COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Draft Proposal for a Regulation amending Regulation (EC) No 273/2004 on drug precursors
Date: 2012-09-27
Institutions: European Commission
Subjects: drug traffic, market supervision, marketing standard, medicinal product, psychotropic substance

EUROPEAN 
COMMISSION 

Brussels, 27.9.2012  
SWD(2012) 278 final 

COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Draft Proposal for a Regulation amending Regulation (EC) No 273/2004 on drug 
precursors 

{COM(2012) 548 final} 
{SWD(2012) 279 final} 

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Disclaimer: This executive summary commits only the Commission's services involved in its 
preparation  and  does  not  prejudge  the  final  form  of  any  decision  to  be  taken  by  the 
Commission.

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COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Draft Proposal for a Regulation amending Regulation (EC) No 273/2004 on drug 
precursors 

1. 

PROBLEM DEFINITION 

1.1.  Why is ineffective prention of diversion of acetic anhydride a problem? 

Drug  precursors  are  chemicals  that  have  a  wide  range  of  legitimate  uses,  but  can  also  be 
misused for the illicit manufacture of narcotic drugs and psychotropic substances. In order to 
prevent  their  diversion  from  legal  trade  to  illicit  drug  production  a  specific  regulatory 
framework has been set up (both on international level1 and in the EU2) in order to identify 
suspicious transactions. 

Ineffective prevention of the diversion of Acetic Anhydride (AA), the key drug precursor for 
heroin  production,  has  been  identified  as  the  main  problem  over  the  last  years  under  the 
applicable  internal  market  legislation  on  drug  precursors3.  AA  diverted  from  legal  trade  in 
Europe  is  trafficked  to  Afghanistan,  which  is  the  main  global  source  of  heroin,  of  which 
Europe alone consumes almost 20%.  

The underlying drivers of the problem and its consequences are visualised below: 

1 

2 

3 

United Nations  Convention against  the Illicit  Traffic  in Narcotic  Drugs  and  Psychotropic  Substances, 
available at: HTTP://WWW.INCB.ORG/PDF/E/CONV/1988_CONVENTION_EN.PDF 
Regulation (EC) No 273/2004 of the European Parliament and of the Council of 11 February 2004 and 
to  Article  32 of  Council  Regulation  (EC) No  111/2005 on  the  implementation  and functioning  of  the 
Community legislation on monitoring and control of trade in drug precursors 
Commission Report on the functioning of the existing EU legislation on drug precursors 
(COM(2009)709 final), available at: HTTP://EUR-
LEX.EUROPA.EU/LEXURISERV/LEXURISERV.DO?URI=COM:2009:0709:FIN:EN:PDF 

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DRIVER 

PROBLEM 

DIRECT 
CONSEQUENCES 

INDIRECT 
CONSEQUENCES 

Inadequate 
control 
mechanisms for 
category 2 
substances: 
- No registration   
  of end-users 
- Exemptions  
  from reporting  
  obligations,  
- Difficulties for  
  companies to  
  check customer  
  declarations 

Ineffective 
prevention 
of cat. 2 
drug 
precursors 
diversion  

-  Continuing 
diversion of 
drug precursors 
in Category 2 
for illegal 
purposes 

-  Internal 
market 
distortion due to 
MS' trying to 
address the 
ineffective 
prevention 
individually 

-  Failure to 

contribute to the 
global combat 
against production 
and supply of 
illicit drugs 

-  Aggravation of 

health and social  
problems 
associated with 
drug use 
throughout the 
world 

-  Compromising the 

EU position 
within the UN's 
INCB 

In 2008, 241 tons of AA were seized or stopped in the EU, which would have been sufficient 
to produce ca. 150 - 223 tons  of heroin, which amounts to about 50% of the yearly Afghan 
heroin  production.  Even  though  statistics  in  2009-2010  have  shown  a  sharp  decline  of  AA 
stopped and seized in the EU4, many Member States and the International Narcotics Control 
Board  (INCB)  are  concerned  that  the  mechanisms  of  Regulation  (EC)  No  273/2004  for  the 
control of AA are not sufficient.  

1.2.  Who is affected 

Member  States  are  affected  when  conducting  enforcement  actions  as  well  as  by  the  health 
costs  resulting  from  the  use  of  heroin.  In  addition,  there  are  significant  costs  to  the  public 
from drug-related crime. 

EU citizens are affected through the supply of heroin produced with the diverted AA and also 
through drug-related crime. 

