The Commission presents a report on the exercise of the power to adopt delegated acts conferred on the Commission pursuant to Directive 2014/40/EU on the approximation of the laws and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products (Tobacco Products Directive). Under the terms of the Directive, the Commission is required to draw up a report in respect of the delegation of power conferred on the Commission for a period of five years from 19 May 2014.

The Commission reports that it adopted two delegated acts based on Articles 10(3)(b) and 15(12) of the Tobacco Products Directive.

Delegated act adopted under Article 10(3)(b): this provision empowers the Commission to adopt delegated acts to establish and adapt a picture library . The pictures contained in that library are an integral part of the combined health warning which is required to appear on each unit packet and outside packaging of tobacco products for smoking placed on the EU market. Commission adopted Delegated Directive 2014/109/EU amending Annex II to Directive 2014/40/EU of the European Parliament and of the Council by establishing the library of picture warnings to be used on tobacco products.

Delegated act adopted under Article 15(12): the relevant provisions of Article 15 require Member States to ensure that:

all unit packets of tobacco products are marked with a unique identifier, in order to enable their movements to be recorded by all economic operators involved in the trade of tobacco products; manufacturers and importers of tobacco products conclude data storage contracts with an independent third party, for the purpose of hosting the data storage facility for all relevant traceability data recorded in this context

The Commission may adopt delegated acts to define the key elements of the data storage contracts , such as duration, renewability, expertise required or confidentiality, including the regular monitoring and evaluation of those contracts.

Accordingly, the Commission adopted Delegated Regulation (EU) 2018/573 on key elements of data storage contracts to be concluded as part of a traceability system for tobacco products, in order to ensure the effective functioning of the traceability system in general and the interoperability of the data storage system in particular.

Procedure : the two draft delegated acts were submitted to the Expert Group on Tobacco Policy prior to their adoption. The European Parliament has been systematically invited to the meetings of this Expert Group. The documents relevant to these consultations were transmitted simultaneously to the European Parliament and to the Council, as provided for in the Common Understanding between the European Parliament, the Council and the Commission on Delegated Acts . The European Parliament or the Council raised no objection to either of the delegated acts adopted by the Commission within the 2-month period provided for in the Directive.

As regards the other delegated powers conferred , the preconditions for their exercise have not yet been met.

The Directive states that the five-year duration of the delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such extension not later than three months before the end of each period. The Commission considers that the delegation of powers should be extended, since the rationale for the delegation has not changed and the powers granted are essential for achieving the objective of the Tobacco Products Directive.

The Commission presents a report on the potential risks to public health associated with the use of refillable electronic cigarettes in accordance with Directive 2014/40/EU.

The report identifies the particular risks that may be associated with refillable e-cigarettes and their refill containers . It does not consider the potential public health impact of e-cigarettes in general.

The document was prepared with input from the PRECISE study prepared by an external contractor, and analysed 277 cases of nicotine poisoning reported to poison centres in eight EU Member States (Austria, Hungary, Ireland, Lithuania, Netherlands, Portugal, Sweden and Slovenia) from January 2012 to March 2015.

The contractor performed chemical analysis on e-cigarette samples. It also conducted a survey amongst the e-cigarette industry to determine what they believed to be the main risks associated with refillable e-cigarettes

The Commission identified four main risks related to the use of refillable e-cigarettes, these being:

accidental ingestion of e-liquid (particularly with young children); dermal contact, where e-liquid contains nicotine and other products irritating to the skin (propylene glycol and flavours); mixing or customisation of liquids, where users blend their own e-liquid at home by purchasing ingredients separately; risks due to using untested combinations of e-liquid and device or hardware customisation.

Possible risks to health : the report concludes that the use of refillable electronic e-cigarettes, and the potential exposure to e-liquids containing nicotine in high concentrations, may pose risks to public health . Based on the limits set out in the Tobacco Products Directive, refillable e-cigarette devices can contain up to 40 mg nicotine and refill containers can hold up to 200 mg nicotine. There is, therefore, a particular risk for young children if they accidently ingest e-liquid especially from a refill container.

