COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products (Text with EEA relevance) /* SWD/2012/0453 final */
1.
INTRODUCTION
Directive
2001/37/EC of the European Parliament and of the Council on the approximation
of the laws, regulations and administrative provisions of the Member States
concerning the manufacture, presentation and sale of tobacco products (Tobacco
Products Directive, hereafter TPD) was adopted on 5 June 2001.[1]
More than ten years have passed since the adoption and it has become necessary
to consider and examine options to update the TPD in line with market,
scientific and international developments, in particular the WHO Convention
on Tobacco Control (FCTC) to which the European Union and all the Member States are Party. The initiative to revise the TPD is included in the Commission's
Work Plan 2012.[2]
The overall objective of the revision is to improve the functioning of the
internal market, while ensuring a high level of health protection. Thus, the
main objectives are (1) update already harmonised areas to overcome Member
States' obstacles to bring their national legislations in line with new market,
scientific and international developments,[3] (2) address
product related measures not yet covered by the TPD insofar as heterogeneous
development in Member States has led to, or is likely to lead to, fragmentation
of the internal market[4] and (3) ensure that
provisions of the Directive are not circumvented by placing on the market of
products not complying with the TPD.[5] A high level of health
protection has been considered when defining and choosing between different
policy options. In particular, the initiation of tobacco consumption among young
people has been taken into account. Most of the measures concentrate, at a
first stage, on factory manufactured cigarettes (FMC), roll-your-owns (RYO) and
smokeless tobacco products (STP).
2.
consultation, expertise and market description
In the context
of the Impact Assessment extensive public and targeted stakeholders’
consultations took place. The Impact Assessment also benefited from a number of
external studies, opinions from the Commission’s independent Scientific
Committee (SCENIHR) and Eurobarometer surveys. The total value
of the tobacco market at retail level, including taxes and excise duties, is
136.5 bnEUR. FMC represent almost 90% (121.3 bnEUR) of the total tobacco market
value, making up together with RYO close to 95% of the tobacco market. The
remaining part of the market is pipe tobacco, cigars/cigarillos and STP. In
2010, excise duties amounted to over 79 bnEUR across the EU. Tobacco is the
largest avoidable health threat in the EU, responsible for almost 700,000
deaths in the EU each year. The revision focuses on initiation of tobacco
consumption, in particular among young people, taking into account that 94% of
the smokers start before the age of 25.[6] Around 50% of smokers die prematurely, on average 14 years earlier than
non-smokers. They have more life years characterised by serious disease. Annual
EU public healthcare expenditure on treating six main disease categories
related to smoking is estimated around 25.3 bnEUR and society loses 8.3 bnEUR
per annum due to productivity losses (including early retirements/deaths and
absenteeism) linked to smoking. In addition, if monetised, the life years lost
due to smoking correspond to 517 bnEUR every year.
3.
PROBLEM DEFINITION
3.1.
Problem 1: Smokeless tobacco and extension of the
product scope
a)
Smokeless tobacco products (STP) All STP are
addictive and associated with a number of adverse health effects. New products
with attractive labelling and flavours have reached the market aiming to explore
new market opportunities created by national laws prohibiting smoking in public
places (smoke-free environments). There are divergent
views among stakeholders whether or not the current ban on oral tobacco (snus) is
still justified and whether or not the ban on oral tobacco should be extended
to other STP. The role of STP in smoking cessation is disputed among
stakeholders. STP can act as an entry gate for new tobacco consumers. b)
Nicotine containing products (NCP) Recent years
have seen the emergence of new NCP (including electronic cigarettes), which are
put on the market without any prior authorisation or control. In the absence of
legislation at EU level, Member States have taken different regulatory
approaches (ranging from no specific regulation, to tobacco legislation, medicinal
products’ legislation or ban) to address the uncertainty over the contents and
health effects of these products. Nicotine is a toxic and addictive substance
and there are also reports of other hazardous substances being used in electronic
cigarettes. Producers of NRTs (Nicotine Replacement Therapies) expressed
concern over the different treatment of NRTs and NCPs. There is also a risk of
an increase in the use of NCP as a consequence of national legislation on
smoke-free environment. Others supported that NCP have a potential role in
smoking cessation/limitation and argued that NCP should be treated as a
consumer product. c)
Herbal products for smoking Herbal products
for smoking are treated differently in national legislations, which negatively affects
cross-border trade. Combustion of these products is associated with health risks
similar to those of traditional FMC although they do not have the same
addictive characteristics and do not contain tobacco. Herbal products
for smoking are often perceived as harmless or less harmful products by
consumers.
