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EU: Candidates Mark Symbolic Victory On Cigarette Taxes

The European Commission says it will accept a demand from candidate countries to delay imposing the EU's high excise duties on cigarettes. RFE/RL's Brussels correspondent Ahto Lobjakas reports that last night's decision shows that the commission recognizes sharp price hikes could fuel political discontent in candidate countries.

Brussels, 24 October 2001 (RFE/RL) -- The European Commission has decided to allow candidate countries to delay imposing high excise duties on cigarettes after enlargement.

Last night's decision is important in that it marks the first time the EU has permitted candidate countries to deviate from EU norms -- albeit for a limited period of time -- in the key internal market sector.

It is one of the mainstays of accession talks that any transition measures not distort competition within the bloc. Lower excise duties on cigarettes in certain member states would have just such an effect. But a statement issued last night by the European Commission says the commission recognizes that not accepting transitional periods may have a strong political, economic, and social impact on candidate countries -- that is, it may fuel skepticism toward the idea of joining the European Union.

Privately, commission officials also admit that higher tax levels in candidate countries could serve to boost cigarette smuggling over their eastern borders.

The compromise offer of a two- to three-year transition period will not apply in Hungary, Cyprus, and Malta. These countries did not request a delay.

The commission's enlargement spokesman, Jean Christophe Filori, today defended the compromise: "I would like to stress here that this is a balanced proposal taking into account not only the social effect but also other considerations, like the consistency of the internal market, which is very important especially as regards transitional periods, as well as public health policy. And this is definitely the best that the commission can offer today to the candidate countries."

The proposal must be approved by the EU's 15 member governments before it can be presented to the candidates.

Most candidates had requested delays of five to seven years, considering that their excise duty levels -- as well as average incomes -- are much lower than the EU's.

The EU concessions are further watered down by the commission's demand that candidates begin "progressive alignment" next year to reach the EU's 57 percent excise levels on cigarettes.

The commission statement says negotiations on the issue of taxation will not be closed before the presentation of a "realistic timetable" for alignment.

Candidate countries will have a chance to react to the EU's offer on 26 October when negotiators reconvene in Brussels for another round of accession talks.