Measures to reduce risk : in the context of current scientific knowledge, the Commission considers that the measures relating to refillable e-cigarettes provided for in the Tobacco Products Directive and secondary legislation, combined with national regulation, provide an adequate and proportionate framework for the mitigation of such risks. This does not, however, preclude the need for further study of these products and their safety for consumers (in particular concerning poisoning from accidental ingestion of e-liquid and the hazard profile of flavours).

The rather high percentage of poisonings involving adults over the age of 18 (57%) also suggests the need to increase awareness amongst citizens on the toxicity of the e-liquids containing nicotine, perhaps through national educational campaigns.

Member States and the Commission should carefully monitor the market of refillable e-cigarettes, as well as the notifications received under Article 20(2) of the TPD.

Lastly, the report suggests that further research on certain aspects of e-cigarettes relevant to refillables, such as emissions testing and the safety of flavours or mixtures of flavours, should also be carried out. Additional research on these topics would benefit all users of e-cigarettes (whether they are disposable, rechargeable and refillable).

Corrigendum to Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC ( Official Journal of the European Union L 127 of 29 April 2014 ) On page 19, point (f) of Article 10(1): for:

‘(f) be reproduced in accordance with the format, layout, design and proportions specified by the Commission pursuant to paragraph 3;’,

read:

‘(f) be reproduced in accordance with the format, layout, design and proportions specified by the Commission pursuant to paragraph 4;’.

The European Parliament adopted by 514 votes to 66, with 58 abstentions, a legislative resolution on the proposal for a directive of the European Parliament and of the Council on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products.

The issue had been referred back to the committee responsible during the session of 8 October.

Parliament adopted its position in first reading following the ordinary legislative procedure. The amendments adopted in plenary are the result of a compromise between Parliament and Council. The main amendments are the following:

Objectives of the Directive : the general objective should be to meet obligations under the WHO Framework Convention for Tobacco Control and to facilitate the functioning of the internal market in tobacco and related products, taking as a base a high level of health protection, especially for young people.

Maximum yields of tar, nicotine and carbon monoxide and other substances: the accuracy of the tar, nicotine and carbon monoxide indications shall be verified in accordance with ISO standard 8243. Tests verifying the validity of the result supplied by the tobacco companies shall be done on a regular basis by independent testing laboratories that are not owned or controlled directly or indirectly by the tobacco industry.

Priority list of additives and enhanced reporting obligations : in addition to the reporting obligations laid down regarding the reporting of ingredients and emissions, enhanced reporting obligations shall apply to certain additives contained in cigarettes and roll-your-own tobacco that are included in a priority list.

The Commission shall adopt implementing acts laying down and subsequently updating such a priority list of additives. A first list of additives shall be adopted containing at least 15 additives within 2 years of entry into force of the Directive.

Manufacturers and importers of cigarettes and roll-your-own tobacco containing an additive that is included in the priority list must carry out comprehensive studies , which shall examine for each additive whether it contributes to the toxicity or addictiveness of the products concerned, or results in a characterising flavor, facilitates inhalation or nicotine uptake or leads to the formation of substances that have CMR properties.

Ingredients : the amended text prohibits the placing on the market of tobacco products containing a characterising flavour (a clearly noticeable smell or taste other than one of tobacco, resulting from an additive or a combination of additives, including, but not limited to, fruit, spice, herbs, alcohol, candy, menthol or vanilla). Also prohibited are additives such as vitamins, caffeine or taurine, additives having colouring properties for emissions, additives that facilitate inhalation or nicotine uptake, and additives that have CMR properties in unburnt form.

The use of additives necessary for the manufacture of tobacco products, for example sugar, is allowed.

These provisions shall not apply to tobacco for oral use.