3.2.
Problem 2: Packaging and Labelling
Some of the
current TPD provisions in the area of packaging and labelling are no longer
in line with scientific evidence and commitments in the context of the FCTC.
The current harmonised provisions of the TPD do not allow Member States to take
action to protect public health and update their legislation in line with their
FCTC commitments. For example, Member States cannot remove the display of tar,
nicotine and carbon monoxide (TNCO) levels on the package, which are known to
be misleading, or introduce pictorial health warnings on both sides of the
tobacco packages, which have been shown to be more effective. Other aspects of
packaging and labelling are not harmonised in the current TPD and national developments
have led to discrepancies between Member States. For example, pictorial
health warnings are in use in eight Member States and two more will follow in
2013. Discussions on standardised packaging are on-going in a few Member
States. This situation is likely to be aggravated, in particular when Member
States implement the FCTC. These divergent approaches will negatively affect
the internal market.
3.3.
Problem 3: Ingredients
The use of
different reporting formats makes it difficult for manufacturers, importers and
Member States to fulfil their reporting obligations under the current
legislation and burdensome for the Commission to compare, analyse and draw
conclusions from the data received. The lack of a harmonised
approach on ingredients regulation affects the functioning of the
internal market and impacts on the free movement of goods across the EU. Some
Member States have adopted legislation allowing or forbidding different
ingredients given their potential to enhance tobacco consumption or initiation.
Without harmonisation, the obstacles on the internal market are expected to
increase further in coming years. In order to comply with their obligations
under the FCTC, Member States are likely to continue adopting rules
unilaterally, in particular to address the attractiveness of tobacco products and
considering the marketing development in recent years with more flavoured
tobacco products being placed on the market.
3.4.
Problem 4: Cross border distance sales of tobacco
Cross-border internet
sales of tobacco are - in most cases – illegal, taking into account that the
main attraction of these transactions is to evade taxes and/or circumvent age
control.[7] From the perspective of
the TPD cross-border internet sales implies a risk of circumvention of the safeguards
of the Directive (e.g. obligation for a tobacco product to feature health
warnings in the language(s) of the country of the consumer). Different legal
approaches have been taken by Member States in this area and the legal
disparities are expected to aggravate as Member States gradually implement
FCTC. Cross-border sale has, by definition an impact on the functioning of the
internal market. As internet retailers typically offer their products to
consumers regardless of their locations, national solutions within the EU have
no or little effect.
3.5.
Problem 5: Traceability and security features
The availability
of products not complying with the provisions of the Directive (e.g. health
warnings and ingredient regulation) undermines the objectives of the Directive.
Measures at EU level in the area of traceability based on Article 5(9) TPD have
not been taken and in their absence Member States are not in a position to take
effective measures. There is currently no level playing field for economic
operators on the internal market, as only the four largest tobacco
manufacturers have concluded legally binding agreements, including provisions
on tracking and tracing, with the EU and the Member States. Sales of illicit products mean that the consumers do not benefit
from the safeguards introduced by the TPD. Moreover, they are not able to verify the authenticity of the products concerned. Many
stakeholders (tobacco industry, but also retailers) have voiced concerns that
some of the discussed and intended measures in the revised TPD would increase
the illicit trade in tobacco, although compelling evidence to that end was not
submitted.
4.
EU BASIS TO ACT
Article
114(1) TFEU empowers the European Parliament and
the Council to adopt measures for the approximation of the provisions laid down
by law, regulation or administrative action in Member States which have as
their object the establishment and functioning of the internal market.
According to Article 114(3) TFEU, the Commission should aim to ensure a high
level of health protection in its proposals envisaged in paragraph 1 of Article
114. As explained some
areas included in the impact assessment are already covered by harmonisation
in the current TPD, but need to be updated in accordance with scientific and
international developments. Other areas relevant for the impact assessment are
subject to different legal approaches in Member States which has led to
obstacles to the free movement of goods.
