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Cross-border issues

 

Rates of alcohol-related outcomes are sensitive to policy differences in neighboring territories. It is clear that cross-border trade with alcoholic beverages has a profound impact on public health. While Nordic countries have very strong alcohol policy with high prices and limited marketing, Baltic countries, just next door, are having much lower price levels which attracts massive number of buyers from Nordic countries. Also between Nordic countries and from countries such as Germany and Poland cross border trade is important. This cross-border trade and travellers’ alcohol imports as such is limiting the possibilities to increase alcohol excise duties or otherwise affect prices of alcohol in several Nordic countries.

While cross-border trade and price differences seem to be the biggest issue here, it´s definitely not the only matter that countries have to deal together. 

 

This project is run by Nordic Alcohol and Drug Policy Network in cooperation with Estonian Temperance Union and is partly financed by Nordic Council of Ministers Estonian office. 

As part of the project, we organized a conference in Tallinn, Estonia on October 28-29, 2017. Conference presentations can be found HERE.

Travellers’ imports and cross-border trade of alcohol is not exclusively a Nordic problem

Cross-border trade exist where there are strong enough push and pull factors to get people to buy and transport goods from one country into another.

The main motive for travellers’ to import alcohol is price differences between countries. 
Therefore differences in excise duties on alcohol will always be relevant for the volume of travellers’ alcohol imports.
As long as it is affordable or at least feels advantageous for people to bring less expensive alcohol from another country the phenomenon of travellers’ alcohol imports will exist.
The easier it is to travel and the fewer restrictions there are, the higher are the amounts of alcohol imported.

By Thomas Karlsson, THL, Finland

Report 2017/2018

Alcohol across borders

Nordic and Baltic region

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UK based TV channels advertise in Sweden

Television broadcasters established in other EU Member States circumvent the ban on alcohol advertisement on TV in Sweden. Through the country of origin principle in the Audiovisual Media Services Directive (AVMSD) broadcasters in other EU countries are allowed to only follow the rules of the country they are established in when they are broadcasting to a Swedish audience. This is currently the case for a large amount of Swedish-language TV channels broadcasting from the UK and is done with the intent to avoid Swedish advertising legislation. There is currently a case being brought against these broadcasters by Swedish authorities following the procedure in article 4 of the AVMSD. However, the current phrasing of article 4 AVMSD means that the procedure has been very long with a low chance of success at the end of it.

IOGT-NTO:s complaint from 2011 against the UK-based broadcasters behind the TV-channels that broadcast alcohol commercials on Swedish television finally got an answer in 1 February 2018. The Commission decided to not allow Sweden to sanction the broadcasters.

“The AVMSD is based on the principle of the country of origin, according to which broadcasters are subject solely to the rules of the Member State where they are established, including when they broadcast to other EU countries. The AVMSD does not prohibit alcohol advertising, but allows Member States to apply stricter rules, including a full ban, on broadcasters under their jurisdiction. Such a ban exists in Sweden,” European Commissions decision states. “In order to impose such a ban on the UK broadcasters, Sweden should have demonstrated, under the specific procedure contained in Article 4 of the AVMS directive, that the broadcasters in question established themselves in the UK in order to circumvent such rules. The burden of proof lies with the Member State and the Commission found in this case that Sweden failed to prove circumvention on the part of the two broadcasters.”

The decision affects marketing rules in countries all over the EU by failing to make sure that national legislation can be upheld against broadcasters who want to circumvent it – regardless if it concerns alcohol, HFSS-food marketing or something else.

IOGT-NTO sent an open letter to health attachés as well as parliament negotiators. The letter calls on the trilogue negotiators to revisit article 4 of the AVMSD in view of this decision by the Commission. NordAN network was one of the co-signers of the letter. 

Kalle Dramstad, IOGT-NTO´s European Policy Officer, Sweden

Tallinn resolution

Nordic Alcohol and Drug Policy Network (NordAN) welcomes the Estonian Presidency’s focus on cross-border alcohol policy solutions. We urge European Member States and EU institutions to recognize the need to cooperate in reducing the harm caused by alcohol.

Alcohol is a regional, national and European issue. Action is needed at all levels. We are calling for a Single Market with high public health standards that supports Member States’ efforts to reduce alcohol related harm.