Labelling and packaging : the health warnings on a unit packet and any outside packaging are irremovably printed, indelible and fully visible . They shall remain intact when opening the unit packet other than packets with a flip-top lid. All unit packets of tobacco products, which are placed on the market, must carry a tamper proof security feature, composed of visible and invisible elements.

Members want the combined health warnings to cover 65 % of both, the external front and back surface of the unit packet and any outside packaging. The warnings must contain a corresponding colour photograph specified in the picture library in Annex II.

The labelling shall not include any element or feature that: (i) promotes a tobacco product or encourages its consumption; (ii) suggests that a particular tobacco product has properties or has other health or lifestyle benefits; (iii) resembles a food or a cosmetic product; (iv) suggests that a certain tobacco product has improved biodegradability or other environmental advantages.

Packets of less than 20 are forbidden.

Cross-border distance sales of tobacco products : the amended text states that Member States may prohibit cross-border distance sales of tobacco products to consumers. Member States shall cooperate to prevent such sales. Retail outlets engaging in cross-border distance sales of tobacco products may not supply such products to consumers in Member States where such sales have been prohibited.

Electronic cigarettes : in accordance with Parliament’s wishes, E-cigarettes should be regulated, either as medicinal products for stopping smoking or tobacco products . In the second case, the nicotine concentration must be no more than 20mg/ml . E-cigarettes should carry health warnings and should not be sold to children.

They would be subject to the same advertising restrictions as tobacco products.

Manufacturers and importers of electronic cigarettes and refill containers shall submit a notification to the competent authorities of the Member States of any such products which they intend to place on the market.

The Commission shall submit a report on the potential risks to public health associated with the use of refillable electronic cigarettes within 2 years after entry into force of the Directive and where appropriate thereafter.

The European Parliament adopted by 560 votes to 92, with 32 abstentions, amendments to the proposal for a directive of the European Parliament and of the Council on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products.

The issue has been referred back to the committee responsible . The vote has been postponed to a later date.

The main amendments adopted in plenary are the following:

Objectives of the Directive : the general objective should be to meet obligations under the WHO Framework Convention for Tobacco Control and to facilitate the functioning of the internal market in tobacco and related products, taking as a base a high level of health protection, especially for young people .

The Directive stipulated that Member States should prohibit cross border distance sales of tobacco products.

Maximum yields of tar, nicotine and carbon monoxide and other substances : the accuracy of the tar, nicotine and carbon monoxide indications shall be verified in accordance with ISO standard 8243. Tests verifying the validity of the result supplied by the tobacco companies shall be done on a regular basis by independent testing laboratories monitored by the competent authorities of the Member States.

Members suggested setting a maximum yield of Polonium 210 which has been shown to be a significant carcinogen in tobacco. This would result in a reduction of 95% of the current average content of Polonium 210 in cigarettes.

Ingredients : an assessment should be carried out on the safety of additives for use in tobacco products. Additives should only be allowed in tobacco products if they are included in a Union list of authorised additives . That list should also indicate any conditions or restrictions on the use of allowed additives. Tobacco products containing additives not included in the Union list or used in a manner that does not comply with this Directive should not be placed on the Union market.

The following additives may not be approved : vitamins and other additives that create the impression that a tobacco product has a health benefit or presents reduced health hazards; caffeine and taurine and other additives and stimulant compounds that are associated with energy and vitality; additives which, when used, may impart a characterising flavour ( fruit, spice, herb, alcohol, candy, menthol or vanilla). Additives essential to produce tobacco, such as sugar, would be authorised.

In order to obtain the approval of an additive, manufacturers and importers shall make an application to the Commission.

Labelling and packaging : Members requested that the health warnings should appear on all sides of the unit packet and any outside packaging and that they cover 65 % of the external area of both the front and back surface of the unit packet and any outside packaging.

The labelling of a unit packet and any outside packaging and the tobacco product itself and/or its brand name shall not include any element or feature that promotes a tobacco product and encourages its consumption by means that are false, misleading, deceptive or likely to create an erroneous impression about its characteristics, health effects, hazards or emissions. Labels shall not include any information about nicotine, tar or carbon monoxide content.

