By THOMAS CATAN And WILLIAM MAULDIN

WASHINGTON—Europe is encountering fierce opposition from an unexpected source over its efforts to curb smoking: Republican Senator Mitch McConnell of Kentucky.

In a sharply-worded letter, the Senate minority leader has warned the European Union its proposed restrictions on tobacco marketing would violate international trade rules and harm trade relations with the U.S.

Along with three other senators from tobacco-producing states, Mr. McConnell also pointedly reminded the European Union that his legislative body would be considering any free-trade agreement negotiated between the U.S. and EU. The two sides embarked on an ambitious effort to ink a trade pact earlier this year.

“We have serious concerns about the (tobacco proposal) and its impact on trans-Atlantic trade relations,” read the letter, which was reviewed by The Wall Street Journal. “As the Senate considers the potential U.S.-EU free trade agreement, the (proposal) calls into question the EU’s ability to deliver on regulatory commitments to the U.S. that it will have to make under a comprehensive U.S.-EU agreement.”

The May 7 letter was also signed by Sens. Rand Paul (R., Ky.), Richard Burr (R., N.C.) and Kay Hagan (D., N.C.).

A spokesman for Tonio Borg, the European health commissioner who drew up the plans, denied the cigarette rules would affect trade relations. In a reply to the U.S. senators, the EU ambassador in Washington, João Vale de Almeida, said the proposed measures were “fully consistent with the EU’s international commitments.”

“We expect this also to be the case with our future engagement” on the proposed U.S.-EU trade pact, he wrote in a letter reviewed by the Journal.

The brewing spat is just one example of the parochial issues that could make it difficult for the two sides to agree on a trans-Atlantic pact.

The senators leading the charge against Europe’s proposed smoking rules have long-standing ties to the tobacco industry. Sen. Burr has received more money from tobacco companies, $524,000, than any other member of Congress, according to data from the nonpartisan Center for Responsive Politics. Sen. McConnell has received $465,000 from the tobacco industry, making him the second-largest recipient.

Moreover, the U.S. and Europe produce similar types of goods and compete head-to-head in many sectors. The U.S. has four times as many complaints open against Europe at the World Trade Organization than it does against China.

The fight over Europe’s tobacco industry also shows how many individual constituencies must be satisfied for any deal to succeed. France, for example, this week threatened to scuttle the U.S.-EU talks unless it is allowed to keep protecting its movie and music industries. Europe also wants include financial regulation in the trade talks, a move likely to be resisted by the U.S.

The European Commission announced the update to the decade-old rules governing tobacco sales and marketing in December, saying it was needed to take account of new developments such as electronic cigarettes. Among other things, the proposed rules would mandate that at least three-quarters of the cigarette packet should display health warnings, up from the current 40%, and that those include gruesome pictures of the damage smoking can cause. Menthol, flavored or slim cigarettes would be banned.

The proposal has drawn opposition from several Central European countries—Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia,—who say it would hurt tobacco growers and processors in their countries.

But other EU members say it is necessary to curb an estimated 700,000 deaths from smoking in the EU each year. “It’s as if a city like Palermo or Frankfurt were to vanish from the EU every year,” said a spokesman for the Health Commissioner. “We think our proposal, particularly since it targets young people, will help getting down the number of people who smoke in the EU.”

Health ministers from the EU are due to discuss the proposal on June 21. Then it will be debated by the European Council and European Parliament. The Health Commissioner’s office estimates the new rules could come into effect in two to four years.

A U.S. federal appeals court in March blocked the Obama administration’s plans to introduce graphic new warning labels on cigarette packages. The Food and Drug Administration must now propose a new set of labels aimed at discouraging smoking.

Tobacco companies have vigorously opposed the European proposals. Imperial Tobacco Group PLC, which controls Commonwealth Brands, called them “disproportionate and unreasonable,” adding that the gruesome pictures served only to stigmatize smokers. A spokesman for Reynolds American Inc. declined to comment.

Since December, Australia has mandated that cigarettes must be sold in completely unbranded boxes covered in warnings and horrifying images of smokers suffering from cancer. Australia’s move has drawn challenges before the WTO from several countries that produce tobacco products, including Honduras, Dominican Republic and Ukraine. However, the off-putting packaging has been considered a success by health campaigners. New Zealand and Ireland have since announced plans to follow suit.

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Ireland had prioritised a plan to ban flavoured tobacco and stylish cigarette packaging even if this hurt jobs in the tobacco industry in some countries, he said today following a two-day meeting of EU health ministers in Dublin.

Minister for Health James O’Reilly (right) and Chief Medical Officer Tony Holohan pose in the RHA Gallery in Dublin with photographs which will appear on cigarette packaging sold in Ireland. Photograph: Julien Behal/PA Wire

“We have to remember it should never be a case of jobs or lives,” he said.

He said the EU should help countries to “get out of tobacco production” and to develop other types of industry instead.

European health commissioner Tonio Borg also acknowledged there would be opposition to the proposed ban. “It is natural in those countries where tobacco production is high there will be considerations other than health which will be put forwards to put it mildly,” he said.

The aim of the law was to prevent young people from starting smoking, said Mr Borg. “Tobacco products should look like tobacco products … and it should taste like tobacco,” he said. It was hoped the effect would be a 2 per cent reduction in the number of smokers over five years in the EU. This would represent 2.4 million less smokers, he added.

Thirteen EU states produce tobacco, including Italy, which produces the biggest amount, followed Bulgaria, Poland and Spain.

The ban would affect menthol cigarettes, which are sold in Ireland, and vanilla flavoured cigarettes. Stylishly packaged cigarettes were a particular problem, Mr Reilly said. “That’s what they are trying to attract our children to, particularly young girls,” he said.

The Minister said he was hoping to win agreement from other health ministers on the directive during Ireland’s presidency of the EU which lasts until June which would then be submitted to the European Parliament for approval. The aim was to have agreement on the directive by next year and to have it enforced by 2015 or 2016.

He said 700,000 European were dying each year and the tobacco industry were looking for people to replace them. “They are focusing on children,” he said.

He said he supported a proposed new law in Ireland banning smoking in cars carrying children under 16, adding it was a “child protection issue”. The law could be enacted later this year. Since February 1st all cigarettes sold in Ireland must now carry graphic images and health warnings about the dangers of smoking.

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The tobacco directive is at the center of a cash-for-influence probe by the EU’s anti-fraud office which resulted in former Health Commissioner John Dalli stepping down last week. Mr. Dalli has consistently denied any wrongdoing.

“We will come with the draft revision of the directive in the coming weeks,” Mr. Bailly said. “The Commission will make this proposal. No doubt about that. So really the political commitment is there,” he added.

Any proposal would then have to go to member states and the European Parliament.

In a press conference in Brussels, in which he said he would take legal action against the Commission over what he called his ouster, Mr. Dalli repeated his concern that the directive would be blocked now that he has resigned.

He has also said that the directive was twice delayed internally by Commission officials.

Mr. Bailly declined to comment on who had delayed internal discussions, adding that the process would move ahead once a new commissioner had been appointed to replace Mr. Dalli.

Malta has put forward foreign minister Tonio Borg as a replacement. But he may not be confirmed for some weeks since there must be a hearing with the European Parliament before he is appointed.

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