5.
POLICY OBJECTIVES
The overall objective of the revision is to improve the functioning
of the internal market, while ensuring a high level of health protection. The
proposal aims to update already harmonised areas, thereby overcoming the obstacles
for Member States in bringing their national legislations in line with new
market, scientific and international developments. It also aims to address
product related measures not yet covered by the TPD insofar as heterogeneous
development in Member States has led to, or is likely to lead to, fragmentation
of the internal market. Finally, the proposal seeks to ensure that the provisions
of the Directive are not circumvented by placing on the market of products not
compliant with the TPD. The proposal will also ensure a harmonised
implementation of international obligations following from the FCTC, which is
binding for the EU and all Member States, and a consistent approach to
non-binding FCTC commitments, if there is a risk of diverging national
transposition. The revision
will contribute to the overall aim of the EU to promote the well-being of its
people (TEU Art. 3) and the Europe 2020 strategy. Keeping people healthy and
active longer will have a positive impact on productivity and competitiveness.
The revision also fully respects the EU Charter on Fundamental Rights. Whilst
unintended, certain measures might also lead to increased tax revenues for
Member States. Reaching these general objectives requires the realisation of the
following specific policy objectives: A. To remove obstacles to cross-border trade and ensure a level playing
field for manufacturers and other economic operators. B. To reduce the administrative
burden for economic actors and public authorities due to the complexity of the
current TPD and remaining disparities in legislation. A high level of health
protection has been considered when choosing between different options. In
this context, the revision seeks to regulate tobacco products in a way that
reflects its characteristics as an addictive product with proven negative
health consequences linked to its consumption (including mouth, throat and lung
cancer, cardiovascular diseases including heart attacks, strokes, clogged
arteries, increased risk of blindness, impotence, lower fertility, impacts on
the unborn child). As such the revision aims to ensure that ingredients and
packaging do not encourage or facilitate smoking uptake by young people. The
focus on young people is also reflected in the selection of the policy options
and the products primarily targeted (FMC, RYO, and STP). In addition, the
revision should create conditions which allow all citizens across the EU to
take informed decisions about the products, based on accurate information on
the health consequences of consuming tobacco products. Finally, all smokers should
benefit from the safeguards of the TPD (e.g. health warnings and ingredients
regulation). In light of this, the following main health consideration was
taken into account when comparing and choosing between different options: C. To provide a high level of protection to citizens throughout the EU.
6.
POLICY OPTIONS
A substantial
number of policy options were considered in the revision. Some measures
originally foreseen (e.g. asking the tobacco industry to contribute to health
care costs as well as measures to introduce age verification mechanisms in all tobacco
vending machines and common provisions on display of tobacco at point of sale)
have been dropped. For policy area “STP
and extension of the product scope” (i.e. NCP and herbal products for
smoking) the options ranged from no change to regulating the products under the
TPD (health warnings/ingredients), or phasing out the products (herbal products
for smoking). In the area of STP, lifting the current ban on oral tobacco was
also assessed and in the area of NCP, setting up a new authorisation system or
using the current medicinal products’ framework were analysed. Within the policy
area “packaging and labelling” policy options included no change,
introduction of bigger and mandatory pictorial warnings, plus prohibition of
promotional and misleading elements or introduction of full plain packaging.
The measures exempt tobacco products other than FMC and RYO (i.e. cigars,
cigarillos, pipe tobacco and STP) from some provisions, but this exemption should
be removed if there is a substantial change of circumstances (in terms of sales
volume or prevalence level among young people). In the policy
area “ingredients” the policy options included mandatory or voluntary
reporting in either different formats or based on a common electronic format. Various
options in relation to content regulation were also assessed, including regulating
additives with attractive, addictive and toxic properties, prohibit products
with characterising flavours and with increased toxicity or addictiveness or
ban all additives not essential for manufacturing. The measures exempt tobacco
products other than FMC, RYO and STP (i.e. cigars, cigarillos and pipe tobacco)
from some provisions, but this exemption should be removed if there is a
substantial change of circumstances (in terms of sales volume or prevalence
level among young people). In the policy
area “cross-border distance sales”, options range from no change
to introducing a notification obligation or prohibiting cross-border distance
sales of tobacco. Finally, the
policy area “traceability and security features” includes options from no
change to the introduction of an EU tracking and tracing system with or without
security features. Tobacco products other than FMC and RYO would be granted a
transitional period.