A unit packet of cigarettes shall include at least 20 cigarettes. A unit packet of roll-your-own tobacco shall contain tobacco weighing at least 20g.

Members rejected the banning of slim cigarettes.

Traceability and security : Member States should ensure that all unit packets and any outside transport packaging of tobacco products shall be marked with a unique identifier .

The unique identifier should determine the date and place of manufacturing, the manufacturing facility, the intended and actual shipment route from the place of manufacturing to the first retail outlet, including all warehouses used, the shipment date, shipment destination, consignee and point of departure.

Age limit : Member States should be encouraged, if they have not already done so, to formulate their national laws on the protection of young people in such a way that tobacco products may not be sold to, or consumed by, young people under the age of 18. Member States should also ensure that such prohibitions are respected.

Member States should report every two years to the Commission on the enforcement of the measures taken on the prevention of smoking and on initiatives to improve tobacco control, in particular with regard to age limits set in national legislation, as well as their plans to increase the age limit to achieve the goal of a ‘smoke-free generation’.

Imitation tobacco products : products aimed at underage consumers, such as food products and toys in the form of tobacco products that may be appealing to minors should be banned.

E-cigarettes : E-cigarettes should be regulated, but not be subject to the same rules as medicinal products unless they are presented as having curative or preventive properties. Those for which no such claims are made should contain no more than 30mg/ml of nicotine , should carry health warnings and should not be sold to anyone under 18 years old .

Manufacturers and importers would also have to supply the competent authorities with a list of all the ingredients that they contain. E-cigarettes would be subject to the same advertising restrictions as tobacco products.

Given the potential of nicotine-containing products to aid smoking cessation, Member States should ensure that they can be made available as widely as tobacco products. These products should be available to be sold outside pharmacies .

PURPOSE: to revise Directive 2001/37/EC on tobacco products in order to improve the functioning of the internal market and ensure a high level of health protection.

PROPOSED ACT: Directive of the European Parliament and of the Council.

BACKGROUND: tobacco is the most significant cause of premature death in the EU, responsible for almost 700 000 deaths every year . More than ten years have passed since the adoption of the Directive 2001/37/EC on tobacco products. In line with market, scientific and international developments, it has become necessary to update and complement this Directive .

The overall objective of the revision is to improve the functioning of the internal market . In particular, the proposal aims to:

· update already harmonised areas, in order to overcome obstacles encountered by Member States in bringing their national legislation in line with new market, scientific and international developments;

· address product related measures not yet covered by the Directive;

· ensure that provisions of the Directive are not circumvented by the placing on the market of products not compliant with the Directive;

· ensure a harmonised implementation of international obligations following from the WHO Framework Convention on Tobacco Control (FCTC) , which is binding for the EU and all Member States.

With regard to health protection , the proposed revision:

· seeks to regulate tobacco products in a way that reflects their specific characteristics (nicotine has addictive properties) and the negative consequences of their consumption (mouth, throat and lung cancer, cardiovascular problems including heart attacks, strokes, clogged arteries, increased risk of blindness, impotence, lower fertility, impact on the unborn child etc);

· focuses on initiation of tobacco consumption, in particular by young people , taking into account that 70% of the smokers start before the age of 18 and 94% before the age of 25;

· create conditions which allow all citizens across the EU to take informed decisions about the products, based on accurate information on the health consequences of consuming tobacco products.

The Commission's proposal for a Regulation of the European Parliament and of the Council on establishing a Health for Growth Programme contains measures which have as their direct objective the protection of public health regarding tobacco products and advertisement required by or contributing to the objectives of EU legislation in this field.

IMPACT ASSESSMENT: the Commission undertook an impact assessment which accompanies the proposal. A high level of health protection has been taken as the basic criteria amongst the different strategic options that were considered during the review of the Directive.