 

Cross-border purchases and taxes
Taxation of alcoholic beverages is an important part of alcohol policy. Price measures, including taxation, are well documented strategies to reduce alcohol related harm and one of WHO’s three “best buys” in alcohol policy. Price impacts both on total consumption in the population and on consumption in risk groups, such as young people and heavy drinkers.

 

In order to avoid unhealthy downward tax competition and border trade between EU member states, consumption taxes on most goods in the EU single market are levied at the rate of the country where the good is consumed. 

 

However, in European Union individuals can move large amounts of alcohol for private use across internal EU borders without paying excise duty where the alcohol is consumed.
 
Due to significant tax differentials on alcohol between EU countries, these rules create strong incentives to purchase and transport alcohol across internal EU borders. Fear of - or real -  losses in trade resulting from cross-border shopping has lead many EU Member States to reduce, or refrain from increasing, alcohol taxes. This has negative effects on both tax revenues and the health of EU citizens.

 

NordAN calls on the EU to revise the rules for private import of alcoholic beverages. This revision should give Member States flexibility to lower the current indicative guide levels for alcohol and set absolute limits. We firmly believe this can be done in the framework of the Single Market, just as it has been done for excise duty on tobacco and fuels.

Cross-border marketing 

There is consistent evidence that exposure to alcohol marketing increases alcohol consumption, especially among young people. This significantly increases both the economic costs and the social and health related harm of alcohol.

In a connected world, marketing crosses borders effortlessly. Effective regulations therefore require a European response. However, it has become clear that current regulatory policies in Europe struggle to keep up to speed with technological developments and do not sufficiently protect children and young people from alcohol marketing in digital and social media. 

NordAN urges the European Union to strengthen alcohol marketing control. Ideally, we call for a ban on all alcohol advertising – a simple, cost effective policy measure, recommended by the World Health Organization.

 

Labelling
In 2011 the European institutions passed regulations that require food and soft drinks, including fruit juice and milk, to label nutritional information and ingredients. Unfortunately, alcoholic beverages were exempted from this obligation.

 

Listing ingredients contained in a beverage alerts the consumer to the presence of potentially harmful substances. Nutritional information such as energy content allows consumers to monitor their diets better, and makes it easier to choose a healthy lifestyle.The EU must ensure that consumers can make truly informed and easily comparable choices for alcoholic beverages, just as they can for all other products.

 

NordAN is calling for the current loophole in the regulation to be closed so that ingredients are listed and nutritional information in all alcoholic beverages is provided per 100ml. 

We await the outcome of the on-going process to develop a labelling framework, but urge the Commission to take regulatory measures if the industry proposal fails to meet the the required standards.

 

The Commission’s report on alcohol labelling recognizes that people have a right to know what is in the products they buy. In our view regulation on labelling should not stop there. Even moderate consumption of alcohol has health consequences. Alcohol is the cause of a large number of non-communicable diseases, including many cancers. EU-citizens have the right to know.

 

Nordic Alcohol and Drug Policy Network held it´s annual General Assembly on October 28 in Tallinn, Estonia, where this resolution was adopted.

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This publication has been produced with the financial support from the Nordic Council of Ministers. The content of this publication is the sole responsibility of the coordinators of this project and do not necessarily reflect the views or policies of the Nordic Council of Ministers.

Relevant papers and studies

 

COUNCIL DIRECTIVE 2008/118/EC 

Council Directive on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products. 

According to Directive excise duty on excise goods acquired by a private individual for his own use, and transported from one Member State to another by him, shall be charged only in the Member State in which the excise goods are acquired.
Member States may lay down guide levels which for alcoholic beverages may not be lower than:

— spirit drinks: 10 l,

— intermediate products: 20 l,

— wines: 90 l (including a maximum of 60 l of sparkling wines),

— beers: 110 l.

 

Cross-border aspects in alcohol policy – tackling harmful use of alcohol
− Council conclusions (8 December 2017)

Invites Member States to:

Examine the possibility of adopting measures aimed at decreasing the harmful use of alcohol at national level and within the framework of bilateral and multilateral cooperation, while respecting the smooth functioning of the internal market, such as measures aimed at protecting children and young people from exposure to cross-border advertising within the single market, increasing the efficiency of the information provided through the labelling of alcoholic beverages and preventing illegal activities connected to cross-border transport of alcohol.

Closely monitor the compliance with national and EU measures aimed at preventing the harmful use of alcohol, such as the minimum age for purchasing alcohol and the conditions applicable to
cross-border transport of alcoholic beverages.