7.
COMPARING THE OPTIONS AND PREFERRED OPTION
7.1.
Smokeless tobacco Products and extension of the
product scope
a)
Smokeless tobacco products (STP) Lifting the
ban of oral tobacco (snus) and subject STP to stricter rules on labelling and
ingredients would remove the current differential
treatment between different categories of STP. In economic terms, this option
is expected to result in a significant growth for oral tobacco, while sales in
other STP are expected to decrease. Economic actors would be faced with some
compliance costs to adapt to the regulations on labelling and ingredients, but
a harmonised approach at EU level is expected to be advantageous compared to consecutive
changes by Member States. As regards health, the degree of harm from oral
tobacco is currently being debated, but the overall conclusion is that oral
tobacco is an addictive product with adverse health effects. There is no
compelling evidence that lifting the ban on oral tobacco would lead to reduced
smoking prevalence and it has been suggested that the product can play a role
in uptake of tobacco consumption (gateway) or be used in combination with FMC
(dual use), in particular in places where smoking is not allowed. Maintaining
the ban of oral tobacco, subjecting all novel tobacco products to a
notification obligation and all STP to stricter labelling and ingredients
regulation (i.e. health warnings on both sides of
the packages and a ban of STP with characterising flavours) is the preferred
option. This option would provide a common framework for STP in terms of
ingredients and labelling while keeping the current ban on oral tobacco
untouched. The introduction of a notification system for novel tobacco products
would also contribute to increasing the knowledge base as regards these products
for the purpose of possible future amendments to the Directive. The preferred
option is well in line with FCTC guidelines on ingredients and labelling.
Maintaining the ban on oral tobacco is considered to be the only effective
measure to contain the use of this product and discourage the uptake of STP and
nicotine addiction among non-smokers and by young people. As other STP have
still very small markets in the EU and their growth potential is limited banning
products with characterising flavours and making health warnings more visible
is considered proportionate. Maintaining
the ban of oral tobacco, restrict the sale of other STP to areas of traditional
use only and subject all STP to stricter labelling and ingredients rules (i.e.
health warnings on both sides of the packages and a ban on STP with
characterising flavours) would allow for equal treatment of all STP and
provide a high level of health protection, but considering the more limited growth
potential of STP other than oral tobacco, at this stage, this option was discarded
mainly because it was considered unnecessarily strict. An even more far
reaching option would have been to ban all STP with the exception of oral
tobacco in Sweden, which would have to respect stricter labelling and
ingredients rules and without allowing Member States to exempt products for
traditional use. This option was discarded as it was considered
disproportionate. b)
Nicotine containing products (NCP) Regulating
NCP under the TPD could contribute to improving the
safety of these products. However, this option does not correspond to the
current regulatory development in Member States, based on the function of these
products. Setting up of
a separate authorisation scheme for NCP would imply
high administrative costs for national authorities, involve complex
considerations in terms determining the criteria to be used in the evaluation
and imply a risk of overlap with the pharmaceutical framework. Subjecting those
NCP which fall above a predetermined nicotine threshold to the medicinal
products’ legislation and allowing the remaining NCP to be sold as consumer
products provided they feature health warnings is the preferred option. It would remove the current differential treatment between NCP and
Nicotine Replacement Therapies (NRT), increase legal certainty and consolidate
the on-going development in Member States based on the function of these
products. Authorised products could circulate freely in the EU, others only if
their nicotine content is below the identified threshold and they comply with
the labelling rules. The option encourages R&D in smoking cessation with
the aim of maximising health gains. Subjecting
all NCP to medicinal products’ legislation is the
most stringent option identified, but this option was rejected for
proportionality reasons. c)
Herbal products for smoking Regulating
herbal products for smoking under the TPD (labelling requirements) is the
preferred option. It would contribute
to a homogenous development in the EU facilitating free circulation, provide a
common safety net for consumers and address the misleading potential of the
products. Phasing out the marketing of herbal products for smoking would be most
beneficial from a health perspective, but result in a negative impact on the
economic stakeholders involved. The solution was discarded mainly because it would
not be proportionate, taking into account that the main concern relates to the
misperception about adverse health effects. In addition herbal products do not
present the same characteristics in terms of addictiveness as traditional
cigarettes or other nicotine containing products.