LEGAL BASIS: Article 114 of the Treaty on the Functioning of the European Union (TFEU).

CONTENT : the revision of Directive 2001/37/CE focuses on the following areas:

1) Ingredients and emissions : the maximum yields of tar, nicotine and carbon monoxide as well as the measurement methods remain the same as in Directive 2001/37/EC.

The proposal:

· keeps in place the mandatory reporting system of ingredients and, in addition, provides that a common electronic format for the reporting and manufacturers are required to provide supporting data (e.g. marketing reports);

· provides that placing on the market of new or modified tobacco products must not take place before the submission of ingredients data . Reported data, excluding confidential information, must be published;

· prohibits tobacco products with characterising flavours , such as fruit flavours or chocolate, and prohibits flavourings in filters, papers or packages;

· forbids additives associated with energy and vitality (e.g. caffeine and taurine), or creating the impression that products have health benefits (e.g. vitamins);

· exempts tobacco products other than cigarettes, roll-your own tobacco and smokeless tobacco products, i.e. cigars, cigarillos and pipe tobacco from some provisions such as the prohibition of products with characterising flavours. The exemption shall be removed if there is a substantial change of circumstances (in terms of sales volume or prevalence level among young people).

2) Labelling and packaging : the proposal seeks to ensure that the appearance of the package reflects the characteristics of the product inside the package - a product that has negative health consequences, is addictive, and is not for the consumption of children and teenagers. In concrete terms, the proposal:

· provides that that combined warnings (picture plus text) of 75% should be displayed on both sides of the packages of tobacco products, presented in rotation;

· replaces tar, nicotine and carbon monoxide (TNCO) levels on the packages with an information message referring to harmful substances of tobacco;

· ensures that display of cessation information (e.g. quit-lines, websites) is added to the packages;

· states that neither packaging of tobacco products, nor the products themselves, shall include any elements that promote tobacco products or mislead consumers into believing that the product is less harmful than others, refers to flavours or tastes or resembles a food product;

· exempts tobacco products other than cigarettes and roll-your own tobacco from larger health warnings;

· provides that in order to increase the visibility of the health warnings on smokeless tobacco products , these will have to be put on both sides of the package according to the proposal, but their size will remain unchanged compared to Directive 2001/37.

3) Traceability and security features : the proposal:

· provides for an EU tracking and tracing system at packet level for tobacco products throughout the supply chain (excluding retail). Tobacco products other than cigarettes and roll-your-own-tobacco are granted a transitional period of five years;

· provides that technical standards to ensure compatibility between the tracking and tracing systems used as well as for the contracts with third parties shall be adopted by delegated acts. Technical standardisations for security features shall also be adopted through delegated acts.

4) Tobacco for oral use : the ban of placing on the market (including cross-border distance sale) of tobacco for oral use as set out in Directive 2001/37/EC is maintained (except for Sweden which has an exemption in its Accession Treaty).

5) Cross-border distance sales of tobacco products : cross-border distance sales of tobacco products fall outside the scope of Directive 2001/37/EC. The proposal:

· includes a notification obligation for retailers of tobacco products intending to engage in cross-border distance sales;

· allows Member States to require the retailer to appoint a natural person, who ensures compliance with the Directive of products delivered to customers in the Member States concerned;

· provides a mandatory age verification mechanism .

6) Novel tobacco products (do not fall within any of the established product categories): these products will have to respect requirements of the Directive (e.g. in terms of labelling and ingredients) to ensure a level playing field, and the applicable rules will depend on whether the product involves a combustion process or not.

The proposal also provides a notification obligation for novel tobacco products and the Commission will issue a report on market development in these products five years after the transposition deadline of the Directive.

