[Intl-tobacco] Industry Continues EU Tobacco Package Attack; Vote Looms

[Robert Weissman]

Industry Continues EU Tobacco Package Attack; Vote Looms
by Eric R. Drosin / Dow Jones Newswires;
32-2-285-0135;eric.drosin@dowjones.com

Source: The Wall Street Journal Interactive Edition, Tuesday, 12/12/00

BRUSSELS -- Tobacco firms are absolutely fuming ahead of a vote by
European Union lawmakers Wednesday on a package of measures to cut the
marketing and sales of cigarettes across the union.

While several proposals within the package are industry-friendly, tobacco
companies insist not only does the package stand on questionable legal
ground, but it will force cigarette manufacturing outside the E.U.,
leading to losses of thousands of jobs and millions in revenue. But the
E.U. is confident of the package's legality.

"The (tobacco) industry as a whole has problems with various aspects of
this proposal," said Tom Roberts, a spokesman for British American Tobacco
PLC (U.BRT).

Roberts says the tobacco industry is primarily concerned with a proposal
which would impose cigarette export restrictions - an area he claims the
E.U.  has no legal competence in - by 2006, and possibly sooner.

The export restriction would oblige manufacturers to reduce the level of
tar in cigarettes, be they for internal use or export, to 10mg tar, down
from the current 12mg ceiling.

"This alone would affect 85% of the production from BAT's two cigarette
plants in the U.K., which are for export outside the E.U." says Roberts,
adding it would also lead to the loss of millions of pounds in revenue and
10,000 jobs.

"It will result in the export from the E.U. of jobs and revenues,"
according to David Davies, vice-president of Corporate affairs for Philip
Morris Europe, the European branch of Philip Morris Cos. (MO). "We will
simply manufacture cigarettes outside the E.U."

The amended proposals include an increase in the size of health warnings
on cigarette packs. The warnings would cover 30% of the front surface area
and 40% of the back, an increase over the commission's original proposal
of 25% of the surface area.

While Roberts acknowledges the need for warnings on cigarette packs,
Davies says that any increase has to be a "proportionate balance between
promotional and public health information." He believes a warning covering
25% of the pack would be sufficient.

Cigarette makers will also be banned from using terms such as "mild" and
"light" on cigarette packs, another thorn in the side of tobacco
companies.

Roberts said "it seems contrary that the E.U. wants to lower tar levels
across in Europe in the belief there will be public health benefits, but
doesn't want to use descriptives to tell people there are 'lighter'
tobacco products."

The proposed directive would also allow member states to ban substances
that increase addiction, such as ammonia, and allow member states to use
taxation as a form of "tobacco control."

Also included are several industry-friendly proposals that include the
increased harmonization of rules, such as an E.U.-wide recognition of
tobacco test results, and ensuring that toxicological data tests aren't
obligatory, which would protect small- and medium-sized tobacco
enterprises for whom these tests are unaffordable.

Roberts of BAT maintains that the legal basis for the tobacco directive -
Article 95, which regulates internal market decisions - is fundamentally
flawed.

He points to the European Court of Justice's decision on Oct. 5 to
overturn an E.U. ban on tobacco advertising - also based on Article 95 -
on legal grounds.

The court found against the commission's argument that it banned tobacco
advertising and sponsorship in order to harmonize rules within the single
market.

Jules Maaten, the Dutch liberal who compiled the report that amended the
E.U.  Commission's original proposals, responds that "the tobacco
advertising ban proposal was a new untested directive, while the current
package is drafted out of three existing directives."

He remains confident that the legality of the tobacco package cannot be
called into question, given the inclusion of Article 133 - which governs
E.U.  commercial policy - as yet another legal basis for the tobacco
package.


URL for this Article:
http://interactive.wsj.com/archive/retrieve.cgi?id=DI-CO-20001212-005147.djml