in Strasbourg Tuesday followed a recommendation from Vice President Kristalina Georgieva that continuing the deal — in place since 2004 — did not make sense. The agreement, under which the company cooperated with EU and national customs officials in fighting the illegal trade in cigarettes, had been heavily criticized by anti-tobacco groups and by members of the European Parliament.

In a letter to national capitals explaining the decision, seen by POLITICO, Georgieva said new international rules on smuggling had made the Commission’s arrangement with PMI unnecessary.

“There is no need for a prolongation of the PMI agreement,” she wrote, citing legal provisions in a World Health Organization convention, as well as the EU’s tobacco products directive adopted in 2014, as helping to fight tobacco smuggling.

Anti-tobacco groups had been pressuring the Commission not to renew the agreement, arguing it gave industry the opportunity to lobby customs officials and hide potential illegal activities.

The PMI deal became a template for similar arrangements between the EU and other tobacco giants like Japan Tobacco International, British American Tobacco and Imperial Tobacco Limited. Those agreements remain in place until they come up for renewal.

Some critics said the PMI agreement was not well equipped to tackle new tobacco smuggling trends like rolling tobacco or “cheap whites,” which are cigarettes produced on the black market.

Earlier this year, MEPs voted for a resolution calling on the Commission not to renew the PMI agreement, arguing it was outdated and did not respect the latest tobacco smuggling convention of the WHO, the Framework Convention on Tobacco Control.

“There have been major doubts about the effectiveness of the Philip Morris International agreement in reducing the illicit trade in tobacco products,” said Bart Staes, a Green MEP and member of the budgetary control committee.

Commission sources in recent months said the Berlaymont had been in a difficult spot on the issue: Even as MEPs voted to end the agreements, many EU countries were in favor of keeping them.

About €1 billion in public revenue from cigarette taxes has been safeguarded by the agreement with PMI, according to the Commission.

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