Knight Ridder on intl tobacco issues

[Robert Weissman <rob@essential.org>]

Houston Chronicle 4-18-98
Tobacco companies look to overseas as Americans snuff out habit

By SCOTT GOLD 
and JILL YOUNG MILLER 

Knight-Ridder Tribune News 

In Poland, one advertisement promises nothing less than "the taste of
freedom." Better yet, that taste is for sale at the corner
store, captured in an L&M cigarette, a product that is pawdziwie amerykanski
-- "truly American." 

In Hong Kong, smokers use empty packs of cigarettes as free passes into
discos. In Spain, a Madonna concert is
rebroadcast as a "Salem Madonna" concert. 

In Romania, the Camel logo is silhouetted inside traffic lights,
materializing when the lights turn green. 

While smoking drops steadily among adults in the United States, an
increasing number of people in foreign countries are
lighting up. If legislation in Washington, or a proposed $368.5 billion
settlement, saddles cigarette companies with
unprecedented domestic advertising and marketing restrictions, the industry
probably will look worldwide. 

As health advocates insist the industry is exporting not only cigarettes but
disease, and tobacco executives defend their right to
free trade, congressional leaders have launched an initiative to hinder
global expansion. 

"Their growth engine is overseas," said Kenneth Harris, a marketing
consultant with Cannondale Associates in Evanston, Ill.
"It's the key to the whole profit picture." 

Half of U.S.-grown tobacco is exported. At Philip Morris International, for
example, the foreign arm of the nation's largest
cigarette maker, revenues from non-U.S. markets rose from $15.7 billion in
1993 to $26.3 billion in 1997, a 68 percent
increase. As trade barriers fall, cigarettes represent a $260 billion global
market. 

"There is a significant opportunity for U.S. companies to compete overseas
for adult smokers' business," said Jan Smith, a
spokeswoman for R.J. Reynolds Tobacco Co. in Winston-Salem, N.C. "You
certainly aren't going to turn your back on that."

But a global cigarette market could engender a global health crisis. 

Overseas, the health community is overwhelmed by the growing international
cigarette market, as well as the industry's $4.9
billion global advertising budget. Adjusted for inflation, that budget is
triple what it was 20 years ago, according to Federal
Trade Commission figures. 

Like many U.S. companies, tobacco advertisers are taking advantage of
"out-of-control" demand for U.S. goods, Harris said.

"Always in Poland, we were very impressed by the spirit of America," said
Dr. Witold Zatonski, a Polish anti-smoking
advocate who spoke at last week's briefing on tobacco policy at the Foreign
Press Center in Washington. 

"I am especially proud that you are taking so strong steps to defend
American children. However, you must remember that
every day 10,000 children are starting smoking in Eastern Europe. And this
is our problem. We will be in trouble with our
children." 

Each year, according to the World Health Organization, 3.5 million deaths
worldwide are blamed on smoking. Fewer than
half, about 1.5 million, occur in developing countries. 

Tobacco products will be blamed for 10 million deaths a year by 2030, said
Neil Collishaw, acting chief of the WHO's
Tobacco Health Unit in Geneva. About 7 million of them will occur in
developing countries, especially in central and eastern
Europe and Asia. 

In the United States, health advocates are as prevalent and popular on
Capitol Hill as tobacco lobbyists were. Legal
settlements are forcing the industry to pay for campaigns designed to curb
teen-age smoking, such as a $200 million program
under way in Florida and an offshoot of the state's $11.3 billion tobacco
settlement reached in August. 

Debate over foreign tobacco markets boiled over in Washington last week when
Sen. John McCain, R-Ariz., proposed a
broad bill that would increase the price of cigarettes, curb teen-age
smoking, restrict tobacco advertising and cripple
international growth. 

Last June, cigarette makers agreed to a $368.5 billion legal settlement that
would put to rest 39 states' tobacco lawsuits, enact
advertising and marketing restrictions and provide the industry with
immunity from future litigation and antitrust laws. 

The industry did not count on Congress gunning for many of those same
provisions without tobacco's participation and
without providing the industry with critical legal immunity. Under McCain's
proposal, approved by the Senate Commerce
Committee on April 8, tobacco's payout would increase to $516 billion over
the next 25 years. 

McCain's plan also reaches across the shores to address the industry's
international market something the initial settlement
proposal did not do. 

It would finance anti-smoking campaigns abroad, require stringent warning
labels on exported cigarette packs, restrict
advertising in other countries and levy a 2-cent-per-pack fee to pay for
tobacco control efforts overseas. 

Perhaps most critically for the future of overseas markets, it would
prohibit the U..S. government from promoting the sale of
tobacco abroad and would require any international trade developments
involving tobacco to comply with U.S. public-health
policy. 

"We're talking about policies that are perfectly within the power of the
federal government," said Sen. Bob Graham, D-Fla.
Graham also has proposed a bill ending federal support of tobacco's foreign
expansion and providing $100 million a year for
anti-smoking campaigns in other countries. 

Fifteen years ago, only half of the world tobacco market was accessible to
U.S. companies. They were shut out by
government-run monopolies in countries such as China, the world's largest
cigarette consumer. Today, largely because of the
U.S. government lobbying, 98 percent of the world is accessible to some degree. 

Less than 20 percent of cigarettes smoked worldwide are produced by U.S.
firms, which play down their niche in the
international market.