The Select Committee on European Legislation has made further progress in the matter referred to it and has agreed to the following Report:-

  Introduction

1.  A draft Directive to ban tobacco advertising was considered by a previous Committee as long ago as 1991, and an amended version of that draft in 1992[2]. Our predecessors in the last Parliament were told on a number of occasions that a blocking minority of the UK and other Member States opposed the proposals, and that there was therefore no prospect of a compromise position being agreed.

2.  Moreover, in December 1993 the Council Legal Service had taken the view that a measure to ban tobacco advertising could not be based upon Article 100a of the Treaty, as was proposed (we consider this in greater detail in paragraphs 11 to 16 below).

3.  The incoming Government in May this year had made a manifesto commitment to ban tobacco advertising, and it seemed likely that there would be movement on the draft Directive. On 18 July the Minister of State for Public Health (Tessa Jowell) told us[3] that she had explained to the Health Council on 5 June that, before the Government could decide its response to the draft Directive, it would need to know the opinion of the Council Legal Service on the legal base. The Minister undertook to keep us informed of developments.

4.  On 10 November the Minister brought us up to date on negotiations on the text and said on the question of the legal base:

"The Council Legal Service has not yet revised its 1993 opinion that the proposal could not legitimately be based on Article 100a of the EC Treaty. The Commission Legal Service disagrees with this assessment. The Presidency compromise text is still based on Article 100a but may also now include references to Articles 57(2) and 66 on which we are seeking legal advice. The Council will therefore have to look at the question of the legal base as part of its overall consideration of the Directive."

5.  On the text, the Minister said that the Presidency had tabled a draft compromise text (a version of which is document (c) now before us) and was aiming to agree a Common Position at the 4 December Health Council. A number of substantial issues, particularly the question of sponsorship, remained to be resolved in negotiations.

6.  On 12 November we considered the Minister's letter of 10 November. We thought that the question of the legal base might not be resolved before the Council on 4 December at which it was hoped to agree a Common Position. We were also concerned that the text of the proposal would change before it went to the Council of Ministers; for example, it contained no provision for the exemption of Formula One.

7.  A ban on tobacco advertising raises issues of considerable political importance. The Government's proposal that Formula One motor racing should be excluded from that ban (see paragraphs 19 to 37 below) has raised the profile still further. We therefore asked the Minister to appear before us today to give oral evidence. This appears on pages 1 to 11 below, together with other submissions we have received.

  Parliamentary Scrutiny

8.  The way in which Parliament is forced to consider this important proposal is unsatisfactory, and reinforces the criticisms of the European legislative process made by ourselves and our predecessors. We still do not have a final and authoritative text of the proposal,[4] despite that fact that it may be agreed by the Council of Ministers on 4 December, and the debate that we have recommended must take place before then. We learned only yesterday that the Council Legal Service might have changed its view on the legal base. The timescale meant that the Minister's Explanatory Memorandum on the possible compromise text reached us only two days ago (for which we make no criticism of the Minister).

9.  Our predecessors consistently pressed for better European legislation[5], and we entirely endorse their views. The Amsterdam Treaty's Protocol on the Role of National Parliaments in the European Union underlines the importance of the contribution of National Parliaments, and emphasises the importance of adequate time for consideration of legislation. In our view, this is a clear signal to National Parliaments to play an influential role in legislation at the European level.

  The proposal in its present form

10.  The Minister's Explanatory Memorandum of 17 November contains a copy of the latest version of the text, and is available in the Vote Office. The latest version of Article 2 (handed to us by the Minister when she gave oral evidence) appears on page 15 below. The Minister says that the Presidency text would ban advertising for tobacco products on posters and in magazines, as well as promotional activities and advertising through sponsorship. It would also address the issue of indirect advertising through branded goods and ban the free distribution of tobacco products.[6] It would not make rules about the control of tobacco trade journals, point of sale displays and advertising and vending machines; the Member States could regulate these at national level. Member States would be allowed to defer the application of the Directive so as to minimise damage to sports and arts events which might have difficulty in finding alternative sponsors:

"In practice the text would allow an implementation period of 2½ years with a further 2 years' derogation for sponsorship and associated advertising, making a total of 4½ years after the date of adoption; the earliest likely date for this being 30 April 1998.

"The Directive also contains a derogation for the introduction of its rules on products regarded as 'indirect' advertising for tobacco products, such as Camel boots and Marlboro jeans. Pre-existing non-tobacco products using the brand name of a tobacco product would also have 4½ years from the date of adoption to distinguish the appearance of their branding and advertising from those of the tobacco product...."

"Efforts have been made to minimise the cost to those businesses which will be unintentionally affected by the Government's manifesto commitment to ban tobacco advertising."

  Issues raised by the documents

  The legal base

11.  In 1993 the Council Legal Service (CLS) gave an opinion on the legal base of the amended version of the proposal (document (b)). It concluded that a Directive providing for a total ban on advertising could not be adopted by the Council on the basis of Article 100a[7] or any other Treaty Article.

