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ITSA presents its position at the French senate debate on the sources of parallel tobacco trade

28 November 2018

French senate debate on the

“The sources of the parallel tobacco trade and solutions to counter it

ITSA thanks Senator IACOVELLI for organising this debate which we hope will contribute to a better understanding of what is at stake and the risks associated with tobacco traceability in France and the EU in the context of the WHO Protocol.

ITSA is an international association representing the suppliers of security features for tax stamps and of systems which protect supply chains against illicit trade. ITSA has been warning for some time about the incompatibilities between the WHO Protocol to eliminate illicit trade in tobacco products and the EU tobacco directive and delegated acts.

The European Commission deviated from the Protocol on the basis that it would not be in force for some years, whereas many international experts never doubted its rapid entry into force. And indeed it happened on 25 September this year. Furthermore and notwithstanding numerous calls to do so, the Commission failed to take account of the work of the International Standards Organisation on a Tax Stamp standard (ISO 22382 now published). This standard sets out the applicable best practices.

ITSA has consistently put forward key arguments drawing attention to the incompatibility between the Directive and the Protocol - during the stakeholder workshops organised by the Commission (in December 2017 and May 2018), in publications related to product security and now also to the EU’s Court of First Instance where ITSA has lodged a case. These concerns are widely echoed by those who fear the inadequacy of a traceability system which delegates essential tasks to the tobacco industry and/or companies directly or indirectly affiliated to it – the very industry which is considered responsible for a large proportion of the parallel trade in tobacco products in France, as elsewhere in the world.

These arguments have not been put forward by ITSA alone: public health NGOs all expressed their opposition to the delegated acts during the stakeholder workshops. Some, such as the “SmokeFreePartnership” which was most involved in the process, went as far as publishing a press communiqué following the adoption of the delegated acts - calling for all dependant legislation to be adapted following the coming into force of the Protocol so as to ensure full alignment. 

To no avail: the marking of tobacco products with a code, the verification of the marking, the choice and remuneration of the companies appointed to stock the data for tobacco products – all these tasks are under the control of the tobacco industry. Worse still: ONLY ONE of the required 5 security features has to be provided by an independent supplier (the definition of independence being already cause for concern),

What better way of excluding tax stamp technologies !

What could seem more illogical to an industry dedicated to tax stamp security? Companies which have for decades been supplying fully independent systems combining multiple material security features as well as digital security. Companies capable of assuring the most robust system to government authorities, completely independently of the tobacco manufacturers.

On the contrary, the system being implemented by the EU today assigns so many tasks – and rights – to the tobacco industry that it looks like the Codentify system developed by the tobacco industry itself. The European Commission is promoting it wherever it can, just as in the past it promoted the cooperation agreements with the tobacco industry (which were in fact transactions). These also were in contravention with the WHO treaties. 

Senator, we hope that this debate will provide the opportunity to make clear once again the identity of the parties principally responsible for the parallel tobacco trade – and will agree finally on the one good solution: the implementation in France, in the EU and elsewhere in the world, of a reliable and efficient system – one that is totally independent and which meets the requirements of the WHO Protocol.

Attachment: Legal advice underpinning the above arguments:

Paris, 23 November 2018

Nicola Sudan
General Secretary
International Tax Stamp Association


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