7) Nicotine containing products (NCP): bearing in mind the novelty and the rapid growth of the market in NCP, the proposal removes current legislative divergence between Member States and the differential treatment between Nicotine Replacement Therapies and Nicotine Containing Products. The proposal provides that:

· NCP that either have a nicotine level exceeding 2 mg, a nicotine concentration exceeding 4 mg per ml or whose intended use results in a mean maximum peak plasma concentration exceeding 4 ng per ml may be placed on the market only if they have been authorised as medicinal products on the basis of their quality, safety and efficacy, and with a positive risk/benefit balance;

· NCP with nicotine levels below this threshold can be sold as consumer products provided they feature an adapted health warning.

8) Herbal products for smoking : herbal products for smoking fall outside the scope of Directive 2001/37/EC and Member States regulate these products in different ways.

The proposal provides for adapted health warnings for herbal products for smoking to inform consumers about the adverse health effects of these products. In addition, no promotional or misleading elements are allowed on the packages.

BUDGETARY IMPLICATIONS: the estimated impact on expenditure (operational appropriations, human resources and other administrative expenditure) amounts to EUR 7,888 millions for the period 2014-2018.

DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU).

PURPOSE: to revise Directive 2001/37/EC on tobacco products in order to improve the functioning of the internal market and ensure a high level of health protection.

PROPOSED ACT: Directive of the European Parliament and of the Council.

BACKGROUND: tobacco is the most significant cause of premature death in the EU, responsible for almost 700 000 deaths every year . More than ten years have passed since the adoption of the Directive 2001/37/EC on tobacco products. In line with market, scientific and international developments, it has become necessary to update and complement this Directive .

The overall objective of the revision is to improve the functioning of the internal market . In particular, the proposal aims to:

· update already harmonised areas, in order to overcome obstacles encountered by Member States in bringing their national legislation in line with new market, scientific and international developments;

· address product related measures not yet covered by the Directive;

· ensure that provisions of the Directive are not circumvented by the placing on the market of products not compliant with the Directive;

· ensure a harmonised implementation of international obligations following from the WHO Framework Convention on Tobacco Control (FCTC) , which is binding for the EU and all Member States.

With regard to health protection , the proposed revision:

· seeks to regulate tobacco products in a way that reflects their specific characteristics (nicotine has addictive properties) and the negative consequences of their consumption (mouth, throat and lung cancer, cardiovascular problems including heart attacks, strokes, clogged arteries, increased risk of blindness, impotence, lower fertility, impact on the unborn child etc);

· focuses on initiation of tobacco consumption, in particular by young people , taking into account that 70% of the smokers start before the age of 18 and 94% before the age of 25;

· create conditions which allow all citizens across the EU to take informed decisions about the products, based on accurate information on the health consequences of consuming tobacco products.

The Commission's proposal for a Regulation of the European Parliament and of the Council on establishing a Health for Growth Programme contains measures which have as their direct objective the protection of public health regarding tobacco products and advertisement required by or contributing to the objectives of EU legislation in this field.

IMPACT ASSESSMENT: the Commission undertook an impact assessment which accompanies the proposal. A high level of health protection has been taken as the basic criteria amongst the different strategic options that were considered during the review of the Directive.

LEGAL BASIS: Article 114 of the Treaty on the Functioning of the European Union (TFEU).

CONTENT : the revision of Directive 2001/37/CE focuses on the following areas:

1) Ingredients and emissions : the maximum yields of tar, nicotine and carbon monoxide as well as the measurement methods remain the same as in Directive 2001/37/EC.

The proposal:

· keeps in place the mandatory reporting system of ingredients and, in addition, provides that a common electronic format for the reporting and manufacturers are required to provide supporting data (e.g. marketing reports);

· provides that placing on the market of new or modified tobacco products must not take place before the submission of ingredients data . Reported data, excluding confidential information, must be published;

· prohibits tobacco products with characterising flavours , such as fruit flavours or chocolate, and prohibits flavourings in filters, papers or packages;

· forbids additives associated with energy and vitality (e.g. caffeine and taurine), or creating the impression that products have health benefits (e.g. vitamins);

· exempts tobacco products other than cigarettes, roll-your own tobacco and smokeless tobacco products, i.e. cigars, cigarillos and pipe tobacco from some provisions such as the prohibition of products with characterising flavours. The exemption shall be removed if there is a substantial change of circumstances (in terms of sales volume or prevalence level among young people).