Explore possible ways, including through bilateral and multilateral arrangements, of preventing cross-border issues from having a negative impact on the effectiveness of the national measures aimed at tackling the harmful use of alcohol.

Invites
Member States and Commission to:

Continue developing collaboration and the sharing of best practices aimed at reducing the harmful use
of  alcohol within the EU wherever possible, in particular through better supervision of activities liable to weaken the effectiveness of national alcohol policies in other Member States, e.g. cross-border transmission of promotional messages and cross-border purchases of alcoholic beverages.

 

COUNCIL CONCLUSIONS
ON COMMISSION REPORT ON COUNCIL DIRECTIVE 2008/118/EC (5 December 2017)

CALLS upon the Commission to explore the possibilities for revising the provisions on
guide-levels for intended own use of alcohol and tobacco, set out in Article 32 of the
Directive, ensuring that they remain fit for purpose to balance the objectives of public
revenues and health protection. This work could also cover the analysis of a feasibility of
introducing quantitative limits to intra-Community transport of such products, respecting
the principle of free movement of goods.

 

SWEDISH NATIONAL INSTITUTE OF PUBLIC HEALTH: Alcohol affordability and
cross-border trade in alcohol (2009)

Policy research in the alcohol field has long recognized the importance of price and  affordability for the development of alcohol consumption and related harms. The Swedish National Institute of Public Health has been commissioned by the Swedish Government to produce a discussion paper on alcohol affordability in the EU, with special focus on its consequences on cross-border trade on alcohol. The present report is the result of this assignment.

 

Journal of Health Economics: Cross-border health and productivity effects of alcohol policies (2014)

"Our results show that the Finnish tax cut did not have any clear effect on mortality or alcohol-related hospitalisations in Sweden. However, we find that workplace absenteeism increased by 9% for males and by 15% for females near the Finnish border as a result of the tax cut."

 

NORDIC STUDIES ON ALCOHOL AND DRUGS: Cross-border purchase of alcohol
in the Nordic countries (2009)

DUE TO THE REALISATION OF THE SINGLE EUROPEAN MARKET by the European Union (EU) member states quotas for travellers’ tax-free imports of alcoholic beverages were completely abolished in Denmark, Finland and Sweden on January 1, 2004. This applied only to traffic between EU countries. In other EU countries, such an abolition had already been applied on January 1, 1993, while Denmark had done so only with respect to travellers’ imports of beer and wine. 

 

The International Journal of Alcohol and Drug Research: What happened to alcohol consumption and problems in the Nordic countries when alcohol taxes were decreased and borders opened? (2013)

Harms measured in register data did tend to increase in the short term with the policy change, particularly in Finland, where the tax changes were broader.  But reducing price and increasing availability does not always increase alcohol consumption and harm.  Effects are dampened in affluent societies, and other factors may intervene. The results for Finland also suggest some limits for general population surveys in testing for relatively small policy effects.

 

Permanent Mission of Estonia in Geneva: Statement delivered by Estonia on behalf of the Nordic-Baltic countries (September, 2017)

Countries are today realising the impact of a borderless world, which affect the preventive measures concerning alcohol-related harm. National measures adopted can be diluted by cross-border shopping. To address this and other important cross-border issues, including labelling and marketing in new media, a discussion among the EU countries on alcohol policy and possible future steps will take place during the Estonian Presidency of the Council of the European Union.

 

Alcohol and Alcoholism: The Impact of Policy Changes on Consumer Behaviour and Alcohol Consumption in Scania, Sweden 1999–2005 (2014)

The deregulation of the cross-border trade of alcohol into Sweden did not, within our sample, lead to an increase in consumption. There were, however, significant decreases in consumption levels within different socio-demographic sub-groups. In relation to changing consumer behaviours both upward and downward shifts in drinking trends were observed.

 

 

N O R D I S K A L K O H O L - & N A R K O T I K A T I D S K R I F T: Developing border regions, regulating alcohol in the Nordic countries (2005)

In the last decade or so there has been a decided shift in Nordic alcohol policy towards questions of cross-border trade and cross-country price differences. This refocusing is the result of ongoing efforts in the European Union to create a common market without fi scal barriers, which have led to a slow but sure erosion of Danish, Finnish and Swedish exemptions to Union rules on the import of alcohol for personal use.

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