Companies  producing  or  trading  AA  may  experience  diversion  (attempts)  at  any  stage  of 
handling the substance. Apart from securing their premises and processes against theft, they 
have to register their premises with the authorities and have to be vigilant to critically assess 
whether  their  customers  use  the  substance  only  for  the  claimed  licit  purpose5.  Suspicious 
transactions have to be notified to the authorities. End-users (who only buy AA for production 

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33 tons in 2009 and 21 tons in 2010. 
AA is legally used as an acetylating agent in chemical, photographic and pharmaceutical industry. It is 
used for producing plastic, textile, dyes, photochemical agents, perfumes, explosives and aspirin. 

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purposes)  have  more  limited  obligations:  they  do  not  have  to  register  but  must  provide  a 
customer declaration when placing orders. 

2. 

ANALYSIS OF SUBSIDIARITY 

Regulation  (EC)  No  273/2004  on  drug  precursors  is  based  on  Article  114  TFEU  (formerly 
Article 95 TEC). The Regulation has set common requirements for monitoring and control of 
the trade in drug precursors, in order to ensure the free licit trade of these chemicals within the 
EU.  Even  though  Art.  10  of  the  Regulation  requires  Member  States  to  adopt  national 
measures to enable the competent authorities to perform their control and monitoring duties, 
any general revision of the control and monitoring mechanism would  have to be adopted at 
the European level in order not to unduly hinder the licit trade of drug precursors within the 
EU. 

3. 

OBJECTIVES 

General policy objectives 

• 

• 

To  contribute  to  the  world-wide  combat  against  the  illicit  traffic  in  drugs. 
Preventing the diversion of drug precursors is an important element by which the EU 
fulfils its obligations under Art. 12 of the 1988 UN Convention. 

To ensure a proper functioning of the internal market for drug precursors, by 
ensuring that operators are subject to harmonised rules within the EU whilst avoiding 
unnecessary administrative burden for enterprises and competent authorities. 

Specific policy objectives 

• 

• 

Preventing  diversion  attempts  in  the  EU  internal  market,  thus  limiting  the  input  of 
diverted  AA  originating  from  the  EU  to  the  production  of  illicit  drugs,  namely 
heroin.  

Avoiding  market  distortions  resulting  from  non-harmonised  control  of  drug 
precursors within the EU and thereby to limit the costs for operators involved in the 
drug precursor value chain. 

Operational policy objectives 

• 

• 

To achieve a downward trend of diversion attempts and seizures in the EU. 

To  introduce  a  uniform,  effective  and  efficient  standard  of  controls  for  drug 
precursors across the EU internal market. 

4. 

POLICY OPTIONS 

Option 1: no action: EU legislation remains unchanged (baseline option)  

Regulation (EC) No 273/2004 will not be modified. The Commission and Member States will 
continue efforts to improve the implementation of current rules. Member States could adopt 

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further  national  legislation  if  considered  necessary  in  accordance  with  Article  10  of  the 
Regulation, subject to notification and scrutiny in accordance with Directive 98/34/EC.  

Option 2: strengthened reporting obligations  

Reporting  obligations  for  operators  would  be  strengthened  to  increase  Member  States' 
knowledge  in  order  to  better  target  inspections  and  other  enforcement  activities.  Two  sub-
options  could  be  applied  separately  or  in  combination:  (a)  increasing  the  frequency  and  (b) 
extending the scope of reporting. 

Option 3: strengthened obligations  on operators related to customer declarations from 
end-users 

Operators  would  not  be  allowed  to  deliver  scheduled  substances  in  category  2  unless  the 
customer declaration received with an order is completely filled in and they have verified that 
the end-user has genuine motives for placing the order. If required, operators would have to 
involve  their  authorities.  The  verification  of  the  information  would  have  to  be  documented. 
Furthermore,  a  copy  of  the  customer  declaration  would  have  to  accompany  the  delivered 
substances.  The  option  could  be  reinforced  by  reducing  or  abolishing  the  threshold  of 
minimum  quantities  foreseen  in  Article  6  of  the  Regulation.  Two  sub-options  could  be 
differentiated: the obligations apply to AA only (a) or to all cat. 2 substances (b).  

Option 4: require operators to systematically notify new end-users to the authorities for 
verification 

Operators  placing  scheduled  substances  in  category  2  on  the  market  would  have  to 
systematically notify all orders from end-users who are first time customers to the authorities, 
and  would  only  be  allowed  to  deliver  after  having  received  the  authorities’  agreement.  The 
authorities would verify the legitimate motives of the end-users, if necessary by co-operating 
with the authorities of another Member State. The option could be reinforced by reducing or 
abolishing the threshold of minimum quantities foreseen in Article 6 of the Regulation. Two 
sub-options  could  be  differentiated:  the  obligations  apply  to  AA  only  (a)  or  to  all  cat.  2 
substances (b).  

