Optimizing the regulatory environment

Championing better regulation for informed choice

We value and support the freedom for adults to make informed choices, and we play our part by ensuring all consumers understand the associated risks when deciding whether to smoke or not. That’s why we are as transparent about our positions on smoking and health as possible. It is also why, no matter what we do, we adhere to the five core principles that define our attitude to smoking. We also work in a highly regulated operating environment, and we monitor regulatory trends in order to anticipate future changes in regulation and prepare for the implementation of those changes well in advance. This is done in line with our tobacco principles, so that we go above and beyond our obligations.

Aspirational goal

We will ensure the Company is included in policymaking leading to fair and balanced regulation, and enhance our cooperation with governments to combat illegal trade.

Target

We will always protect our ability to participate in public policy debate with the aim to achieve balanced regulation that meets societal concern and supports business growth.

Progress

During 2019, we engaged openly and transparently in public policy debate and made our views known to regulators, NGOs and other relevant stakeholders in the countries where we operate.

Read more about our latest progress on the JT Group's tobacco business sustainability strategy.

Read more about our views on specific regulatory topics on JTI.com.

Supporting ‘better regulation’

Smoking carries risks to health, and appropriate and proportionate regulation of the tobacco sector is both necessary and right. To meet public policy goals, while respecting the rights of all stakeholders, it is important that regulation is evidence-based, practical, enforceable, and competitively neutral.

To help lawmakers develop better regulation, the OECD has endorsed the internationally recognized ‘Guiding Principles for Regulatory Quality and Performance’, which we support. These can be summarized as:

  • Coherence
  • Openness
  • Proportionality
  • Participation
  • Effectiveness
  • Accountability

A key aspect of better regulation is a transparent legislative process, one that involves all interested and affected parties.

With regulation affecting our products and our industry, we exercise our right to make our views known, by engaging openly and transparently with government stakeholders (including regulators), non-governmental organizations, and all other relevant stakeholders. We seek to ensure that the regulatory environment encourages innovation, business growth, and freedom of consumer choice so that we may better serve the needs of consumers, society, and our business.

We engage openly in regulatory processes at all stages, and take part in public consultations by providing arguments supported by evidence and alternative solutions.

We support public discussions on the topics of good governance, better regulation, and transparency.

Our views on Reduced-Risk Product regulation

The tobacco industry is currently undergoing a transformation as Reduced-Risk Products are gaining popularity in many countries. We believe that these products offer real benefits to consumers and society, and that consumers should be free to choose them.

Governments and regulators should avoid restrictive regulation which suppresses innovation and/or prevents adult consumers from selecting these products.

However, legislative approaches to Reduced-Risk Products continue to vary widely across the world, and to change rapidly. Some countries ban these products outright; others try to regulate them to different degrees, while others lift bans altogether.

That’s why we are committed to working with regulatory authorities, public health bodies, and the scientific community, to create the best possible frameworks for these products to reach their full potential, and provide a greater choice for adult consumers.

Latest regulatory developments

It is in the public interest for regulation to be evidence-based, proportionate, and effective. We support the principles of better regulation, which argue for measures that preserve consumer choice and market freedom. Regulation is fast-moving and we monitor developments closely. The following are just a few examples of some key regulatory developments around the world in 2019.

U.S. – Premarket tobacco product applications (PMTA) deadline advanced

In July 2019, a ruling endorsed by the Food and Drug Administration brought forward the submission deadline for the PMTA review of “deemed” tobacco products (including e-cigarettes), from 8 August 2022 to 12 May 2020. This has since been extended to 9 September 2020 due to the global COVID-19 crisis.

In August 2019, Logic Technology Development LLC (a subsidiary of the JT Group) submitted PMTAs for a number of products in its e-cigarette and tobacco vapor line-up.

U.K. – Public Health England continues to see strong risk-reduction potential in e-cigarettes

In November 2019, Public Health England reassured users about the risk reduction potential of e-cigarettes currently marketed in the U.K. saying, “PHE and the Royal College of Physicians estimate the risk reduction to be at least 95%.”*

Read more from Public Health England

  • * https://www.gov.uk/government/publications/smoking-and-tobacco-applying-all-our-health/smoking-and-tobacco-applying-all-our-health

Switzerland – Snus is authorized

Following a Federal Court judgment in May 2019, the marketing of snus (tobacco for oral use) is now permitted in Switzerland under the Act on Foodstuff.

