A Time For Action
The duty-free industry must press for legal recognition that its trade is separate from domestic high street retailing if the tobacco category is to survive, says ETRC secretary general Keith Spinks
SINCE the World Health Organisation’s (WHO) Framework Convention on Tobacco Control was adopted in 2003, we have seen restrictions on the marketing and retailing of tobacco products increasing at a pace across the globe. As of today, 157 of the 192 members of the WHO have ratified the treaty. Countries that have ratified the WHO treaty are obliged to ban the advertising and promotion of tobacco products, i n t r o d u c e stronger and more prominent health w a r n i n g s – including pictorial representations of the conse q u e n c e s of smoking – and measures to address such issues as illicit trade and smoking cessation programmes.
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Also included in the treaty is a clause that recommends that signatories restrict or prohibit sales and/ or allowances of duty-free tobacco products. However, since the adoption of the treaty, no country has banned tobacco sales, although a few have addressed the issue of traveller’s tobacco allowances, including the European Union. The EU will allow its Member States to apply a lower allowance (40 rather than the normal 200 cigarettes) for travellers entering the EU across land or sea borders as of December 1 this year. Whilst we are unsure which countries will apply this lower limit, it is a clear indication of the attitude of European politicians and the tobacco control activists towards duty-free tobacco. The EU will now join Singapore, which has had a ban on travellers bringing in duty-free tobacco for many years, and Hong Kong, which allows arriving passengers only three packs, in restricting travellers’ allowances for tobacco.
There are also a number of countries that are currently considering further restrictions on the retailing
of tobacco products, including proposals for a possible total display ban in retail outlets. It is considered
unlikely that the duty-free sector will be excluded from these restrictions, when and if they are finally adopted, without strong representation from the industry.
The problem that the duty-free industry faces is that there is currently no legal foundation accepting
this trade sector as being separate from domestic high street retailers. Therefore, there is no basis for the duty-free market to be excluded from the growing restrictions on tobacco products, as well as increasingly the regulation of other product categories. The trade is presently addressing proposed restrictions on retail displays of tobacco in Ireland, Norway, Turkey, Australia, Canada and Taiwan. The most recent country to begin consulting on further restrictions on retail displays is the UK.
The EU authorities do recognise that an airport shop operator’s principal competition for customers
are other airport retailers, confirmed in the reasoning of the competition directorate for their decision
to approve the acquisition of World Duty Free by Autogrill earlier this year. However, this presently does not provide a legal exemption from the regulatory environment, particularly on tobacco. Indeed, trade associations representing high street retailers have and will continue to oppose any such exemptions, as Eurocommerce (the EU trade association representing European retailers) did during the industry’s campaign to retain intra-EU duty-free sales in 1999.
It must be a priority for the global duty-free industry to seek legal recognition that this trade is a separately defined market from domestic high street retailing. Regulating the industry should take account of both the international nature of its consumer base and that competition for these consumers is between national airports and airlines and, to a lesser degree, within the maritime trade, ferries and cruise lines. A starting point for this project could be the European Union’s 27 Member States, where we should argue for a single set of rules; a standardised regulatory environment for retailers, including for product merchandising and display, and possibly a single language for product labelling.
Referring back to the WHO’s tobacco control treaty, there are currently ongoing discussions taking place on a protocol on the illicit trade in tobacco products, seeking to agree measures to reduce tobacco smuggling across the globe. It has been noticeable during these discussions that allegations have been resurrected by the antitobacco activists that the duty-free trade in tobacco products contributes to illicit trade, a reasoning advanced during the negotiations on the WHO treaty for the outright prohibition of tobacco sales in dutyfree outlets. Although industry representation during the original negotiations led to the clause on dutyfree being adopted as non-obligatory, this development poses further challenges for the trade.
Indeed, the EU industry is currently lobbying against proposals from the European Commission calling for the abolition of duty-free shops on borders with third countries, i.e. Greece and Romania, alleging that such sales are difficult to control and contribute to criminality and illicit trade, principally in tobacco. The industry remains confident that it will obtain a reprieve for these shops, although the recent closure of the shops in Bulgaria amidst claims of criminal activity has not helped the campaign. The industry needs to ensure that it can prove that robust controls are in place at all retail outlets, not only at border shops, to counter allegations that the retailing of duty-free tobacco through traditional retail outlets are contributing to smuggling.
Responsible retailing is not an issue only for the controversial tobacco category, but it is the one that is the primary focus for health activists and politicians at the present time and could set an unwelcome
precedent for action against other products. If you need confirmation of the seriousness of the challenges that we are facing, the following is a quote from Avril Doyle MEP, a senior member of the European Parliament, at a hearing on tobacco control in the parliament on July 15: “I would be happy to see a long-term target date, say 2025, when it would be illegal to sell tobacco products in the EU,” she said to an applauding crowd of parliamentarians and global health experts. The current EU health commissioner, Androulla Vassiliou, also declared at the same hearing: “I am ready to commit today to not accept any invitation coming from the tobacco industry or those working in its interests so long as I hold office.”
The tobacco industry does not have any friends in politics and the duty-free industry may also soon find
itself without an audience for its representatives. We must act now to ring-fence the duty-free trade from
further regulatory action against the products that provided the foundation for our industry.
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