Option  5:  require  registration  for  end-users  and  reinforce  requirements  regarding 
registration  

End-users  for  scheduled  substances  in  category  2  would  be  required  to  register.  The 
registration  number  would  have  to  be  included  in  every  customer  declaration  to  allow 
operators  to  verify  that  orders  are  legitimate.  Authorities  will  have  to  verify  end-users’ 
businesses  before  registration  to  give  legitimacy  to  the  registration  number.  European 
legislation would specify more detailed requirements and conditions for the granting, refusal 
and withdrawal of registration of end-users (and of operators in general). The option could be 
reinforced by reducing or abolishing the threshold of minimum quantities foreseen in Article 
6  of  the  Regulation,  and/or  foresee  exemptions  for  certain  categories  of  end-users,  such  as 
universities or research institutions. Two sub-options could be differentiated: the obligations 
apply to AA only (a) or to all cat. 2 substances (b).  

Option 6: move AA from category 2 to category 1 

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AA would be moved from category 2 to category 1, which would mean that all those involved 
in the trade and use of AA would need to obtain a licence before they possess or place AA on 
the market, and would have to comply with all other requirements of licensed operators. 

5. 

ASSESSMENT OF IMPACTS 

The  costs  from  increased  administrative  burdens  under  the  different  options  have  been 
quantified  and  are  summarised  in  the  comparative  table  in  section  6.  Benefits  are  described 
qualitatively. 

5.1. 

Option 1: no action 

No  additional  administrative  burden  would  be  imposed  on  European  level  on  either 
enterprises  or  competent  authorities,  but  an  increase  of  administrative  burdens  at  national 
level could be expected should Member States introduce complementing national measures.  

In  terms  of  effectiveness  in  preventing  diversion,  recent  statistics  of  seizures  and  stopped 
shipments  have  shown  a  clear  downward  trend,  which  suggests  that  the  efforts  to  improve 
implementation have already tangibly improved the effectiveness of the current legislation in 
preventing diversion. 

On the other hand, the identified weaknesses of Regulation (EC) No 273/2004 would persist – 
even  though  these  may  be  reduced  by  better  implementation.  Member  States  could  still  see 
the need adopt further national measures to reinforce control of trade in drug precursors6. This 
would  be  counterproductive  to  the  objective  of  preserving  the  internal  market.  Finally,  the 
international  criticism  of  the  EU  (also  shared  by  some  Member  States)  as  remaining 
"inactive" despite continued calls for stepping up the control of its internal market legislation 
would persist. 

5.2. 

Option 2: strengthened reporting obligations 

In terms of effectiveness in preventing diversion, competent authorities could expect to have a 
better  knowledge  of  the  legal  trade  flows.  This  could  allow  detecting  more  easily  unusual 
trade patterns indicating diversion. However, in order to be able to match trade data from all 
operators within the EU, a very large amount of data would need to be collected and would 
have to be matched across EU-internal borders. Even this EU-wide cross-checking may prove 
ineffective as only 0.2% of the total AA production is diverted, so that a general "check all 
transactions" approach is less promising than targeted, risk-based actions. 

Member  States  might  still  consider  that  it  would  be  necessary  to  adopt  further  national 
measures  to  reinforce  control  of  trade  in  drug  precursors.  This  would  be  counterproductive 
with regard to the objective of avoiding fragmentation of the internal market. 

5.3. 

Option  3:  strengthened  obligations  on  operators  related  to  customer 
declarations from end-users 

The cost calculation for this option distinguishes 2 scenarios (detailed in the overview table in 
section 6). In Scenario 1, already today operators only conduct business with clients known to 

6 

For  instance:  Belgium,  Hungary  and  Italy  require  its  operators  to  notify  each  AA  transaction  to  the 
authorities prior to the delivery of orders. 

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them and which they verified. Therefore, the main obligation under option 3, verification of 
the customer declaration,  would  be  considered 100% business as usual. The only additional 
administrative costs would stem from sending a copy of the customer declaration. Operators 
are able to verify themselves their customers, so that there would be no additional costs for 
authorities. 

Under  Scenario  2,  30%  of  operators  do  not  yet  act  in  an  ideal  way  and  thus  would  have  to 
increase their efforts. Furthermore, it is assumed that about 10% of all customer declarations 
would  require  verification  by  authorities,  because  operators  cannot  conduct  full  verification 
themselves. 

In terms of effectiveness in preventing diversion, Option 3 would increase the responsibility 
of operators for the choice of their customers. Even though diligent operators already conduct 
the necessary verifications, the clarification of the legal text would lead to higher vigilance of 
operators  and  also  increase  the  number  of  cases  where  operators  would  contact  their 
authorities. 