2) Labelling and packaging : the proposal seeks to ensure that the appearance of the package reflects the characteristics of the product inside the package - a product that has negative health consequences, is addictive, and is not for the consumption of children and teenagers. In concrete terms, the proposal:

· provides that that combined warnings (picture plus text) of 75% should be displayed on both sides of the packages of tobacco products, presented in rotation;

· replaces tar, nicotine and carbon monoxide (TNCO) levels on the packages with an information message referring to harmful substances of tobacco;

· ensures that display of cessation information (e.g. quit-lines, websites) is added to the packages;

· states that neither packaging of tobacco products, nor the products themselves, shall include any elements that promote tobacco products or mislead consumers into believing that the product is less harmful than others, refers to flavours or tastes or resembles a food product;

· exempts tobacco products other than cigarettes and roll-your own tobacco from larger health warnings;

· provides that in order to increase the visibility of the health warnings on smokeless tobacco products , these will have to be put on both sides of the package according to the proposal, but their size will remain unchanged compared to Directive 2001/37.

3) Traceability and security features : the proposal:

· provides for an EU tracking and tracing system at packet level for tobacco products throughout the supply chain (excluding retail). Tobacco products other than cigarettes and roll-your-own-tobacco are granted a transitional period of five years;

· provides that technical standards to ensure compatibility between the tracking and tracing systems used as well as for the contracts with third parties shall be adopted by delegated acts. Technical standardisations for security features shall also be adopted through delegated acts.

4) Tobacco for oral use : the ban of placing on the market (including cross-border distance sale) of tobacco for oral use as set out in Directive 2001/37/EC is maintained (except for Sweden which has an exemption in its Accession Treaty).

5) Cross-border distance sales of tobacco products : cross-border distance sales of tobacco products fall outside the scope of Directive 2001/37/EC. The proposal:

· includes a notification obligation for retailers of tobacco products intending to engage in cross-border distance sales;

· allows Member States to require the retailer to appoint a natural person, who ensures compliance with the Directive of products delivered to customers in the Member States concerned;

· provides a mandatory age verification mechanism .

6) Novel tobacco products (do not fall within any of the established product categories): these products will have to respect requirements of the Directive (e.g. in terms of labelling and ingredients) to ensure a level playing field, and the applicable rules will depend on whether the product involves a combustion process or not.

The proposal also provides a notification obligation for novel tobacco products and the Commission will issue a report on market development in these products five years after the transposition deadline of the Directive.

7) Nicotine containing products (NCP): bearing in mind the novelty and the rapid growth of the market in NCP, the proposal removes current legislative divergence between Member States and the differential treatment between Nicotine Replacement Therapies and Nicotine Containing Products. The proposal provides that:

· NCP that either have a nicotine level exceeding 2 mg, a nicotine concentration exceeding 4 mg per ml or whose intended use results in a mean maximum peak plasma concentration exceeding 4 ng per ml may be placed on the market only if they have been authorised as medicinal products on the basis of their quality, safety and efficacy, and with a positive risk/benefit balance;

· NCP with nicotine levels below this threshold can be sold as consumer products provided they feature an adapted health warning.

8) Herbal products for smoking : herbal products for smoking fall outside the scope of Directive 2001/37/EC and Member States regulate these products in different ways.

The proposal provides for adapted health warnings for herbal products for smoking to inform consumers about the adverse health effects of these products. In addition, no promotional or misleading elements are allowed on the packages.

BUDGETARY IMPLICATIONS: the estimated impact on expenditure (operational appropriations, human resources and other administrative expenditure) amounts to EUR 7,888 millions for the period 2014-2018.

DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU).