The United Kingdom has joined the 26 other EU member states and the European Community as a signatory to the 2004 anti-contraband and anti-counterfeit agreement with Philip Morris International (PMI) and the 2007 co-operation agreement with Japan Tobacco International (JTI), the European Commission said on April 21 2009.

This means that now all EU states are parties to these agreements.

Every year, the European Community and the member states lose hundreds of millions of euro in unpaid taxes from contraband and counterfeit cigarettes.

Counterfeit and other forms of contraband create a parallel illegal supply chain that compromises legitimate distribution channels and competes unfairly with genuine products.

European Commission Vice President Siim Kallas said: "This united front by the Community and all the member states shows how seriously we take the fight against illicit tobacco products. It is a strong signal to other companies that such legally binding arrangements are an essential tool to strengthen our action in this area.

"As the agreements now cover the entire territory of the EU, implementation will become even more comprehensive and efficient," he said.

"It will be more difficult for illegal traders to find loopholes. This is not only to the advantage of the UK, but to the EU as a whole since it protects EU financial interests more effectively," Kallas said.

On July 9 2004, the European Community and 10 EU member states signed an anti-contraband and anti-counterfeit agreement with PMI.

Since that date, 16 member states have signed the agreement with PMI. On December 14, 2007 the EC, together with 26 participating member states and JTI signed a similar multi-year co-operation agreement to combat future cigarette smuggling and counterfeiting.
flowing from the agreements.

The agreements require the participating producers to build on their existing review processes for selecting and monitoring customers, to enhance their capacity to track and trace certain packaging, and to provide expanded support to European law enforcement in its battle against the illegal trade in cigarettes.

Under the agreements, the producers agree to continue limiting their sales to volumes commensurate with legitimate market demand.

The agreements also incorporate into a comprehensive contractual framework the participating producers' existing compliance programmes.

Producers have a responsibility to fight illegal trade in their products, in full cooperation with relevant government authorities.

A lawsuit against R.J. Reynolds and its affiliated entities for civil claims arising out of conduct related to contraband cigarettes is currently pending before the United States District Court - Eastern District of New York.

"The European Commission has always made it clear that it would like to see legally
binding agreements negotiated with other international tobacco companies and is always prepared to have discussions with producers who are willing to improve ways to combat illegal trade in their product and associated criminal activity, such as money laundering," the EC statement said.