9319/17

COM (2017) 235

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT: PROGRESS REPORT ON THE IMPLEMENTATION OF THE COMMISSION COMMUNICATION "STEPPING UP THE FIGHT AGAINST CIGARETTE SMUGGLING AND OTHER FORMS OF ILLICIT TRADE IN TOBACCO PRODUCTS - A COMPREHENSIVE EU STRATEGY”.

Submitted by HMRevenue and Customs on1 June 2017.

SUBJECT MATTER

  1. This communication provides a progress report from the Commission on the 2013 EU strategy designed to step up the fight against the illicit tobacco trade across Europe and internationally. It also meets a commitment by the Commission to monitor implementation of the strategy.
  1. It concludes by stating that the challenges presented by illicit tobacco in the EU remain and that work should continue in line with the EU strategy.
  1. The Commission reports on progress across all the main areas of the EU strategy:
  • Changes to the legislative and policy framework

This includes international promotion of the Protocol to Eliminate Illicit Trade in Tobacco Products to the World Health Organisation Framework Convention on Tobacco Control (FCTC). It notes a revision of the Tobacco Products Directive,including a requirement for a tracking and tracing system for tobacco products to be introduced across the EU by May 2019, aiming to secure the supply chain. The Commission is also carrying out an impact assessment on a possible revision of the fiscal framework on the structure and rates of excise duty applied to manufactured tobacco.

  • Strengthening enforcement authorities and inter-agency cooperation

The report highlights the introduction of revised regulations to reinforce the effectiveness of OLAF’s investigative functions and a strengthening of the legal framework for Europol activities. The Commission notes that it provides technical support to Member States to fight fraud, corruption and other illegal activities using the Hercule III programme and the creation of a dedicated policy team focussing on the fight against the illicit tobacco trade.

  • Stepping up law enforcement: operational activities, risk management and intelligence gathering

The Commission reports on operational activities in Europe and internationally including joint customs operations. It notes an improved analysis of trends in illicit tobacco andthe establishment of a customs laboratory to provide analytical support to investigators offering independent analysis of seized cigarettes.

  • Enhanced bilateral cooperation with major source and transit countries,

To improve cross border cooperation and coordination, the Commission notes the establishment of additional mutual assistance provisions with an additional 14 countries. It notes agreements with Moldova, Ukraine and Georgia to adjust levels of tobacco excise rates and structures to reduce fiscal incentives for smuggling and with Canada, Georgia, Moldova, Singapore and Vietnam to promote cooperation in customs investigations. The Commission also notes dialogue on customs issues with Russia, Belarus and Ukraine,

  • Addressing the demand side of the illicit tobacco market

The Commission notes key findings from a Commission funded report on people’s perception of the illicit tobacco trade to better inform an understanding of demand.

SCRUTINY HISTORY

  1. The introduction of this EU strategy “Stepping up the fight against cigarette smuggling and other forms of illicit trade in tobacco products” was deposited in Parliament on 19 June 2013. This was the subject of an Explanatory Memorandum of 2 July 2013 ref. 11014/13, COM (13) 324.
  1. The comprehensive EU Strategy to address the illicit trade in tobacco products was given full scrutiny in the twelfth report session, 2013-14. HMRC prepared the EM and gave evidence to the House of Lords EU Sub-Committee F on 24 July 2013 and “cleared” scrutiny.

MINISTERIAL RESPONSIBILITY

  1. The Financial Secretary to the Treasury is responsible for strategic oversight of the UK tax system. The Chancellor of the Exchequer has responsibility for UK policy on European Union monetary and economic issues. The Foreign and Commonwealth Secretary and the Secretary of State for Exiting the EU are responsible for overall UK policy towards the EU. The Home Secretary is responsible for policy on policing and the fight against crime (except in Scotland and Northern Ireland), including mutual legal assistance and extradition.

INTEREST OF THE DEVOLVED ADMINISTRATIONS

  1. Excise duties are a reserved matter under the UK's devolution settlements and no devolved administration interests arise. The devolved administrations have therefore, not been consulted in the preparation of this EM.

LEGAL AND PROCEDURAL ISSUES

  1. Legal basis
  1. None.
  1. European Parliament Procedure

12.Not applicable. This is not a proposal for legislation.

  1. Voting procedure.

13.Not applicable. This is not a proposal for legislation.

  1. Impact on United Kingdom Law
  1. There is no direct impact on United Kingdom law.
  1. Application to Gibraltar
  1. Not applicable
  1. Fundamental rights analysis
  1. Not applicable

APPLICATION TO THE EUROPEAN ECONOMIC AREA

  1. This report is not applicable to the European Economic Area.

SUBSIDIARITY

  1. No issues arise

POLICY IMPLICATIONS

  1. No comment appropriate during dissolution.

CONSULTATION

  1. No consultation on this report is planned.

IMPACT ASSESSMENT

  1. Not applicable as there are no legislative proposals.

FINANCIAL IMPLICATIONS

  1. This report has no direct financial implications for the UK.

TIMETABLE

  1. The Commission notes it will complete the evaluation of the strategy and identify any areas for further action in 2018.