The anti-smuggling alliance between the EU and cigarette manufacturer Philip Morris has been hailed a success by a parliamentary draft report adopted on Wednesday.

The alliance, established in 2004 after the Commission took legal action against the company, has been called a ‘gold standard’ for future agreements by Parliament's rapporteur Bart Staes. The Staes Report urges other cigarette companies such as Japan Tobacco and Reynolds American to conclude similar agreements with the EU. By the end of 2008 the Commission will draw up a comprehensive report on the issue.
The out of court settlement of 2004 led Philip Morris to pay compensation for loss of revenues, and help to combat smugglers. The Commission and Philip Morris agreed to set up a database to help track cigarettes and funding measures to fight contraband worth € 904 million (USD 1.29 billion) over 12 years. It also led OLAF – the EU's anti-fraud watchdog – to work closely with the company to trace contraband.
Smuggled cigarettes worth € 460 million in taxes were seized in th EU in 2006.