Facing escalating geo-economic tensions embodied by the Trump administration’s 2 April imposition of 20% tariffs, Europe is accelerating its push to streamline bureaucracy and bolster the continent’s competitiveness.
Announced by European Parliament President Roberta Metsolain in late March, parliamentary negotiations on the Commission’s recently-unveiled ‘sustainability omnibus’ proposals were launched less than 24 hours after the US’s ‘Liberation Day’ declaration.
The bloc has no time to waste: as Swedish MEP Jörgen Warbon – the file’s rapporteur leading EP negotiations – has rightly noted, Europe is “falling behind” global competitors, and “one of the most important parts” of the continent’s economic revival is to “cut red tape.” While the initial omnibus proposals send a positive signal, the EU must seize this rare political window to go beyond modest reform and deliver sweeping simplification.
Beyond economics, a comprehensive approach to streamlining regulations would equally generate vital social, security and health benefits, with the bloc’s ineffective, overly-complex tobacco traceability system among the key EU policies that stand to gain from this initiative amid a rising illicit tobacco trade.
Boarding the omnibus: right direction, wrong speed
The European Commission’s first two omnibus simplification packages, unveiled on 26 February, mark the beginning of a long-overdue effort to ease regulatory pressures. Focused primarily on sustainability reporting, the proposals would postpone key obligations under the CSRD and CSDDD and raise thresholds so that fewer businesses – particularly SMEs – are caught in the compliance net.
Under the new thresholds, only large companies with more than 1,000 employees and substantial turnover or assets would face full reporting duties. SMEs slated to report in 2026 and 2027 would now receive a delay, and the due diligence directive would not begin to apply until 2028, with other measures including plans to cut the number of required data points and amendments to the InvestEU Regulation.
Beyond sustainability, a dedicated defence omnibus package is expected in June, following the March publication of the Commission’s White Paper on the Future of European Defence, with the EU executive prioritising regulatory harmonisation and simplification as essential in reducing single market fragmentation and accelerating defence production, hinting at a broader streamlining push – at least on paper.
Indeed, as MEP Warborn has asserted, the omnibus proposals are “a good first step” but “not enough,” warning against vilifying multinationals that power jobs and growth – an assessment big industry leaders broadly share. The AFEP group, representing 118 of France’s largest private firms, warns that the proposals “do not correct the bureaucratic burden” for bigger companies, while Schneider Electric’s Gwenaelle Avice Huet laments that large firms have “been a little bit set aside,” and Austrian manufacturer RHI Magnesita predicts little relief from mounting compliance costs.
Meanwhile, MEPs like Anna Cavazzini have dismissed the omnibus initiative as an “illusion that dismantling sustainability laws will solve the structural problems of the economy” – a view reinforced by the harmful legacy of previous ill-fated regulations affecting one of the EU’s greatest public health scourges: tobacco.
Streamlining EU’s industry-aligned tobacco traceability
As it enters the legislative process, Brussels’s simplification drive should be expanded to address the damage caused by its opaque, overly-complex bureaucracy, which has allowed tobacco multinationals to manipulate EU systems at the expense of public interest.
Indeed, Big Tobacco benefits from the EU’s failed tobacco traceability system – one of unparalleled complexity worldwide whose convoluted structure has enabled the core operational involvement of industry-allied firms. As Dr Allen Gallagher of the University of Bath’s Tobacco Control Research Group has highlighted, the EU system’s “mixed” governance model, riddled with tobacco-linked service providers, renders it utterly incompatible with the WHO’s Protocol to Eliminate Illicit Trade in Tobacco Products, which strictly requires industry-independent track and trace.
Swiss firms Inexto and Dentsu Tracking, along with France’s Atos and its four European subsidiaries – representing half of the primary repositories approved by the Commission – remain key players in the EU’s ineffective track and trace system, despite their historic ties to the discredited Codentify system developed by Philip Morris International (PMI). Since acquiring Codentify in 2016, Inexto has falsely claimed to operate independently from the tobacco industry and align with WHO standards, including in markets like Lithuania, where it has promoted its technology alongside Codentify co-developer, Atos. Meanwhile, Dentsu Tracking purchased Blue Infinity, another Codentify co-developer, in 2017.
Last year, Dr Gallagher, along with other leading tobacco control experts, contributed to an MEP-led White Paper exposing the shadowy lobbying practices of the tobacco industry and its allies to shape EU tobacco control policies to their commercial advantage. Gallagher’s previous research has flagged Inexto’s lobbying ahead of the EU traceability system’s implementation to push for “industry-favoured technical standards,” as well as its “ongoing financial relationship with the tobacco industry.”
Furthermore, Dentsu Tracking’s recruitment of Jan Hoffman – a former Commission official involved in tobacco traceability – after its tender-less contract award from the EU executive has raised serious conflict-of-interest questions, with this affair prominently outlined in the White Paper.
Road ahead requires wider view
With the revision of the Tobacco Products Directive (TPD) on the horizon, the EU’s omnibus agenda offers a crucial opportunity to simplify the existing framework and equip member-states with the tools they need to confront the bloc’s multi-faceted illicit trade, which has only risen since the EU’s traceability system’s implementation.
On one hand, the cross-border trade is enabled by the tobacco industry’s intentional oversupplying of cheap cigarette havens like Andorra and Luxembourg. Meanwhile, in the Western Balkans, tobacco smuggling is notably controlled by organized criminal groups equally active in drug trafficking, with Montenegro, Serbia and Albania among the “main sources” of Europe’s illicit tobacco according to MEP Tomislav Sokol, leaving bordering EU states like Croatia particularly vulnerable.
This plague cannot continue unchecked. Illicit tobacco is undermining Europe’s social fabric, robbing EU countries of at least – and likely much more than – €10 billion annually in lost tax revenue that could fund essential public services, while financing organised criminal groups and exacerbating a dire public health crisis. As emphasised in the White Paper, “tobacco prematurely kills 700,000 people in Europe every year, about 15 % of whom are non-smokers.”
To change course, the EU must fully implement the WHO Protocol during the long-overdue TPD revision and shut the door on industry interference. Encouragingly, leadership is building in Brussels, with health ministers from 12 member-states addressing a letter to the EU Health Commissioner Oliver Várhelyi on 21 March expressing concern over Europe’s cross-border tobacco trade, questioning the TPD revision delay and pressing the EU executive to take decisive action.
While the omnibus package offers a clear opportunity to improve regulatory efficiency in the interest of European citizens, the Commission must remain vigilant against attempts by cynical industry actors to hijack this effort for commercial gain through unsafe deregulation – a risk exemplified by the shameless efforts of British American Tobacco and other major corporations under the EU Better Regulation agenda introduced in the early 2000s.
Looking ahead, overhauling complex, ineffective frameworks such as the EU tobacco traceability system with safe, efficiency-enhancing regulatory tools like the WHO Protocol will be a test of the Commission’s ability to defend its citizens’ health and well-being amid rising parliamentary scrutiny.
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EU ‘omnibus’ offers key opportunity to drive competitiveness and redress past wrongs