7.2.
Packaging and Labelling
Introducing bigger
and mandatory pictorial warnings on both sides of tobacco packages would
bring coherence to the currently fragmented situation (picture warnings are
already in use in eight Member States and two more will follow from 2013), be
in line with international commitments (FCTC), and facilitate cross-border
trade. The adoption of EU wide measures would lead to cost savings for the
industry compared to the current situation where the industry has to adapt consecutively
to many different legal systems. From a health point of view, bigger and
mandatory pictorial warnings would increase awareness about the negative health
consequences of tobacco consumption in all EU Member States (while now
consumers in the Member States that use picture and text health warnings are
better informed than consumers in the countries that only use text warnings), motivate
behavioural change, and prevent smoking initiation, in particular among young
people. Introducing
bigger and mandatory pictorial warnings and in addition prohibiting promotional
and misleading elements is the preferred option. This would further advance
the functioning of the internal market and imply cost savings compared to
multiple national changes. This option would also reinforce the positive
impacts on health by increasing further awareness about the product and its
health related consequences. It would also contribute to discouraging, in
particular young people, from taking up smoking. Member States would remain
free to introduce plain packaging, as far as this is compatible with the Treaty.
Introduction of plain
packaging at EU level would maximise the effects on the internal market and
further reduce compliance costs for the industry. This option would provide the
most positive impact from a health point of view. However, given the current lack
of real life experience in the EU, pending legal disputes and concerns
expressed by some stakeholders, it appears preferable to choose a less
stringent option at this stage and report on this issue 5 years after
transposition to assess developments.
7.3.
Reporting and Regulation of Ingredients
Introducing a mandatory
reporting in harmonised electronic format would ensure a level playing
field, facilitate analysing and monitoring of data and provide cost savings for
industry compared to the current fragmented situation with different reporting
formats in Member States. Obliging
Member States to regulate toxic, addictive and attractive additives in tobacco
products would provide Member States with limited
guidance and only result in limited positive impacts on the internal market.
For economic stakeholders, the measure would lead to legal uncertainty and only
limited cost savings compared to the current situation where the industry has
to adapt to different national measures. This option is not expected to have
any significant impact on smoking initiation. Prohibiting tobacco
products with characterising flavours and with increased toxicity or
addictiveness is the preferred option.[8]
This option would prevent a patchwork of national regulations and facilitate
cross-border trade. The option would also imply a cost saving compared to the
current situation where more and more multiple national changes can be expected.
This option does not prohibit the use of all additives, but focus on products
that have characterising flavours (e.g. vanilla and chocolate), as well as
additives associated with energy and vitality (e.g. caffeine and taurine), or
additives creating the impression that products have health benefits (e.g.
vitamins). The number of affected products would be limited as well as the effects
for the farmers, including those involved in Burley and Oriental growing, as
this option does not regulate additives which are essential for the manufacture
of tobacco products. This option would contribute to discouraging young people
(attracted by flavoured products) from taking up smoking. Test panels will assist
in the decision making process. The option also allows for further measures
when scientific advances on toxicity and addictiveness arise. Prohibiting
all additives not essential for manufacturing would
constitute the most stringent option.[9] This option would further
improve the internal market and similarly to the option of prohibiting products
with characterising flavours, could result in economies of scale. However, the measure
would remove most additives, even those used in smaller quantities that do not give
products a distinctive taste. Therefore this option would affect practically
all products on the market, requiring reformulations and possibly leading to
product withdrawals. Burley and Oriental tobacco growers could be particularly
affected as more additives are used in the manufacturing of tobacco products
using these types of tobacco varieties. In terms of health, this option would
further reinforce the effect on consumption/prevalence, but not to the extent
justifying the additional costs.
