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October 5th, 2015:

Commission in breach of UN tobacco lobbying rules, says EU Ombudsman

The Ombudsman’s findings are another embarrassment for the European Commission over its relationship with Big Tobacco.

The European Commission fails to meet United Nations transparency obligations over tobacco lobbying the EU Ombudsman has found, in the latest of a string of embarrassments over the executive’s relationship with Big Tobacco.

Emily O’Reilly found “inherent weaknesses” in the Commission’s current practices, and that, with the exception of DG Health, the Commission’s approach was “inadequate, unreliable, and unsatisfactory”.

It was also in breach of requirements made under the UN World Health Organisation 2005 Tobacco Control Convention, she said. The Commission told EurActiv it believed it had correctly interpreted the obligations of the Convention.

The Barroso Commission, rocked by the Dalligate graft scandal, was too secretive about meeting Big Tobacco lobbyists, the Ombudsman said.

Health Commissioner John Dalli was sacked by Former Commission President José Manuel Barroso in October 2012, after an anti-fraud investigation connected him to a €60 million attempt to influence EU tobacco legislation.

O’Reilly, who investigates maladministration in the EU institutions, called on the current administration, now led by Jean-Claude Juncker, to publish every meeting and minutes of meetings with tobacco lobbyists and their lawyers.

She found that certain meetings with lawyers representing the tobacco industry were not considered as meetings for the purpose of lobbying by the Commission.

In her official recommendations, she said that the rest of the executive should follow DG Health’s example of proactive transparency. Only DG Health hit the required standards, she said.

Corporate Europe Observatory

The Ombudsman inquiry was brought after NGO Corporate Europe Observatory complained that the Commission was failing to meet UN World Health Organisation transparency rules on tobacco.

2005’s Tobacco Control Convention requires signatories, including the EU, to be accountable and transparent.

The Commission argued that by answering access to document requests, and by responding to questions from Members of European Parliament, it met that obligation.

O’Reilly disagreed. She concluded that the Commission must take active measures to limit interactions with Big Tobacco, and to be transparent about its dealings with it.

Otherwise, no details of meetings with lobbyists would become public unless a question was asked.

O’Reilly said, “The European Commission has a particular responsibility in its role as initiator of EU legislation to ensure that policy-making in public health is as transparent as possible. It is an opportunity for the Juncker Commission to be a global leader in this area of public health promotion.”

The executive has until 31 December to explain how it will implement the Ombudsman’s recommendations. If it chooses to ignore them, the Ombudsman can ultimately close the investigation with a damning report.

“This ruling is a significant victory for the fight against the sinister scheming of this lethal industry,” said Corporate Europe Observatory’s research and campaigns coordinator Olivier Hoedeman.

“The Commission’s complacency and secrecy over its contacts with the tobacco industry are deeply regrettable – but part of a pattern. We hope it will finally get the message that it must fulfil its UN obligations and take strong measures to prevent the undue influence of tobacco lobbyists.”

The Commission, which runs a transparency register and online portal, was asked for comment shortly after this article was published.

An official said, “The Commission believes that its interpretation of the WHO Framework Convention on Tobacco Control is the correct one, and that its practices offer a high degree of transparency.

“The Commission is fully committed to enhanced transparency across all areas of its work. Upon taking office in November, the Commission presented its transparency initiative for contacts between interest representatives and the Commissioners, their cabinets, and Commission Director-Generals.

“We will carefully assess the Ombudsman’s report and respond within the deadline.”


The European Union Ombudsman investigates complaints about maladministration in the EU institutions and bodies. Any EU citizen, resident, or an enterprise or association in a Member State, can lodge a complaint with the Ombudsman.

NGO Corporate Europe Observatory complained that the Commission was failing to meet UN World Health Organisation transparency rules on tobacco.

The European Union’s top health official, John Dalli, resigned in October 2012 after an anti-fraud investigation connected him to an attempt to influence EU tobacco legislation.

A report from OLAF, the EU’s anti-fraud office, claimed that a Maltese lobbyist had approached the tobacco producer Swedish Match and proposed making use of his contacts with Dalli to fix the EU export ban on powder tobacco.

The report claimed that, while Dalli was not involved, he knew what was going on. Dalli rejected OLAF’s findings, denying that he was in any way aware of any of these events.

