Closing the Independence Loophole in the Tobacco Products Directive

Despite calling for independent providers to help the EU track and trace tobacco products, big tobacco can use “Independent” firms to sneak through a major loophole in the tobacco products directive

Fighting Illicit trade with the Tobacco Products Directive

On the 4th of September 2017, The EU Health Commission published a draft secondary legislation relating to the establishment and operation of the systems of traceability and security features for tobacco products, as provided for under Articles 15 and 16 of Directive 2014/40/EU. The directive addresses how to better combat illicit tobacco trade in Europe in the 21st century, specifically by requiring Member States to adapt more sophisticated means of tracking, tracing and authenticating tobacco products. The directive in its current form clearly excludes the tobacco industry from regulating itself by clearly redefining what an independent provider is. While this is a positive step forwards, there is one major loophole which requires immediate addressing.

Big Tobacco’s Attempts to Subvert the Directive

I have extensively covered how over the past number of years big tobacco has been trying to subvert this directive in order to ensure they can continue business as usual and continue to profit from illicit trade. The industry has primarily been trying to push the EU to allow the selection of their own self created system originally called Codentify, but since rebranded as Inexto. The implementation of such a tool, which has serious technical flaws and limitations, would effectively allow big tobacco to regulate themselves, a task the EU and its member states should, of course, not entrust them with.

Directive Clearly Calls for Solution Independent from Big Tobacco

The directive states very clearly in Article 35 of this document and article 8 of this document that the provider must be independent and even goes so far as to explain three criteria for determining that the independent provider is not unduly influenced by big tobacco. Below are the criteria defined.

Inexto Disqualified

In short, the directive calls for the solution provider to be legally and financially independent from the tobacco industry as well as free from conflicts of interest for personnel. Most importantly is that the directive requires the provider to have no more then 20% of the revenue generated by the tobacco industry. This should fully exclude Inexto as my sources tell me roughly 80% of their revenue is from big tobacco. I hope to release more information on this within the next week.

The Atos Worldline Loophole

The one major loophole which much must be closed is the ability for the work to be contracted to a firm who can then subcontract out to Inexto or another big tobacco tool.

DCTA and Atos Worldline pilot for Lithuania

Recently Atos bid on a tracking and tracing tender in Chile. Interestingly when required to provide references Atos only provided one; a pilot the DCTA did using Codentify in Lithuania back in 2014.

Here is a screenshot of their documentation provided to Chilean Authorities.

If work they did utilizing Codentify is their only reference, we should not expect things to be different in Europe.

Atos’s citation of the DCTA is just an example of what the existing EU directive text would allow to take place.

Closing the Loophole

The directive must be amended to include:
d) No provider shall subcontract any of the authentication elements or other tasks to any party that does not meet the above mentioned definitions of Independence.

Only then can we ensure that big tobacco cannot use a Trojan horse and prevent the EU from taking the needed steps to truly fight the illicit trade.

As a result, I believe everyone should write to the commission at the link below and ask the commission to amend article 35 with an additional point requiring that any subcontractor meet the same requirements laid out above.

https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-4305467/feedback/add_en

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