7.4.
Cross-border Distance Sales
The preferred
option is to regulate cross-border distance sales in terms of notification obligations
and age verification mechanisms. This option is
expected to ensure better compliance with TPD and improve the situation for
retailers engaged in legal activities, while continuing to allow purchasing of
products not available in all Member States. Age verification and higher prices
(legal sale) are expected to have a positive impact on prevalence/consumption.
Setting up the system would imply some limited additional costs for national
administrations, but these costs are considered proportionate considering the
positive impacts on legal sales and reduced consumption. The costs are also largely
compensated by improved enforcement possibilities. A prohibition
of cross-border distance sale would address the current distortions and
facilitate traditional retailers to carry out their legal activity. It would
also make it easier for Member States that have adopted stricter rules to
enforce these and it would further reinforce the effect of the TPD by
preventing purchasing of products not complying with the Directive. On the
other hand, this option would fully remove one of the sales channels. Given
that better compliance with the TPD can be achieved with an alternative less
strict option, a full prohibition of cross-border distance sale was not
considered necessary.
7.5.
Traceability and Security Features
An EU wide
tracking and tracing system would ensure a homogenous approach, which means
significant cost savings for industry and the creation of a level playing field
for all operators on the internal market. It would also reinforce the effects
of the TPD in terms of health warnings and ingredients regulation, by reducing
the availability of illicit and non-compliant products. Taking into account
that a large part of the market already has contractual obligations to have a
tracking and tracing system in place, the compliance costs for the industry are
expected to be proportionate, even if one considers that data storage should be
outsourced to an independent third party. The measure is expected to contribute
to a drop in consumption following increased awareness and reduced availability
of cheap illicit FMC and RYO. A tracking and tracing system which gives the
authorities access to the data storage of the independent third party, will
help the authorities (including the Commission) to monitor systematically the
movement of tobacco products from the place of their manufacture, through the
distribution chain to the intended market of retail sale ("tracking”). An EU wide
tracking and tracing system, complemented by
security features is the preferred option. The
option would maximise the effect of the TPD, facilitate market surveillance and
empower consumers in verifying the authenticity of products. It also addresses the
(unsubstantiated) concerns of some stakeholders who claim that revision of the
TPD would result in an increase in illicit trade.
7.6.
Overall Conclusion of the Impacts
7.6.1.
Overview of preferred options
Following the conclusions in previous section, the table below gives
an overview of the policy options as well as justifications for choosing the
preferred options (which are marked in grey). PA / Options || 1 || 2 || 3 || 4 || Justification 1a. STP || Lift the ban on oral tobacco and subject all STP to stricter labelling and ingredients regulation || Maintain the ban on oral tobacco, subject all novel tobacco products to notification obligation and all STP to stricter labelling and ingredients regulation || Maintain the ban on oral tobacco, restrict the sale of other STP to areas of traditional use only and subject all STP to stricter labelling and ingredients regulation. || Ban all STP with the exception of oral tobacco in Sweden. Subject oral tobacco in Sweden to stricter labelling and ingredients regulation. || -harmonised labelling and ingredients regulation for all STP. -facilitated level playing field. -proportionate to prevent the introduction / expansion of new addictive, harmful products in the internal market -health concerns with all STP -no evidence that STP leads to smoking cessation, risk of entry gate and dual use -risk for market development (ingredients and smoke-free environments) -Trade-off/ impact on SME justified due to health risks associated with product development, marketing and expansion to new user groups. Option 3 and 4 would have more positive impact on health, but option 2 was considered more proportionate after a cost/benefit balance. 