[Intl-tobacco] Tobacco firms eye Afta avenue / Tax exemption may boost availability

[Robert Weissman]

Tobacco firms eye Afta avenue / Tax exemption may boost availability
by Aphaluck Bhatiasevi
Source: Bangkok Post, Monday, 1/10/00

Concern has been raised over the effect Asean Free Trade Area (Afta) will
have on increasing availability of foreign tobacco products in a number of
countries, particularly Thailand.

Speaking at the World Health Organisation's International Conference on
Global Tobacco Control Law which ended in the Indian capital yesterday,
Hathai Chitanond, president of the Thailand Health Promotion Institute
said cigarettes should not be on the list of products exempted from
taxation.

According to the 1998 Asean Summit in Vietnam, member countries agreed to
implement Afta by the year 2002, and tariffs of 0-5% would be effective on
90% of taxable items.

Dr Hathai said the Thai government's policies in supporting a continuous
increase in taxation would be obstructed by Afta, for it would make
foreign brands of cigarettes cheaper and more easily available in the
country.

"The recent establishment of a manufacturing plant in Malaysia by tobacco
giant Philip Morris is obvious that they want to increase their sales
market in the region, particularly in Thailand," he said.

Bungon Rithipakdee, director of Action on Smoking and Health, said Afta
will impose its tariff reduction scheme on tobacco products as well.

Accordng to her, the Asean pact makes it more advantageous for
multinational cigarette companies to set up production in one of the
member countries.

"Malaysia is therefore replacing Hong Kong as the Asian hub for cigarette
manufacturing due to its cheaper labour and more favourable trading
arrangements," Ms Bungon said.

Dr Hathai urged the World Health Organisation to intervene by raising the
issue of exempting tobacco products from the list of items that would
enjoy free trade.

Derek Yach of the WHO's Tobacco Free Initiative, said though the role of
the WHO has not been outlined on the issue, continuous increase in the
price of cigarettes was the most effective tool in reducing cigarette
consumption.

He pointed out that WHO has an "open channel of communication" with the
International Monetary Fund and the World Bank, where discussions about
trade policies can be made to diversify policies at the local level.

Ms Bungon said if foreign brands of cigarettes became cheaper in the
country, it could lead to faster privatisation of the government-owned
Thailand Tobacco Monopoly (TTM).

According to her, the TTM would find it difficult to survive and would
eventually be taken over by a multinational tobacco firm. Similar
scenarios have occurred in a number of countries, said Dr Hathai.

He said transnational tobacco companies have been expanding their
production bases and businesses in Eastern Europe and the Asia-Pacific
region.

"Philip Morris, British-American Tobacco and R.J.Reynolds each own or
lease cigarette plants in at least 50 different countries around the
world," said Dr Hathai.

Faced with a difficult business environment in the US, the transnational
tobacco companies have now shifted their base to developing countries in
Asia, Africa, Latin America and Eastern Europe, said Luk Jossens of
Belgium's International Union Against Cancer.

At the same time, mergers and acquisitions made a few tobacco companies
even more dominant, and the top four cigarette manufacturers now enjoy
over 70% of the global market, Dr Luk said.

Major firms which recently merged include British-American Tobacco and
Rothmans, Japan Tobacco and R.J.Reynolds, and the French Seita and Spanish
Tabacalera.

Mongkhol Na Songkhla, director-general of the Medical Sciences Department,
said the only tool to keep the youth away from cigarettes was to increase
awareness of the health consequences of smoking.