TPP deal: US and 11 other countries reach landmark Pacific trade pact

Trans-Pacific Partnership – the biggest trade deal in a generation – would affect 40% of world economy, but still requires ratification from US Congress and other world lawmakers

Pacific trade ministers including the US, Australia and Japan have reached a deal on the most sweeping trade liberalization pact in a generation, which will cut trade barriers and set common standards for 12 countries, an official familiar with the talks said on Monday.

Leaders from a dozen Pacific Rim nations are poised to announce the pact later on Monday. The deal could reshape industries and influence everything from the price of cheese to the cost of cancer treatments.

The Trans-Pacific Partnership would affect 40% of the world economy and would stand as a legacy-defining achievement for Barack Obama, if it is ratified by Congress.

Lawmakers in other TPP countries must also approve the deal.

The final round of negotiations in Atlanta, which began on Wednesday, had got stuck over the question of how long a monopoly period should be allowed on next-generation biotech drugs, until the United States and Australia negotiated a compromise.

The TPP deal has been controversial because of the secret negotiations that have shaped it over the past five years and the perceived threat to an array of interest groups from Mexican auto workers to Canadian dairy farmers.

Although the complex deal sets tariff reduction schedules on hundreds of imported items from pork and beef in Japan to pickup trucks in the United States, one issue had threatened to derail talks until the end: the length of the monopolies awarded to the developers of new biological drugs.

Negotiating teams had been deadlocked over the question of the minimum period of protection of the rights to data used to make biologic drugs, made by companies including Pfizer Inc, Roche Group’s Genentech and Japan’s Takeda Pharmaceutical Co.

The United States had sought 12 years of protection to encourage pharmaceutical companies to invest in expensive biological treatments like Genentech’s cancer treatment Avastin. Australia, New Zealand and public health groups had sought a period of five years to bring down drug costs and the burden on state-subsidized medical programs.

Negotiators agreed on a compromise on minimum terms that was short of what US negotiators had sought, people involved in the closed-door talks said. The agreement would protect the data for between five and eight years, the New York Times reported.

The Washington DC-based Biotechnology Industry Association said it was “very disappointed” by reports that US negotiators had not been able to convince Australia and other TPP members to adopt the 12-year standard approved by Congress.

“We will carefully review the entire TPP agreement once the text is released by the ministers,” the industry lobby said in a statement.

Final hours

A politically charged set of issues surrounding protections for dairy farmers was also addressed in the final hours of talks, officials said. New Zealand, home to the world’s biggest dairy exporter, Fonterra, wanted increased access to US, Canadian and Japanese markets.

Separately, the United States, Mexico, Canada and Japan also agreed rules governing the auto trade that dictate how much of a vehicle must be made within the TPP region in order to qualify for duty-free status.

The North American Free Trade Agreement between Canada, the United States and Mexico mandates that vehicles have a local content of 62.5%. The way that rule is implemented means that just over half of a vehicle needs to be manufactured locally. It has been credited with driving a boom in auto-related investment in Mexico.

The TPP would give Japan’s automakers, led by Toyota Motor Corp, a freer hand to buy parts from Asia for vehicles sold in the United States but sets long phase-out periods for US tariffs on Japanese cars and light trucks.

The TPP deal being readied for expected announcement on Monday also sets minimum standards on issues ranging from workers’ rights to environmental protection. It also sets up dispute settlement guidelines between governments and foreign investors separate from national courts.

EU officials kept tobacco meetings under wraps

Ties between the European Commission and the tobacco industry have been hidden from public scrutiny in contravention to UN rules.

The findings, released on Monday (5 October) by European Ombudsman Emily O’Reilly, point to long-held suspicions of corporate lawyers lobbying senior staff under the previous Commission steered by Jose Manuel Barroso.

She says that the Commission’s argument that it is transparent because it publishes materials upon access requests or on demand from MEPs is not good enough.

“This effectively means that if no questions are asked, meetings with tobacco lobbyists remain undisclosed”, said her office in a statement.

She found that meetings held between the Commission and lawyers representing the tobacco industry “were not considered as meetings for the purpose of lobbying.”

O’Reilly says the current Commission must publish all its minutes and meetings with tobacco representatives without having to be asked. She wants a response before the end of the year on how they intend to do it.

Failure to do so would be a violation of the WHO’s Tobacco Control Convention, which bans commercial and vested interests on public health policies on tobacco control.

The issue is sensitive because EU-wide laws on tobacco were revised under the Barroso mandate.

Barroso sacked his commissioner for health, John Dalli, in 2012 over alleged ties in a bungled bribery that involved tobacco lobbyists.

But the move did not dispel suspicions of insider influence.