The  benefits  for  the  internal  market  would  probably  be  similar  to  Option  1:  Member  States 
might still consider that it would be necessary to adopt further national measures to reinforce 
control of trade in drug precursors, which would be detrimental to the internal market. 

5.4. 

Option  4:  require  operators  to  systematically  notify  new  end-users  to  the 
authorities for verification 

In terms of effectiveness in preventing diversion, option 4 would focus efforts of operators on 
new customers – in particular those claiming to be end-users not having a registration number 
for  whom  it  is  more  difficult  to  verify  genuine  motives  for  placing  an  order.  Systematic 
notification  of  all  new  clients  to  the  authorities  will  allow  them  to  conduct  all  appropriate 
verifications.  If  necessary  they  can  prevent  and/or  monitor  delivery.  However,  shifting  the 
responsibility  to  authorities,  who  would  ultimately  decide  on  potential  new  business 
relationships, could be a counter-incentive for operators' own vigilance. 

As  Option  4  would  increase  the  knowledge  of  authorities  on  a  part  of  the  end-users,  this 
would  probably  reduce  the  likelihood  that  Member  States  would  adopt  additional  national 
measures. However, some could still consider option 4 insufficient and adopt further control 
measures, which would be detrimental for the internal market.  

5.5. 

Option  5:  require  registration  for  end-users  and  reinforce  requirements 
regarding registration  

In terms of effectiveness in preventing diversion, registration would allow Member States to 
verify the genuine motives of end-users before a first order. This would enable operators to 
verify  more  easily  their  customers  as  the  customer  declaration  would  include  an  official 
registration number. 

Option 5 would greatly increase the knowledge of authorities on all end-users and this would 
strongly  reduce  the  likelihood  that  Member  States  consider  it  necessary  to  adopt  further 
national measures. Option 5 would thus be very effective in preserving the internal market. 

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5.6. 

Option 6: move AA from category 2 to category 1 

In terms of effectiveness in preventing diversion, benefits are expected to be similar or higher 
than  those  of  option  5,  as  all  end-users  and  operators  of  AA  would  fall  under  the  strict 
licensing regime under direct control of the authorities. This would also strongly reduce the 
likelihood  that  Member  States  adopt  further  national  measures,  so  that  Option  6  would  be 
very effective in preserving the internal market. 

6. 

COMPARISON OF OPTIONS 

Table  17  compiles  the  information  regarding  expected  benefits  (in  terms  of  effectiveness  to 
achieve the operational objectives) and costs for each of the (sub-)options. 

Options  4a  and  5a  have  the  most  favourable  cost-benefit  ratio.  Option  4a  scores  most 
favourably  based  on  total  costs  for  authorities  and  companies  combined.  However,  when 
disregarding  the  'one-off'  costs  for  registration  of  all  existing  end-users  in  option  5a, 
differences  in  ongoing  yearly  costs  are  less  pronounced:  Option  5a  is  les  onerous  for 
companies, whereas Option 4a is less burdensome for authorities. 

In addition to lower annual costs for companies, Option 5a has been supported by a majority 
of  the  Member  States  during  the  stakeholder  consultations.  Option  5a  would  also  better 
respond to the criticism expressed on international level that a systematic control of AA end-
users is lacking in the EU. 

In view of the relatively low costs of either option in relation to the overall market value of 
the European AA production, a tangible impact on the competitiveness of European industry 
is not expected.8 

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Total costs in this table are based on the sum of the exact individual components. Therefore they do not 
fully correspond with the totals of the (rounded) components in this table. 
The combined total costs of either option (€ 0.05 mio for Option 4a and € 0.06 mio for Option 5a are 
very limited in relation to total European market value of AA (> € 257 mio/year). Also the one-off 
costs of € 0.16 million for companies and of € 0.29 million for authorities are low in comparison. 

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1 

2 

2a 

2b 

2a+2b 

3 

3a  
(AA only) 

3b 

4 

5 

4a  
(AA only) 

4b 

5a  
(AA only) 

TABLE 1: COMPARATIVE TABLE ON COSTS AND BENEFITS 

Option 

Benefits/Effectiveness 

Costs for companies 

Costs for authorities 

Total Costs 

Prevent  
diversion 

Preserve int. 
market  

0 

0 

0 

0 

+ 

+ 

0 

0 

0 

0 

0 

0 

€ 0
Risk of fragmented market 

€ 5.6 mio/year 

€ 1.5 mio/year 

€ 11.4 mio/year 

€ 0.2 mio/year 

€ 4.7 mio/year 

Scen. 1: (no authority  
involvement) 

