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Lithuania mulls ending agreements with major tobacco producers

VILNIUS – Lithuania's government is considering whether to back the European Parliament's call to end agreements with major tobacco producers, under which the latter pay compensation to EU members for the producers' contraband products seized in these countries.

The Ministry of Finance proposed against backing the decision to end such contracts. The Lithuanian government will consider the move on Wednesday.

In 2004-2010, the European Commission signed four agreements with major tobacco producers, which are in fact out-of-court settlements related to the then ongoing judicial proceedings in the US where lawsuits were filed against the tobacco companies over damages for indirect promotion of trade in illegal cigarettes.

The agreement with Philip Morris ended in 2017, and the European Parliament was against its extension and recommended ending all such agreements with tobacco producers in 2019, which needs backing from all EU member states. Therefore, the European Commission has asked member states to provide express their positions.

In Lithuania, the Ministry of Health, the Drug, Tobacco and Alcohol Control Department, as well as the National Tobacco and Alcohol Control Coalition are in favor of ending such agreements but the Ministries of Finance and the Interior, the Police Department, the State Border Guard Service, the Financial Crime Investigation Service and the Customs Department are against.

The Finance Ministry underlines that the agreements are not about cooperation with tobacco producers but about compensation for indirect promotion of contraband. It says tobacco producers allocated 6.2 million euros in 2016-2019 and the money is used to for official incentives and the purchase of equipment.

The EU agreement with Japan Tobacco Imperial is in force until 2022, and the ones with British American Tobaco and Imperial Brands will expire in 2030.

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