A window display with different electronic cigarettes is seen in a shop. (REUTERS/Charles Platiau)

Disagreement over how to regulate the booming market for electronic cigarettes is holding up a deal on strict new rules governing tobacco products in the European Union, diplomats said on Monday.

In talks aimed at finalizing the legislative proposals by the end of the year, the European Parliament has pushed for a light touch approach to e cigarettes, which it regards as a less harmful alternative to smoking.

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But with a lack of clear evidence on the long term health impact of e cigarettes, EU governments have sought more restrictive rules, saying the amounted of nicotine contained in the cigarettes should be limited.

That could threaten the continued growth of a fast growing market that some analysts say could eclipse the $700 billion a year regular cigarette market within 10 years.

Unless negotiators can reach a compromise in two final rounds of talks this week, the row could delay by up to two years the adoption of a wider package of tough new anti tobacco controls. They include larger health warnings on cigarette packets and a ban on menthol and other tobacco flavorings.

The alternative would be to leave e cigarettes unregulated at EU level as at present, leaving each government to decide individually what rules if any to apply.

«I don’t think we will get a deal on e cigarettes,» said one EU diplomat close to the talks, who spoke on condition of anonymity as he was not authorized to talk to journalists.

The main sticking point is the parliament’s demand that e cigarettes can be sold with refillable nicotine cartridges, rather than as single use items as demanded by member states.

Several governments, including Britain and Germany, are concerned that at the nicotine concentration level of 20 milligrams per milliliter being discussed, one 10 ml refill cartridge would contain more nicotine than a carton of 200 cigarettes.

«The parliament has said that unless refillable cartridges are allowed, it will veto the package,» said another senior EU official involved in the discussions.

«So it is possible that refillable cartridges could block the entire deal.»

BIG TOBACCO

Other elements of the proposals where governments and the parliament broadly agree include graphic new health warnings combining pictures and text that will cover 65 percent of the front and rear of cigarette packs.

There will also be a ban on menthol flavored cigarettes, although it will only come into effect 6 years after the rules are finalized. Vanilla and other flavors seen as particularly attractive to children will be phased out more quickly.

With agreement elsewhere, e cigarettes are the last remaining hurdle to the adoption of draft EU tobacco rules that have been more than three years in the making, and the subject of intense lobbying by the tobacco industry and health campaigners alike.

The global market for e cigarettes battery powered tubes that turn nicotine laced liquid into vapor was estimated at more than $2 billion last year by market consultant Euromonitor. They usually sell for about $30 to $50 each.

Big tobacco firms including Philip Morris owner Altria, British American Tobacco and Imperial Tobacco have all moved into the fast growing market, to try to offset a decline in sales of ordinary cigarettes.

A study published in The Lancet medical journal earlier this year showed that smokers who switch to e cigarettes are at least as likely to quit or cut down as users of nicotine patches.

Proponents say there is no evidence of any harm from using e cigarettes, while tobacco smoking continues to kill 700,000 people in Europe each year and as many as 6 million worldwide.

But health professionals remain wary, with the World Health Organization saying that until e cigarettes have been endorsed as safe and effective by regulators, consumers should be strongly advised not to use them.

The U.S. Food and Drug Administration is expected to release rules this month extending its «tobacco product» authority to cover e cigarettes, which could prompt new legislation.

Up in smoke: the future of cigarettes in europe — legalis global

The new directive brings important changes on the tobacco market, many of which have been strongly contested by the companies doing business in this sector. According to the press release issued by the European Parliament on Dec. 18, 2013, the reason behind the stricter rules that will be implemented through the revision of the directive is mainly to discourage youth from smoking and to ban flavors and tobacco products considered to be misleading with respect to certain characteristics or benefits that could make them more appealing to consumers.

A major change brought by the new directive refers to the appearance of the packaging. Combined picture and text health warnings will now cover two thirds of the surface of the individual package on both sides, representing 65 percent of the surface of the package. Furthermore, each cigarette pack will mandatorily feature a general warning of the type Smoking kills quit now and the following informative message Tobacco smoke contains over 70 substances known to cause cancer .

The new directive also prohibits the sale of tobacco products that have a distinct flavor. For instance, member states will ban the marketing of tobacco products that have a distinguishable mint, fruit or vanilla flavor or that contain vitamins or other additives which might give the impression that they have health benefits as well as those that include caffeine, taurine or other stimulants for energy and vitality or additives that produce coloring effects in emissions.

With respect to the labeling of products, the directive prohibits the use of any elements or features that promote tobacco products or encourage tobacco use by creating a misleading impression with respect to its features and health effects. Consequently, labels and packages of tobacco products can no longer include references to the presence or absence of taste, smell or any other flavors or additives, cannot be similar to the labels and packaging for foods stuffs or cosmetics and cannot contain indications that the respective product has natural, organic, energizing properties. Since the directive provides that the elements and features prohibited can also include texts, symbols, names, trademarks, figurative elements or other signs, it lays the groundwork for member states to introduce even stricter rules with respect to the packaging of tobacco products, such as plain packaging.

Plain packaging has so far been adopted in Australia, where the domestic legislation allows for cigarettes to be sold in dark brown packs displaying large sized health images and text warnings and prohibits the display of trademarks on cigarette packs unless written in standard small letters.

The introduction of plain packaging is also supported in Ireland and the United Kingdom by recent statements issued by the public authorities in both countries on April 3. New Zealand has also recently issued a legislative bill that would amend the legislation currenty in force, by introducing plain packaging for tobacco products.

However, both the representatives of tobacco companies as well as the intellectual property associations INTA, ECTA, MARQUES, AIPPI, LES etc. have reacted negatively to the introduction of plain packaging, expressing concerns throughout the recent years in what regards various issues that could be raised by the introduction of legal provisions that expressly ban the use of trademarks with figurative elements and colored logos.

In the comments submitted recently by ECTA to the New Zealand Parliament bill it is stated that the proposed legislation is in conflict with the property rights of trade mark owners, since it amounts to a deprivation or property rights by prohibiting any use of trademarks registered by the tobacco companies. Further, ECTA also argues that introducing plain packaging may generate an increase in the trade in counterfeit and contraband cigarettes.

In our view, such effect would be an indirect consequence of the mandatory elimination of the specific details and graphical elements applied by manufacturers, for security purposes, on the packaging and labels of tobacco products and the introduction of plain, generic labels much easier to be copied by infringers.

Last but not least, the introduction of plain packaging could also breach a number of other fundamental rights and freedoms. In addition to depriving a right to property, it also breaches the freedom of expression (of entities doing business on the tobacco markets) and the freedom to carry out a commercial activity. Also, the prohibition to use certain trademarks would most like have financial implications for the holders of such intellectual property rights, both by generating a loss of the amounts already invested in their trademarks registration, protection and enforcement, as well as by diminishing the value acquired by such trademarks through their extensive use on the market and the investments in their advertising.»

The new Tobacco directive is scheduled to enter into force in May 2014, 20 days after publication in the Official Journal. Member states are granted two years as of its entry into force for putting into effect the new provisions.

Ana Maria Baciu is a partner and heads the Intellectual Property division, in addition to managing the Consumer Protection, Pharmaceutical and Health Care and Gaming practices at NNDKP in Romania. Andreea Bende is a Senior IP Counsel and is licensed as a European trademark and design attorney.