12.  The CLS took the view that a measure could not be based upon Article 100a unless, in aim and content, it was intended to achieve the free movement of goods between Member States, or fair competition to avoid distortion of the market. It concluded that a ban on the free distribution of tobacco products therefore did not fall within Article 100a because it covered purely domestic situations, not the generality of the internal market, and was designed to protect health.

13.  The CLS also had grave doubts as to the possibility of basing a total ban on advertising on Article 100a because such a ban would apply without distinction to advertising material imported from other Member States, to material intended for limited domestic markets (local press) and even more locally (posters, for example). Moreover, even assuming that Article 100a could be a correct legal base, a measure which had such a broad application would not be consistent with the principle of "proportionality" because it went beyond what was necessary for the establishment and functioning of the internal market.

14.  The CLS also advised that Article 129, which relates to public health, could not constitute a proper legal base because Article 129(4) expressly rules out any measure harmonising the laws of Member States. Nor could Article 235 (a general provision which enables the Council to adopt measures necessary to attain Community objectives where the Treaty does not provide the necessary powers) be used for harmonisation measures to achieve the objectives of Article 129.

15.  When the Minister of State wrote to us on 10 November, the CLS had not yet revised its 1993 opinion that the proposal could not legitimately be based on Article 100a. By 17 November, the Department of Health was able to tell us that the CLS Representative on the Health Questions Working Group had indicated that the CLS no longer opposed the proposal on the grounds of legal base; and that a further CLS written opinion would be prepared for the Committee of Permanent Representatives (COREPER).[8] However, it appeared from the Minister's evidence this afternoon that in fact no new opinion would be produced by the CLS.[9] We would have been interested to see the reasoning which has apparently led to the reversal of the strongly-argued 1993 opinion.[10]

16.  As the Government points out, the Council of Ministers has to decide what it wishes to do, and "there is nothing intrinsic in the proposed legal base which would prevent the Council from adopting this measure." The Minister told us that the Commission's lawyers were content with the use of 100a.[11] For its own part, the Government "is satisfied that there are sufficient grounds in Article 100a for the Council to proceed[12], and expects other Member States to reach the same view.[13] We do not dissent from the view that Article 100a is an acceptable legal base.

17.  We note that Articles 57(2) and 66 are also cited as part of the legal base for the proposal. The Department has told us that these are the legal base for the Broadcasting Directive[14], which bans television advertising of tobacco products. That draft Directive now covers tobacco advertising on radio, television and cinema through radio, television or film coverage of tobacco-sponsored sports and arts events. "The Presidency compromise text will therefore need to refer to Articles 57(2) and 66 for completeness, although the principal Treaty base remains Article 100a".[15]

  Subsidiarity

18.  The "subsidiarity" principle set out in Article 3b of the Treaty establishing the European Community provides that Community action shall be taken "only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community". The Government's view is that the proposal complies with the principle:

"It has been introduced primarily as an internal market measure under Article 100a, with the aim of approximating the rules relating to the advertising and sponsoring of tobacco products to reduce barriers to circulation and distortion of competition. Article 100a(3) obliges the Commission to take a high level of health protection as its basis for any internal market measures. However, the Directive does not make rules about the control of tobacco trade journals, point of sale displays and advertising and vending machines; this is left to the Member States, as these issues are best addressed at a national level."

  The proposed Formula One exemption

19.  We do not express a view on the merits of the Presidency text; the European Standing Committee and the House will have an opportunity to do that, following our debate recommendation. However, we felt that the Government's proposal permanently[16] to exempt Formula One motor racing from the ban deserves closer examination.

20.  The formulation of the Government's policy on this aspect is described in answers to Qq 11-22.[17] In her Explanatory Memorandum, the Minister had told us:

"After considering the issue of sponsorship in depth the Government has proposed excluding Formula One from the scope of the Directive.[18] The Government has always made clear that it is pursuing twin objectives of reducing smoking and of safeguarding sport from any effects arising from the loss of tobacco sponsorship. A blanket Europe-wide ban on Formula One sponsorship and associated advertising is not only likely to mean fewer Grand Prix races in Europe, but also, perversely, more tobacco advertising on UK TV screens beamed in from events outside the EU."[19]

21.  This is broadly the view of the FIA, which says that a ban would encourage the tobacco industry to support major events outside the EU:

  "In the case of Formula One, over 70% of the world television audience is in the Asia/Pacific region, while ten of the sixteen Formula One championship races are held within the EU. There is already substantial pressure to increase the number of events in Eastern Europe, Latin America and the Asia/Pacific region. In these regions, governments are prepared to exempt Formula One from any restriction on tobacco advertising. These regions are of course, growth markets for the tobacco industry, in contrast to the mature markets of Western Europe.