Former head of the commission’s legal services, Michel Petite, became a corporate lawyer whose clients include US tobacco firm Philip Morris.

The same individual later headed the European Commission ethical committee that monitors departing commissioners looking for new jobs. He also played a minor but key role in Dalli’s dismissal.

Unable to shake off broader suspicions of insider influence, Barroso’s office went on the defence in 2014 and told this website that it fully abides by the WHO convention rules on meetings between the tobacco industry and tobacco regulators.

It said it had made public the minutes of the meetings that took place in 2011 and 2012 between DG SANCO, the main service responsible for preparing the tobacco products directive, and the tobacco industry.

“Information has been made available in accordance with the rules on public access to documents”, said Barroso’s spokersperson at the time in an email.

She stated that Barroso’s office had also provided information to the European Parliament on contacts with the tobacco industry in response to questions on Dalli.

“All meetings that took place have been disclosed in the Commission’s replies to the European Parliament. It is therefore wrong to speak about undisclosed meetings”, the spokesperson added.

But such statements have riled pro-transparency NGOs who first issued the complaint to O’Reilly.

Brussels-based Corporate Europe Observatory, along with other NGOs in January 2013, wrote a letter to Barroso, asking him to stick to article 5(3) of the WHO rules and publish the meetings and minutes between tobacco groups in all of its directorate-generals.

The NGOs had uncovered at least 14 undisclosed meetings involving top Commission officials from the secretariat-general and members of Commission president Barroso’s cabinet.

The TPP And The Tobacco Carve-out Bring Together Strange Bedfellows… While Highlighting The Problems Of The TPP

from the not-a-good-idea dept

It’s been rumored for years, but reports out of Atlanta suggest that it’s now confirmed that in order to finalize the Trans Pacific Partnership (TPP) agreement, everyone agreed to carve tobacco out of the corporate sovereignty system, better known as ISDS (investor state dispute settlement). These systems allow companies to sue countries for passing regulations that the companies feel harm their ability to profit — and tobacco companies have already filed ISDS complaints in a few countries that have pushed to put health warnings on cigarette packages.

While some health activists have cheered on this carve out — it appears that almost everyone else is pissed off. Not because they think that Big Tobacco should be shaking down countries that pass anti-smoking laws (though, there may be some of that), but because they recognize the problems that occur when governments can start to set up trade deals that “carve out” certain industries. It’s opening up a huge can of worms. Even some supporters of corporate sovereignty/ISDS are worried about what it means when one particular industry can just be excluded entirely from the process. Two of the biggest supporters of ISDS and TPP in Congress, Senators Mitch McConnell and Orrin Hatch, have both warned that the US should not carve out tobacco. Here’s McConnell a few months ago, standing up for those poor, poor tobacco farmers:

“It is essential as you work to finalize the TPP, you allow Kentucky tobacco to realize the same economic benefits and export potential other U.S. agricultural commodities will enjoy with a successful agreement.”

And here’s Hatch actually making a fairly salient point about the carve out:

“Although I don’t support tobacco at all, I still think it was essential,” Hatch said. “It’ll cost us some votes. And every vote is essential. And there are other things I am very concerned about. I’ve committed to read the bill, and I will read it, but right now I’m leaning against it.”

That doesn’t bode well for the agreement, given that Hatch was a huge supporter of the TPP. Another Senator, Thom Tillis, has pointed out that carving out one industry opens up the possibility of carving out others:

“I’ll not only vote against it, I’ll work hard to have it defeated if it goes in the final agreement…. Once you carve out someone from dispute settlement agreements, then who’s next?”

And the tobacco carve-out, believe it or not, seems to be one thing that both big business and big labor agree on, though for entirely different reasons. The US Chamber of Commerce and the National Association of Manufacturers are totally against it:

we ask all of the TPP governments to reject the exclusion of products from the coverage of the TPP and its enforcement mechanism…. Such exclusions are unnecessary and would be highly damaging to the international rules based trading system and the prospects for the TPP.

And here was the AFL-CIO opposing the entire ISDS mechanism, and noting that the tobacco carve-out just highlights the problems of ISDS. Whereas Senator Tillis worried about “who’s next” to get carved out, the AFL-CIO is pointing out that maybe there should be a lot more.

Any industry-specific carve-out will not address the serious structural problems inherent in the system itself. Issues of broad public interest should not be viewed through the narrow lens of trade and investment at all, let alone decided by unaccountable private panels. Systems of justice should be transparent and accessible on an equal basis. ISDS is anything but: Only foreign investors can use it and there are no requirements that affected communities be allowed to participate or even have their view considered. In many cases, there often are not even requirements that hearings or decisions be made available to the public at all! Even in the case of clear legal error, it is almost impossible to reverse a decision.

