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Tobacco Products Directive: The EC's Regulatory Impact Assessment is Not Sufficiently Robust, Oxera Concludes

   Tobacco Products Directive: The EC's Regulatory Impact Assessment is Not
                     Sufficiently Robust, Oxera Concludes

  PR Newswire

  BRUSSELS, May 28, 2013

BRUSSELS, May 28, 2013 /PRNewswire/ --

The Regulatory Impact Assessment (RIA) undertaken by the European Commission
on its proposed revisions to the 2001 Tobacco Products Directive (TPD) is not
sufficiently robust when reviewed from the perspective of regulatory best
practice, including the Commission's own guidelines for RIAs (1), reveals
Oxera, an economics consultancy, in a report commissioned by Japan Tobacco
International (JTI).

 (Logo: http://photos.prnewswire.com/prnh/20130528/617491 )

"The aim of Oxera's review was not to question the objectives behind the
proposals; we support sound tobacco regulation. However, from the perspective
of best practice in public policy, regulation and economic analysis, we
concluded that the RIA is not sufficiently robust and contains a number of
significant shortcomings," said Dr. Gunnar Niels, Director at Oxera. "This is
not to say that there is no underlying economic case for some of the proposed
regulations, or other forms of tobacco regulation. However, a more robust RIA
would benefit regulatory decision-making in this area," he added.

Oxera highlights four key shortcomings:

Lack of clarity on the objectives: While the overall objective of the TPD
revision is said to improve the functioning of the internal market, a number
of aspects of the proposed regulations seem to go against criteria that are
normally considered to be part of a well-functioning market, including
innovation, competition, consumer choice and cross-border trade. In fact, most
elements of the RIA seem to be driven primarily by public health
considerations, identified as an additional objective, rather than the
internal market.

The baseline scenario is not clearly defined and is not based on available
evidence. The RIA assumes without any supporting evidence that the current
trend towards decreasing tobacco consumption will stop if regulations remain
unchanged, and that any further reduction in consumption would be attributed
to the proposed regulations rather than existing regulations or other factors.

Reliance on assumptions rather than evidence: The RIA assumes that the TPD
would result in a 2% reduction in tobacco consumption within five years of the
proposed regulation changes. The 2% reduction in tobacco consumption is
assumed rather than derived from evidence or from analysis. In addition, the
cost-benefit analysis has been applied solely to the final proposed package of
measures, rather than to the individual areas separately. This goes against
the Commission's own guidelines (2).

Limited reference to evidence or analysis in the RIA to support the proposals:
There is limited reference to evidence in the RIA to support the proposals on
packaging; ingredients and other tobacco products; and track and trace.

Thierry Lebeaux, Head of EU Affairs at JTI, commented: "This report further
demonstrates that the Proposal to revise the EU TPD has not been properly
thought through. In the interest of quality regulation, we hope that Oxera's
conclusions will be taken into consideration before any new measures are voted
on," he concluded.

(1) See page 4 and 8 of Oxera's review.

(2) See page 4 of Oxera's review.

Download review:
http://www.jti.com/how-we-do-business/key-regulatory-submissions/

About JTI

JTI, a member of the Japan Tobacco Group of Companies, is a leading
international tobacco manufacturer. It markets world-renowned brands such as
Camel, Winston and Mevius (Mild Seven). Other global brands include Benson &
Hedges, Silk Cut, Sobranie, Glamour and LD. With headquarters in Geneva,
Switzerland, and about 25,000 employees worldwide, JTI has operations in more
than 120 countries. Its core revenue in the fiscal year ended December 31,
2012, was USD 11.8 billion. For more information, visit: http://www.jti.com

About Oxera

Oxera is an independent economics consultancy based in Oxford, London and
Brussels with more than 30 years of experience in the areas of regulation,
competition and finance. During this period, Oxera has built a track record
and reputation in analysing public policy, price controls, developing
regulatory frameworks in a number of sectors such as energy, water, transport,
communications, financial services and health. Oxera has made leading
contributions to the development of RIA methodologies in Europe, and has
advised the European Commission, national government bodies and private sector
clients on RIAs in a variety of industries.

Thierry Lebeaux JTI EU Affairs Office Tel.: +32-26-26-2471 E-Mail:
thierry.lebeaux@jti.com Gunnar Niels Oxera Tel.: +44-1865-253000 E-Mail:
gunnar.niels@oxera.com
 
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