1b. NCP || Subject NCP to labelling and ingredients requirements under TPD || Establish a new authorisation scheme for NCP || Subject NCP over a certain nicotine threshold to the medicinal products' legislation and the remaining NCP to labelling requirements || Subject all NCP to the medicinal products' legislation || -clear and well established legal framework for risk/benefit analysis facilitating the free circulation of duly authorised products, in conformity with their nature -possibility of mutual recognition within the internal market. -same treatment of NCP and NRT. -harmonised approach, consolidating trend in MS -minimum safety standard -potential in smoking cessation Trade-off: additional burden for application justified by the setting up of a harmonised safety net with potential to reduce smoking. PA / Options || 1 || 2 || Justification 1c. Herbal products for smoking || Subject all herbal products for smoking to labelling requirements under TPD || Phase out marketing of herbal products for smoking || -facilitates the free circulation of products -remove current misperception on health - Trade-off: Removes misperceptions while minimising compliance costs. PA / Options || 1 || 2 || 3 || Justification 2. Packaging and labelling || Mandatory enlarged picture warnings || Mandatory picture warnings (option 1) plus harmonise certain aspects of packets and FMC appearance and prohibit promotional and misleading elements || Option 2 plus full plain packaging || -removes disparities on internal market and facilitates free circulation -improves awareness and removes misleading elements -in line with FCTC commitments -proportionate: focus on smoking initiation, products attractive for young people -takes into account economic stakeholders’ concerns (e.g. no plain packaging/interference with trademarks) -allows awaiting international and scientific developments -allows Member States to adopt plain packaging to comply with FCTC guidelines as far it is compatible with the Treaty -Trade-off: Option 3 more effective from health point of view, but appropriate to wait for real life experience. 3. Ingredients || Common reporting format on a voluntary basis. Prohibit toxic, addictiveness and attractive additives in tobacco products. || Mandatory reporting in harmonised format. Prohibit products with characterising flavours and products with increased toxicity and addictiveness. || Mandatory reporting in harmonised format. Prohibit all additives not essential for manufacturing. || -removes disparities on the internal market and facilitates free circulation -reduces administrative burden (reporting) -in line with FCTC obligations/commitments -proportionate: focus on smoking initiation, products attractive for young -takes into account stakeholders concerns, including growers (no discrimination of Burley/Oriental) Trade-off: Focus on smoking initiation while minimising costs for economic stakeholders. Option 3 would have been more effective from a health point of view. PA / Options || 1 || 2 || Justification 4. Cross-border distance sale || Notification and age verification system || Prohibit cross-border distance sale of tobacco products || -ensures that safeguards of the TPD are respected -facilitates legal activities (retail) -limited economic impact on legal activity Trade-off: Option 2 would have been more effective from a health point of view, but more costly for industry. 5. Traceability and security features || EU tracking and tracing system || Tracking and tracing system, complemented by security features || -ensures that safeguards of the TPD are respected -level playing field (small-big industry) -costs compensated by savings following shift from illegal to legal trade -addresses economic stakeholders’ concerns regarding illicit trade Trade-off: Costs for industry are outweighed by benefits from reduced illicit trade. In terms of effectiveness, the combined preferred options
contribute to the overall objective of the revision of the TPD to
guarantee a proper functioning of the internal market while ensuring a high
level of public health protection. As far as the internal market is
concerned, all options:
facilitate the
free movement of goods in the internal market by removing existing or
expected discrepancies between national legislations, and/or,
adapt the
level of harmonisation in the current TPD to a new level warranted by
scientific development or international obligations/commitments, and /or,
ensure that
the safeguards of the TPD are not undermined by illicit products or by
cross-border sales not respecting these safeguards.
As far as health
is concerned, the envisaged revision focuses on discouraging young people from
taking up smoking, but would also allow adult consumers to take informed
decisions. The revision would also allow smokers to benefit from the protective
measures set by the TPD. The combined
preferred options are cost-efficient in the sense that they are expected
to result in overall socio-economic benefits for society. For economic
stakeholders, the preferred options are foreseen to lead to reduced direct
(compliance) costs which may, however, be outweighed by lost revenues due to a
decrease in consumption. The identified
options constitute a coherent approach consistent with international
commitments and fundamental rights and values as well as the overall aim of the
EU to promote well-being of its people (Article 3 TEU).
7.6.2.