Indeed, as Sean Flynn pointed out just last week, carving out tobacco really just enforces how dangerous corporate sovereignty really is:

The new exception validates, rather than assuages, the concerns of those who have been criticizing ISDS systems for many years. Without express carve outs, ISDS provisions do threaten common health and safety regulations.

The carve out does nothing to halt the disturbing recent trend of companies using ISDS provisions in trade agreements to enforce international intellectual property norms through ISDS tribunals. This is, indeed, the claim at the heart of the tobacco cases now being litigated in ISDS systems. The claim is that tobacco regulations requiring plain packaging violate the trademark rights of tobacco companies protected by the World Trade Organization agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The pharmaceutical company Eli Lilly has also claimed that the denial of a new use patent on an old (off-patent) medicine violates rights granted by TRIPS and the North Atlantic Free Trade Agreement (NAFTA).

Meanwhile, US trade officials are, of course, trying to tap dance around the fact that basically everyone absolutely hates this. The USTR has tried to pretend this isn’t a big deal because tobacco is “unique.”

The U.S. Government seeks to include this language because tobacco is a unique product – it is highly addictive, always harmful to human health, and the single most preventable cause of death in the world. Recognizing these facts about tobacco through the TPP will represent an important step forward for public health in the international trade community.

It’s true that tobacco can be a serious health concern, but shouldn’t we be raising questions about why this procedure is no good for tobacco companies, but just dandy for every other industry — including some that produce harmful products? Or those like pharmaceutical companies who are jacking up prices to keep necessary medicines out of the hands of the poor?

Oh, and then there are those who are in complete denial, who are insisting that there really isn’t a carve-out for tobacco, even though there almost certainly is (we can’t say for sure, of course, because the documents are secret):

“TPP will not discriminate against any agricultural commodity nor will it exclude tobacco. On the contrary, TPP will provide protections to ensure that governments can implement tobacco control measures, while guaranteeing that tobacco has the same legal status as any other product,” a U.S. official told CQ Roll Call last week.

In short, the whole tobacco carve-out situation is a microcosm of the problems with the TPP. You have a terrible idea (corporate sovereignty) mixed with a weak attempt to appease health activists (carve out tobacco), that basically fixes nothing and satisfies no one. And, now, the same Senators in Congress who demanded the fast track authority be granted, which ties their own arms behind their backs in terms of changing the agreement, are threatening to force this change, even though they’ve already given up the power to do so.

Oxford Economics study biased


Internal Revenue Commissioner Kim Jacinto-Henares said the latest study of Oxford Economics (OE) on tobacco illicit trade is biased.

Henares also branded inaccurate the study made by the London-based think tank that the government lost more than P22 billion in revenues last year because of rampant consumption of untaxed cigarettes. The study was released in Hong Kong on September 29.

She cited a World Bank study showing that only five percent, not 19 percent as claimed by OE, of the total cigarette consumption yearly were sourced from the illicit cigarette trade.

Henares said the study made by Oxford Economics (OE) was commissioned by Philip Morris Fortune Tobacco Corporation (PMFTC), the country’s biggest cigarette producer.

She however did not elaborate apparently to avoid being dragged into a trade war between the PMFTC and its small competitors, such as Mighty Corporation (MC).

Henares said her agency is doing everything to stop the distribution of cigarette packs that do not have the required revenue stamps. She said she will issue a memorandum order requiring cigarette manufacturers to install closed-circuit television cameras (CCTV) at their production lines and warehouses to enable the BIR to monitor the volume of the firm’s production and withdrawals.

Mighty Corp., the wholly-owned Filipino cigarette producers operating for the past 70 years, was the first to install CCTV cameras and other electronic gadgets in its factory in Bulacan in compliance with the BIR requirement under Republic Act No. 8240 which amended certain excise tax provisions of the Tax Code.

It was also the first to forge an accord with the BIR and the National Bureau of Investigation to run after fake cigarettes and conduct raids of warehouses suspected of storing the contraband.

The tie-up resulted in the seizure of large quantities of untaxed cigarettes in Nueva Ecija and Batangas.

Cigarette packs, whether manufactured locally or imported, should be affixed with revenue strip stamps in compliance with the law. Offenders face eight years in jail and a fine of P50,000