EU – Directive on single-use plastics

The EU Directive “on the reduction of the impact of certain plastic products on the environment” entered into force in July 2019. Member states have two years to transpose the legislation into their national law.

Tobacco filters are included in the scope of the Directive, and we are proactively working with our stakeholders to prepare for these regulatory changes, to ensure compliance with laws and maximize the positive impact that these developments might have on our customers and our business.

WHO – Framework Convention on Tobacco Control (FCTC)

We continue to follow the evolution of the WHO FCTC. The Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol) came into force on 25 September 2018. The eighth session of the FCTC Conference of the Parties (COP8) and the first session of the Meeting of the Parties to the Protocol (MOP1) took place in October 2018.

At these FCTC events in 2018, there were no new recommendations or decisions that directly impacted the JT Group and our products. As the decisions made at these events can have far-reaching implications for our consumers, wider society, and our business, we continue to closely monitor the evolution of the FCTC and the Protocol, and are preparing for COP9 and MOP2 in 2021. Although we continue to be denied a voice at such events, we will continue to share our views with decision-makers wherever possible.

Engaging with our stakeholders

The JT Group remains committed to working with regulatory authorities, public health bodies, and the scientific community. As part of this engagement, we attend industry events where we are able to make our voice heard.

In September 2019, we attended the Global Tobacco and Nicotine Forum in Washington DC, a key international conference where commentators gathered to discuss the future of the tobacco and nicotine industry. In 2019, the JT Group sat on panels in discussions around environmental challenges and gender equality. The forum attracted over 250 participants working in academia, public health, regulation, and the tobacco industry.

Case study

Spotlight: branding ban

The ability to build and use a brand is essential for businesses to thrive and economies to prosper. Distinctive branded packaging is vital for competition, and enables consumers to identify, obtain information about, and choose their preferred brands of tobacco products easily and without confusion.

However, branding bans (also known as plain or standardized packaging) are imposed on the tobacco sector in certain parts of the world, and these are not based on, or consistent with, a credible and scientifically rigorous understanding of the behavior of smokers. These types of restrictions are also being considered for other consumer products.

Since the implementation of the plain packaging policy in Australia in 2012, no studies have shown convincing evidence that it reduces the number of people choosing to smoke.

> Visit JTI.com to read expert reports on the impact of plain packaging.

Consequently, we believe these bans fail to achieve stated public policy objectives and are, in fact, excessive and misguided.

Plain packaging has serious negative consequences for society and consumers. It makes counterfeit products easier to produce, distribute, and sell. This encourages criminality and impacts government tax revenues. Consumers and retailers struggle to tell the difference between brands, which damages competition and affects business. It also infringes our rights to property, expression, and trade, without proper justification.

In June 2020, the WTO Appellate Body ruled in favor of Australia in the plain packaging dispute. The ruling is a major step backwards for the protection of intellectual property rights internationally. Although this outcome only applies to Australia, it sets a worrying precedent that could encourage governments to ban branding on other products. Besides, the Appellate Body did not have the opportunity to take into account most recent data such as those from the Australian Government, which shows that the smoking rate has not markedly declined, indicating that it has not worked as anticipated.

Transparency

Transparency, openness, and accountability during official decision-making processes are essential to achieving sound public policies and fair regulation for any industry.

Since 14 November 2011, JTI has been a registrantof the EU Transparency Register setting out our fields of interest and costs related to lobbying activities within the EU decision-making process.

Responsible marketing

We only market our tobacco products and e-cigarettes to adult smokers and vapers in order to maintain brand loyalty and to encourage smokers of competitor brands to switch to our products. We do not market tobacco products or e-cigarettes to minors, nor do we encourage anyone to take up smoking, or discourage anyone from quitting smoking. We support regulation on the responsible marketing of tobacco products and e-cigarettes, providing it is evidence-based, practical, effective, and proportionate – and that it allows us to communicate with adults who use our products.

We take responsible marketing very seriously, particularly when it comes to preventing youth smoking. We never market our tobacco products to minors.

This focus is reflected in our Global Tobacco Marketing Principles, a guiding document developed in 2016.

When it comes to our retail partners, we continue to support them by training staff and providing campaign materials to reinforce the message that underage sales are not allowed.

We provide targeted responsible tobacco-retailing programs that effectively tackle youth smoking, and these are welcomed by retailers. In the U.K. for example, our IDentify program has been developed to locate retailers who may be at risk, and we performed 1,282 test purchases in 2019. We offer these retailers professional training and help them to raise standards, so that they will avoid making underage sales.