[Intl-tobacco] U.S. Tobacco Exports Expected to Get Boost In House of Representatives

[Robert Weissman]

The Washington Post, 09.12.00

Tobacco Exports Get Aid in Bill Set for House Vote

By Marc Kaufman
Washington Post Staff Writer
Tuesday , September 12, 2000 ; A20

The Clinton administration has never been shy about trying to cut smoking
in the United States. But in a move that has confounded its usual allies,
the administration is backing an export subsidy bill this year that would
give American tobacco companies about $100 million in tax breaks yearly
for tobacco products they sell abroad.

The bill, which is scheduled for a full House vote today, would continue
subsidies for many American industries at a cost of between $4 and $6
billion annually. While these tax incentives have generally sparked little
opposition in Congress, the willingness to continue export subsidies for
tobacco has sparked criticism from public health advocates and other
industry critics.

"I think it's a very difficult position for the administration to
explain," said Rep. Lloyd Doggett (D-Tex.), who tried unsuccessfully to
deny the subsidy to tobacco companies in the Ways and Means Committee.
"What we're doing here is promoting and subsidizing the sale of cigarettes
to people abroad, and I find it unacceptable for that to be American
policy." Doggett said that during the White House lobbying for the China
trade bill earlier this year, President Clinton had told him that he
generally supported the amendment to remove tobacco from the export
subsidy list.

But a House Democratic aide familiar with the matter said White House
officials did not attempt to dismantle the program's tobacco subsidy for
fear of jeopardizing bipartisan accord on the legislation. "The
administration is caught a little bit between a rock and a hard place,"
the aide said.

A senior administration official said yesterday that Doggett's amendment
was "consistent with our tobacco policy" but said the administration went
along with House Ways and Means Committee Chairman Bill Archer (R-Tex.) in
the position "that no amendments be added to the legislation to ensure it
be passed on a timely basis."

Trent Duffy, spokesman for Archer, said Democrats and Republicans alike
agreed to preserve the general subsidy program to compensate for European
countries' favorable tax treatment of their companies' activities abroad.
Duffy said the provisions in the bill "are the only way we can stay
competitive with our competitors overseas. . . . Once you start changing
who receives the benefit of this regime, then you get into rewriting
United States tax law, and that's not what this is about." The export bill
deals with a long-standing trade dispute with the European Union. The
Europeans have complained that the corporate tax breaks now offered to
American exporters constitute an illegal export subsidy, and the World
Trade Organization agreed with this position. The bill before the House
today would address those concerns, though EU officials say little has
changed.

When the bill came before the Ways and Means Committee in July, the
American Medical Association, the Campaign for Tobacco-Free Kids and other
public health organizations lobbied to remove tobacco from the subsidy
list, but the bill passed unchanged with little public debate.

Democratic Ways and Means Committee members Doggett, John Lewis (Ga.) and
Fortney "Pete" Stark (Calif.) published a sharp critique of the bill's
handling as part of the committee report on the legislation. They pointed
out that both petroleum and unprocessed timber do not qualify for the
export tax incentives, although tobacco does.

"This legislation constitutes just another way of forcing American
taxpayers to be partners in this export of death and disease," they wrote.
Critics of the subsidies said they would try to remove them when the bill
comes up for consideration in the Senate.

Sales of cigarettes have been stable or declining in the U.S. market for
some time, but rose dramatically abroad until last year. Tobacco is now a
$6 billion export industry.

Today's administration support of the export bill with tobacco subsidies
contrasts sharply with earlier efforts to reduce government support for
tobacco sales abroad. The administration sent cables to all American
embassies last year directing them not to promote cigarette sales because
of public health concerns.

Doggett plans to denounce the tobacco subsidy in today's House debate, and
said he may vote against the entire export subsidy bill because of its
inclusion. His earlier amendment eliminating the tobacco subsidy had won
the support of 96 other representatives, mostly Democrats.

But Democrats are unlikely to have a chance to change the bill once it
reaches the House floor. It is slated to be brought up under suspension of
the rules, which requires a two-thirds vote for approval with no
amendments allowed. Staff writer Juliet Eilperin contributed to this
report. =A9 2000 The Washington Post Company