ITSA to appeal after court blocks tobacco traceability challenge

The group representing the tax stamp industry will challenge an EU court decision that rejected its assertion that tobacco track-and-trace provisions are not fit for purpose.

The International Tax Stamp Association (ITSA) has long argued that the Tobacco Products Directive (TPD) legislation is at odds with the World Health Organization’s Framework Convention on Tobacco Control (FCTC) Protocol to eliminate illicit trade in tobacco products, which says track-and-trace should not be performed by or delegated to the tobacco industry.

Specifically, ITSA challenged the European Commission’s decision to endorse an approach that integrated a third-party, industry-controlled system based on the Inexto (formerly Codentify) system that was originally devised by tobacco giant Philip Morris International (PMI).

The European Union Court of Justice (EUCJ) dismissed its challenge, but the ITSA has already said it plans to appeal in order to shed light on the court’s “misunderstanding of certain basic facts.”

The WHO has also expressed deep concerns about the tobacco industry’s involvement in traceability systems being rolled out around the world, reiterating its view that “the tobacco industry should not be responsible for actions that [should be] from government.”

ITSA says the key reason for the challenge is that the TPD implementing regulation contravenes the FCTC Protocol’s Article 8, which requires that a track-and-trace system shall be under the control of the government and that duties shall not be performed by or delegated to the tobacco industry.

The EUCJ dismissed the claims in a May judgment on the grounds that ITSA could not challenge the EU track and trace system because it did not have “a direct interest” in the TPD implementing regulation.

Nicola Sudan, general secretary of ITSA, said: “The EUCJ appears to have confused the track and trace systems deployed by ITSA’s independent members with the tobacco industry’s Codentify solution, which is largely under the control of the major tobacco companies.”

She went on: “In addition, the EU track and trace system does not provide for strong authentication tools to counter illicit tobacco trade and does not allow for a completely interoperable track and trace system based on established international standards and best practice.”

Sudan asserted that the ITSA’s aim is to get the EU to adopt international technical standards to harmonise anti-illicit trade technologies and promote best practices, including ISO 22382, which provides valuable guidance on the development of and specifications for excise tax stamps.

“We hope that the EUCJ reconsiders its stance towards the admissibility of our claim and takes a closer look at the type of track and trace systems being applied under the TPD implementing regulation.”