Overall impacts
It is expected
that the combination of the preferred policy options will lead to a reduction
of consumption of around 2% within a five year period beyond the baseline for
FMCs and RYO. This corresponds to a reduction of 2.4 million smokers in the
EU. The impacts on economic
stakeholders of complying with the preferred options (direct costs) are
expected to be positive compared to the baseline scenario. On the other hand,
the indirect impacts following from an expected decrease in consumption will lead
over time to a loss of revenue for the FMC and RYO manufacturers of around 376 mEUR. This
negative impact on FMC and RYO manufacturer might outweigh the benefits from
the cost savings in terms of direct costs. However, money not spent on tobacco
is expected to be spent on other sectors which in turn benefit economically
from increased expenditure. In terms of employment
it is estimated that jobs lost in tobacco will be off-set by jobs in other
sectors and that, overall, the measures will lead to a net gain in employment estimated
to around 2,200 jobs. Possible regional employment impacts, as well as the
specific situations of SMEs and micro-enterprises, have been carefully
considered when formulating the preferred options. The main benefit for Governments following the drop in
consumption/prevalence is the improvement of health which is a value in its own
right. The expected socio-economic benefits (reduction of health care costs,
productivity losses and monetised life years saved) represents an annual amount
to the EU of around 9.4 bnEUR even if one deducts reduced tax revenues. The
table below provides a breakdown of the overall net costs and benefits. On the other
hand, social discounting allows comparison of benefits and costs that occur at
different times based on the rate at which society is willing to make such
trade-offs.[10] This is particularly
relevant in the case of tobacco control as some of the expected benefits will
only develop over time whilst certain impacts (e.g. on tax revenues) would
materialise earlier. Under the most likely scenario (i.e. when decrease in tax
revenues and health care/absenteeism savings materialise in the period of 5
years, while on average the benefits from reduced premature mortality accrue
only in 25 years), the annual net benefit of a reduction in tobacco consumption
by 2 % would be 4 bnEUR. Figure 1: Overall net costs and benefits (m EUR) || Different percentage reduction in tobacco consumption 1% || 2% || 3% || 4% || 5% Decrease in excise tax revenues[11] || 794 || 1588 || 2382 || 3176 || 3970 Decrease in health care expenditures || 253 || 506 || 759 || 1012 || 1265 Decrease of productivity loss || 83 || 165 || 248 || 331 || 413 - due to early retirement / deaths || 61 || 122 || 183 || 244 || 305 - due to absenteeism || 22 || 43 || 65 || 87 || 108 Decrease in premature mortality costs || 5,167 || 10,334 || 15,501 || 20,669 || 25,836 Overall net benefit || 4,709 || 9,417 || 14,126 || 18,836 || 23,544 Discounted values || 2,016 || 4,032 || 6,048 || 8,064 || 10,080
8.
MONITORING AND EVALUATION
The following
measures will ensure effective implementation of the revised TPD: ·
Transposition meetings between the Commission
and Member States. ·
Setting up an implementation plan. ·
Monitoring of a number of indicators relevant
for the objective of the proposal. ·
Setting up a network of Member States to discuss
the implementation of the revised TPD. ·
Commission Report on the implementation of the
Directive five years after transposition. [1] OJ L 194, 18.7.2001, p. 26–35 [2] http://ec.europa.eu/atwork/programmes/docs/cwp2012_annex_en.pdf [3] Without an update, Member States cannot, for example, increase the
size of the health warnings, change their location of the package or replace
the display of tar, nicotine and carbon monoxide levels. [4] For example, at this stage, eight Member States have adopted
pictorial health warnings and the regulations of ingredients differ between
Member States. [5] For example, measures on cross-border distance sales and
traceability will facilitate legal activity and thus prevent sale of tobacco
products not complying with the TPD (e.g. health warnings and ingredients). [6] Special Eurobarometer 385, 2012 :
http://ec.europa.eu/health/eurobarometers/index_en.htm. 70% start below the age
of 18 years. [7] Article 36 of Directive 2008/118 on excise duty of tobacco
indicates that in the case of cross border sale, the excise duty have to be
paid for in the country of destination. However, from a perspective of a
consumer, cross-border purchase makes primarily sense when the consumer avoids
the higher excise duties in the country of destination. [8] This option is similar to the current US approach. [9] This option is similar to the Canadian and Brazilian approaches. [10] Social discounting renders benefits and costs that occur in
different time periods comparable by expressing their values in present terms
based on the rate at which society is willing to make such trade-offs. [11] Disregarding measures
taken against illicit trade and possibility to increase tax levels.