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Big Tobacco and Free Trade

by Robert WeissmanSpecial to CorpWatch
April 12th, 2001

An international conspiracy to poison millions of men, women and teenagers around the world is killing four million people a year. By 2030, it will take 10 million lives annually, 70 percent of them in developing countries. This "conspiracy" is run by Big Tobacco: companies like Philip Morris, British American Tobacco and R.J. Reynolds, to name just a few.

If we lived in a rational world, the Bush administration's foreign policy team would focus energy and attention on how to stop the health ravages of the global tobacco trade. But we don't live in a rational world. As a result, far more is known about the Bush administration's plans to pursue a fantasy-world Star Wars missile defense system than whether the new administration will confront the global scourge of tobacco-related death and disease. In fact, the new administration has so far been silent on almost every important tobacco control policy question.

That's not surprising, given the record of key players in the administration and the strong support Philip Morris and the rest of the tobacco industry provided to the Bush campaign and the Republican Party. Critics say there is little reason to be hopeful that the administration will adopt a pro-public health posture on international tobacco control. Instead, trade considerations are expected to trump global health concerns.

Meanwhile, a growing international public health movement is advocating for meaningful tobacco control. Tobacco activists are demanding that the Bush administration oppose Philip Morris' efforts to increase overseas sales, and to support -- or at least not undermine -- efforts to negotiate an international tobacco control treaty. And they are calling attention to a series of domestic policy fights that will have significant ripple effects on international tobacco control, including conflicts over federal regulation of tobacco.


Tobacco and Trade

International trade issues are central to the world's largest tobacco company, U.S.-based Philip Morris. Philip Morris now earns more than half of its cigarette profits overseas, garners almost two-thirds of its tobacco revenues in foreign markets, and sells more than three-quarters of its cigarettes outside the United States. The company's international gains come after two decades of heavy overseas spending to advertise its products, buy newly privatized cigarette companies, set up joint ventures, and build distribution networks. (The second leading U.S. tobacco company, R.J. Reynolds, has sold its international operations, including the right to market RJR products in foreign countries, to Japan Tobacco.)

Activist concern about potential trade impacts on tobacco control has risen dramatically over the last year. They worry about both the harmful consequences of market opening measures, and that tobacco control regulations could be vulnerable to challenge in the WTO or other trade institutions. (For example, regulations that call for plain, black-and-white cigarette packaging could be considered a violation of trademark protections contained in the WTO agreement on intellectual property.) Even Ira Shapiro, former USTR general counsel, now states that he believes tobacco should be excluded from international trade agreements.

The most critical test of whether tobacco control advocates are able to win a "carve out" of tobacco from international trade agreements is likely to come during upcoming negotiations on the proposed Free Trade Area of the Americas agreement (FTAA). That agreement would effectively extend NAFTA to cover the entire Western hemisphere, except Cuba.

The new USTR, Robert Zoellick, has signaled that he intends to aggressively advance corporate interests in trade negotiations, which includes seeking fast-track negotiating authority from the U.S. Congress on the FTAA. However, he has not been forced to specifically comment on tobacco-related issues.


A Framework For Health

The biggest showdown on international tobacco control policy for the new administration will be the proposed Framework Convention on Tobacco Control (FCTC). In 1999, member states of the World Health Organization unanimously agreed to launch negotiations on a global tobacco treaty. If adopted, it will constitute the first treaty negotiated through the WHO.

The Framework Convention could make an enormous contribution to stemming the global tobacco epidemic by fostering international cooperation on issues such as smuggling and the global marketing of tobacco products. Tobacco control advocates are also pressing to ban tobacco advertising all together, or at least limit it to the extent permitted by the law in member countries. Many involved in the process hope to see two protocols adopted simultaneously as part of the Framework Convention, one on advertising and marketing, and one on smuggling.

If adopted, the smuggling protocol is likely to involve a system of tracking cigarette exports, including labels indicating the intended final destination. Cigarette smuggling is at epidemic levels -- an estimated one in three internationally traded cigarettes is smuggled -- and newly emerging evidence from company documents suggests the tobacco industry is facilitating, encouraging or even directing smuggling on a massive scale. Smuggling allows tobacco companies to evade excise taxes, which in most countries make up a considerable portion of the consumer price -- and which deter smoking by keeping prices up.

