It will go underground and harm the economy. Business opposes draft law on nicotine-containing products
13 February 13:45
Leading business associations believe that the current draft law on the regulation of nicotine-containing products will do more harm than good. According to entrepreneurs, the current version of the document effectively bans most nicotine-containing products for oral use, which is not in line with international practice, according to a joint statement by business associations distributed by the EBA press service, reports "Komersant Ukrainian".
Business associations in Ukraine, including the European Business Association (EBA), the American Chamber of Commerce (AmCham), and the Union of Ukrainian Entrepreneurs (SUP), have appealed to parliament to review the provisions of draft law No. 14110-d due to concerns from the business community.
According to the business associations’ appeal, the results of the analysis of draft law No. 14110-d indicate significant risks for the economy and the regulatory environment.
First, in their opinion, the proposed changes would effectively impose a ban rather than regulation.
The bill provides for a restriction on the nicotine content in nicotine-containing products for oral use to 1 mg per serving. In practice, this makes it impossible to manufacture, import, and sell most of these products, which are currently legally available on the Ukrainian market. After all, the most common products in Ukraine are those with a nicotine content of 3-20 mg.
Among the possible negative economic consequences of such a decision, the business community identifies:
— a reduction in state budget revenues from excise tax and VAT — losses could amount to approximately UAH 1.2 billion per year, with a further increase to UAH 1.5–2 billion annually;
— growth of the shadow market due to existing demand, as previous experience with banning flavored e-cigarettes has shown that such a policy leads to a massive shift of the market to the illegal segment and significant budget losses.
In addition, the proposed changes are not in line with international practice.
“Nicotine-containing products for oral use are regulated in most EU countries and in the US. Many countries have set significantly higher permissible nicotine levels than those proposed in draft law No. 14110-d. For example, in 10 EU countries, the upper permissible nicotine limit is 16-25 mg, while in the US, products with a nicotine content of 9 mg are permitted for sale,” the business community noted.
The bill also contains regulatory inconsistencies.
Businesses are particularly concerned about the provisions regarding:
— changing the definition of “tobacco products” to include nicotine-containing products without tobacco, which is not in line with EU Directive 2014/40/EU;
— the introduction of standardized packaging and requirements for placing health warnings on 65% of the packaging surface. This exceeds the approaches of EU countries (where 30% regulation applies to such products) and may violate consumer and intellectual property rights in the use of trademarks.
“That is why the European Business Association, the American Chamber of Commerce in Ukraine, and the Union of Ukrainian Entrepreneurs do not support draft law No. 14110-d in its current form. After all, it creates risks for the budget and the investment climate, contributes to the shadowing of the market, and is not consistent with the relevant EU Directive and international practice in general,” the authors of the appeal concluded.
The business community called on MPs to further refine the bill and introduce balanced regulation that would allow for effective control of the circulation of nicotine-containing products on the market without introducing bans.