Scen. 2: (authorities  
involved in 10% of cases) 

€ 0 

€ 0 

€ 1 mio/year 

€ 0.3 mio/year 

€ 2.1 mio/year 

€ 6.6 mio/year  

€ 1.8 mio/year 

€ 12.5 mio/year 

€ 0

Scen. 1: 

€ 0.2 mio/year 

€ 0.2 mio/year 

Scen. 2:  

€ 4.9 mio/year 

€ 1 mio/year 

Scen. 1: 

€ 0 

Scen. 1: 

€ 1 mio/year 

€ 26.3 mio/year 

Scen. 2: 

€ 1.2 mio/year 

Scen. 2: 

€ 27.5 mio/year 

Scen. 1 (100%  
business as usual): 
Scen. 2: (70%  
business as usual):  

Scen. 1: 

Scen. 2: 

+[+] 

++ 

€ 0.04 mio/year 

€ 0.005 mio/year 

€ 0.05 mio/year 

+[+] 

++ 

++ 

+++ 

€ 0.5 mio/year 

€ 0.16 mio
+ € 0.01 mio/year 

Alt. Scen: (company 
registration fees)  

€ 0.55 mio
+ € 0.06 mio/year 

Alt. Scen:  

  5b 

++ 

+++ 

€ 0.5 mio
+ €0.07 mio/year 

6  

(AA only) 

+++ 

+++ 

Alt. Scen: (company 
registration fees) 

€ 2.3 mio
+ € 0.3 mio/year 

Alt. Scen: 

[or: incl. ext. trade 

Alt. Scen:(company 
licensing fees) 

€ 0.3 mio
+ € 0.2 mio/year
+ 0.5 mio/year] 

€ 2.0 mio
+ € 0.3 [or + 0.9] 
mio/year 

[or: incl. ext. trade 

Alt. Scen: 

€ 0.03 mio /year 

€ 0.39 mio
+€ 0.05 
mio/year 

€ 0 

€ 1.8 mio
+ € 0.2 
mio/year 

€ 0 

Alt. Scen:  

Alt. Scen: 

€ 1.7 mio
+ € 0.1 
mio/year
+ 0.4 mio/year] 

€ 0 

[or incl. ext.tr. 

Alt. Scen: 

€ 0.53 mio/year 

€ 0.55 mio 
+ € 0.06 mio/year 

€ 0.55 mio 
+ € 0.06 mio/year 

€ 2.3 mio 
+ € 0.3 mio/year 

€ 2.3 mio 
+ € 0.3 mio/year 

€ 2.0 mio 
+ € 0.3 mio/year 
+ 0.9 mio/year] 

€ 2.0 mio 
+ € 0.3 [or + 0.9] 
mio/year 

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The preferred options would have effects on SMEs, which are dealing with AA primarily as 
end-users.  During  the  consultation,  option  5  was  the  second  preferred  option  (after  keeping 
the  status  quo).  This  result  corresponds  to  the  present  analysis  that  option  5  would  be  less 
burdensome for enterprises. 

None  of  the  preferred  options  envisages  a  general  exclusion  of  micro-companies,  as  this 
would  create  an  easy  possibility  of  circumventing  the  controls  of  the  legislation.  However, 
micro-companies  benefit  from  the  existing  thresholds  in  the  legislation9.  Finally,  a  specific 
protection  of  micro-SMEs  would  be  foreseen  in  option  5a  to  prevent  Member  States  to 
impose registration costs on micro-SMEs10 in order to recover their own costs. 

7. 

MONITORING AND EVALUATION 

Commission:  

• 

• 

• 

• 

• 

Collection, analysis, and reporting of Member States' annual statistics of seizures and 
stopped shipment. 

Monitoring of Member States’ additional national legislation. 

Support  the  implementation  of  the  amended  Regulation  (update  of  existing 
guidelines, e-learning tool, FAQ document, etc) 

Implementation  of  a  database  currently  being  developed  to  facilitate  the  collection 
and analysis of statistics. 

Five  years  following  the  implementation  of  the  legislative  amendments:  an 
evaluation  of  the  amended  legislation  will  be  carried  out  in  consultation  with 
Member States and stakeholders. 

Member States: 

• 

Ongoing monitoring activities on correct implementation of the legislation. 

9 

10 

Art. 6  of  Regulation  (EC)  No  273/2004  foresee  that  companies  with  sales/purchases  of  AA  below 
yearly quantities of 100 l are excluded from most of the obligations under the legislation. 
The effects of a potential passing-on of the authorities' costs to companies have been calculated as an 
"alternative scenario" under Option 5. 

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