Activists are focusing on other issues, as well. The Network for Accountability of Tobacco Transnationals (NATT), for example, is emphasizing the need for measures to hold companies accountable for the health impacts they perpetrate, and for limits on tobacco companies' multi-million dollar lobbying efforts.

The Bush administration has yet to create its team to handle Framework negotiations, which resume in Geneva in late April. While it is unclear exactly how the Bush administration will position itself, few expect the Bush negotiators to be more positive than the Clinton delegates, who got only fair grades from activist groups. Many fear the new administration will be actively obstructionist.

"If the Bush administration can't support major provisions in the Framework Convention, then it should keep quiet or get out of the way," says Judith Wilkenfeld, Director of the Framework Convention Initiative at the Campaign for Tobacco-Free Kids.

Wilkenfeld and others want the United States to abstain on provisions it may find unacceptable, rather than block other countries from adopting effective tobacco control measures. And while almost all U.S. activists would like to see the United States sign the treaty, they say they would rather Washington pull out of negotiations than torpedo an agreement.

One recent development that is sure to profoundly affect the U.S. position on the Framework Convention is that Philip Morris, the only remaining U.S. tobacco giant which is truly international, has done an abrupt about face and now claims to support a tobacco treaty.

"It is time for regulation," says David Greenberg, Philip Morris International's Senior Vice President for Corporate Affairs. The company is ready to embrace regulation around the world whether by international institutions and/or at the national level.

"We'd like to see a convention have as broad a reach as possible," Greenberg says, "so we know what the rules are."

Philip Morris would support treaty provisions on youth smoking prevention, information to adult smokers, ingredient disclosure, disclosure of the constituents of tobacco smoke, marketing standards and smuggling. The company also supports government regulation of the tobacco product itself, so that cigarettes can be "made as safe as they can be," Greenberg says.

He says the company is even willing to cede to governments the right to regulate nicotine levels, although this agreement comes reluctantly and seems of uncertain scope. "We're not going to get anywhere in [achieving] public health goals if manufacturers are required to make a product that no one wants to smoke," he warns. Then governments would just be "stepping on the gas" of increasing illegal products, he contends.

However, tobacco activists are skeptical of Philip Morris' last minute about face. "Philip Morris is spreading disease and death around the world, and now calls for a seat at the negotiating table," says INFACT Executive Director Kathryn Mulvey. Boston-based INFACT is spearheading a boycott of Philip Morris products, including Kraft Foods and other subsidiaries.

"Through decades of deceit, Philip Morris and the rest of the tobacco industry have disqualified themselves from the FCTC process," adds Mulvey. "If Philip Morris had really changed its ways, it would stop trying to manipulate the treaty into protecting corporate profit over human life."

Not surprisingly, the company does not agree with most of the basic positions advocated by the tobacco control movement. For example, Philip Morris supports restrictions on broadcast advertising of tobacco products, bans on the use of cartoons in cigarette ads and prohibitions on the placement of advertisement in locations with a "particular appeal to minors" -- measures that many activists believe to be of little value. However, the company strongly opposes a total marketing ban.

What Philip Morris wants taken off the negotiating table are proposals for a worldwide taxation level, any elements that might create new opportunities for litigation, and efforts to exclude tobacco from world trade rules. In general, Greenberg says, the company supports "things meant to be good, solid public health regulations... [and] opposes things that are either punitive against companies or smokers."

Again, tobacco campaigners are suspicious of the company's motives. "On product regulation, Philip Morris' primary goal is to gain governments' stamp of approval for the so-called 'reduced risk' products that it plans to market with the goal of getting more people to start smoking," notes Judith Wilkenfeld of Tobacco Free Kids. "Right now, with the treaty at such an early stage, there are major public relations benefits to appearing to be cooperative," she adds.

How Philip Morris' approach to the Framework Convention will affect the Bush administration remains unknown. "This is barely a blip on the screen for the administration," says Greenberg, who says he has had virtually no contact with Bush officials on the issue. Asked if the transition from Clinton to Bush will affect the U.S. position on the FCTC, Greenberg professes to have "no idea."

Whether or not Philip Morris has the White House's ear, it seems unlikely that the Bush administration will pursue constructive measures on international tobacco policy. The unresolved question is whether activists will be able to muster sufficient pressure to stop the administration from doing harm.

Robert Weissman is editor of Multinational Monitor magazine and co-director of Essential Action, a corporate accountability group.