Document 02b
ESTA E.E.I.G.
Rond Point Schumanplein 9, box 1
B - 10
1 40
4 B
0 r
B us
u se
s ls
EC
E Reg.
g No
N : 01
0 38
3 8
8 55
5 85
8 2-
2 93
9
Tel : +32 2 230 80 92
E-mail : xxxx@xxxx.xx
Website: www.esta.be
Twitter: ESTA_EU
Mr. Katainen, Vice-President of the European Commission
Jobs, Growth, Investment and Competitiveness
By Post & Email
European Commission
Rue de la Loi 200
1049 Bruxelles
Copy: European Commission President Mr. Jean Claude Juncker
European Commission First Vice-President Mr. Frans Timmermans
Brussels, 10 May 2019
Subject: Grave concerns
Dear Vice-President,
We, the European Smoking Tobacco Association (ESTA), would like to raise several serious problems
th of May
this year which heavily impacts our Member companies. Our Member companies are European
smaller and mid-sized tobacco companies, many of which are still family owned.
On 6 December 2017, we publicly replied to allegations made by Commissioner Andriukaitis, warning
the Commission that proposing an overly complex and non-interoperable Track and Trace system
would lead to many Member States not being able to meet the implementation deadline, exactly as
was the case with the 2014 Tobacco Products Directive.
Unfortunately, these warnings were not heeded and ESTA has been addressing the Commissioner
for Health on our inability to export products, including the consequences of competing non-
interoperable systems, such as those of the EU and the Russian Federation. A separate letter
requesting a resolution to this issue has been sent to you.
We also understand from a Commission Communication to the Member States1 that it is highly
unlikely that all Member States will be ready on time ensuring a functioning system to issue Unique
Identifiers (UIs) to the tobacco manufacturing, importing and trading companies. We would like to
point out that it took the Commission 4 years to develop the implementing legislative instruments,
leaving the Member States with 13 months to legislate for- and set-up the system, and our companies
with a few days to integrate and test the system providing the Unique Identifiers (UIs). In this regard
k and
Trace is grappling with the applicable Machine Codes. These need to be sent to the UI provider, but
the Commission
The legal consequences for our companies not being able to obtain UI codes from certain Member
States are significant, as we are bound to only manufacture tobacco unit packages with a UI code
after 20 May 2019.
1 Information from the Commission services on the system for tobacco traceability
from the General Secretariat of the Council to the Working Party on Public Health at Senior Level, 14 March 2019.
We appreciate the recently adopted Commission Decision2 that allows an Economic Operator to
request UIs from another ID issuer, but it must be clear that such requests can be denied, thereby
not resolving anything. The impossibility for retailers to register with an alternative UI provider under
this derogation also invalidates this solution. The Decision states that it limits to a certain extent the
potential distortion of the smooth functioning of the internal market. It must also be noted that this
is accompanied by additional costs for business and administrations that could have been avoided.
We also note that fees set by the Member States for generating and issuing the alpha-numeric code
(UIs) to our companies, differ widely throughout the EU, and are higher, in some cases even
significantly higher, than those indicated in the Commi
3. These costs were
thoroughly calculated by consultancy Everis based on information from possible UI providers
estimating the costs as 0,00043 cent per unit placed on the market.
On setting the fees, the Commission itself informed Member States how they could charge for
services which are not allowed by the Implementing Regulation4. This is a highly unusual action by
the Commission, to say the least, and has led Member States to set fees as much as 3 to 20 times
higher per unit.
In addition, it is striking that Commissioner Andriukaitis, representing the European Commission,
made a public statement5 that the cost of the entire Track and Trace system in the EU would be in
the order of 0.005 Euro cents for a tobacco unit placed on the market. The average UI fee alone
stands at almost half of this, with one Member State6 charging twice
cost per unit. On top of this come recurring costs for the data repositories, IT licenses and for the
obviously superfluous high-tech Security Feature (SF). Capital expenditure, including verification
equipment for the SF, the provision of equipment to the trade, the anti-tampering devices and the
massive investments in new, and adapted packaging lines with specialised printers and readers, as
well as in IT infrastructure all tobacco and trading companies are making in order to be compliant,
are running in the tens of millions of Euros.
Taking only three of the recurring costs into account (UI fee, Data Repository Costs and for Security
Feature) the EU Tracking & Tracing System leads to an average recurring unit cost of 0.025 Euro
cents per unit placed on the market, 5 times higher than the purported total cost stated by the
Commissioner7. The real total cost per unit is even higher, and is much higher for our companies
than for the large multinational cigarette companies that have a larger scale, whilst our product
portfolio can be characterised as including many niche products that require more packaging lines
and therefore more capital and other costs to convert these and to operate the system.
In his reply to a European Parliamentary Question8, Commissioner Andriukaitis stated that
Minimising the burden of the system on small and medium-sized enterprises (SMEs) and traditional
producers has been a priority for the Commission from the outset and a detailed assessment of the
measures' proportionality and expected impact in this respect was carried out
2 Commission Decision (EU) 2019/691 of 2 May 2019
3 European Commission, Impact assessment on the establishment of systems of traceability and security features for tobacco
products, SWD(2017) 455 final; Annex 6,
- Cost-benefit analysis , page 40; 15 December 2017.
4 European Commission (DG SANTE) Summary Record of the Meeting of the Subgroup on Traceability and Security Features
of 23 October 2018 (here), page 5.
5 Com
Products, Brussels, 30 November 2017 (here)
6 Hungary
7 Based on recurring costs of UI fee, SF, and Data Repository as calculated by several member companies
8 Answer in writing given by Commissioner Andriukaitis on behalf of the Commission on 5 January 2018 to a Parliamentary
Question (E-006432/2017), (here)
Since the burden on our companies is much more important than estimated, due a 5 fold rise in the
cost per unit placed on the market based on three cost items alone, is the Commission still
obligations of
We would also appreciate if the Commission can clarify to Member States that only costs for the
generation and issuing of the UIs can be charged under the Implementing Regulation and addresses
those Member States that are allowing the UI providers to charge exorbitant fees for the generation
and issuing of the alphanumeric codes.
Finally, we would like to point out that ever since the adoption of the Tobacco Products Directive in
2014, ESTA and individual companies have raised technical issues and offered advice and
assistance to the Commission. The Commission was informed that its sequencing of the many
Implementing Acts, starting with the Implementing Decision for health warnings for fine-cut tobacco
pouches through to the integration of Track and Trace equipment, would mean 2 or 3 consecutive
costly machine adaptations in as many years. This could easily have been avoided if the Commission
would have been willing to fully understand the manufacturing process and the SME nature of our
tobacco companies.
E clearly decided to only have very few meetings on highly complex and
technical issues with the industry, hiding behind a misinterpretation of international obligations
whilst ignoring well-established democratic and self-professed better regulation principles.
The result is an overly complex EU Track & Trace system that might not be up and running by the
deadline, creating legal uncertainty for our companies. It is a system that is at least 5 times more
expensive than publicly stated by the Commission and that is hampering, if not, blocking our exports.
We would appreciate if you could provide us with the comfort that this was a one-o
experience, and that in future the European Commission will effectively and appropriately consult
with directly impacted stakeholders whose important technical input is indispensable in establishing
effective and workable regulation?
We are fully committed to be complaint and make the system work, but we also feel that it is
necessary to be open and transparent and therefore chose to be very clear in this letter. We truly
hope that we can all learn lessons from this process.
We are looking forward to your clarifications and assistance in resolving the many issues smaller and
mid-sized tobacco companies still face.
Yours sincerely,
On behalf of ESTA
-sized Member companies.