[Intl-tobacco] WSJ: Should Trade Have No-Smoking Section?

[Robert Weissman]

Should Trade Have No-Smoking Section?
The Outlook
by Gordon Fairclough / gordon.fairclough@wsj.com1
Source: The Wall Street Journal Interactive Edition, Monday, 7/23/01

When the Bush administration beat back South Korea's bid last month to
sharply raise tariffs on foreign cigarettes, White House spokesman Ari
Fleischer said the case had nothing to do with public health. "It was a
straight trade issue,"  he said.

With tobacco, however, nothing is that simple. Free trade, as a rule,
increases competition, lowers prices and makes better products available
to consumers, leading to higher consumption. Usually, that's a good thing.
But with cigarettes, the result can be more smoking, disease and death.

Four million people globally will die this year from lung cancer,
emphysema and other smoking-related diseases, making cigarettes the
largest single cause of preventable death. By 2030, the annual number of
fatalities could hit 10 million, according to the World Health
Organization.

That has more antismoking campaigners and even some economists and trade
experts arguing that cigarettes aren't normal goods but are, in fact,
"bads"  that need their own set of regulations. "The benefits of open
trade don't apply when you're talking about cigarettes," says Ira Shapiro,
a Clinton administration trade negotiator who now consults for the
Campaign for Tobacco-Free Kids. "They should be treated as an exception to
trade rules."

This view is finding favor with some governments, as well. In the latest
talks on a global tobacco-control treaty being backed by the WHO, a range
of nations expressed support for provisions to emphasize antismoking
measures over free-trade rules. The U.S. opposed such measures.

In fact, the U.S., which at home is suing major tobacco companies for
misrepresenting cigarettes' health risks, has led the charge for freer
trade in cigarettes. President Reagan and the first President Bush forced
open some markets in Asia to U.S. cigarettes. President Clinton opposed
discriminatory cigarette excise taxes in several countries, and negotiated
a sharp reduction in Chinese tariffs, including those on tobacco, in
return for supporting China's entry into the World Trade Organization.

Those moves, combined with free-trade pacts that have lowered tariffs and
removed other barriers to trade, have helped boost international sales of
cigarettes. Since 1985, world cigarette exports have more than doubled,
climbing to 921.86 billion sticks from 354.46 billion, according to the
U.S.  Department of Agriculture.

The U.S., under President Clinton and the new President Bush, has said it
challenges only rules imposed to aid local cigarette makers, not
nondiscriminatory measures to protect public health. The U.S. opposed
South Korea's decision to impose a 40% tariff on imported cigarettes
because it was "discriminatory and aimed at protecting their own industry
and not at protecting the health and safety of the Korean people," a
spokesman for the U.S. Trade Representative's office says.

But antismoking activists say that's a false distinction. "Anything that
makes cigarettes more widely available at a lower price is antithetical to
public health," says Robert Weissman of the corporate-accountability group
Essential Action.

Frank J. Chaloupka, an economist at the University of Illinois at Chicago,
and Thai economist Adit Laixuthai studied the impact of cigarette-market
opening on smoking in Japan, South Korea, Taiwan and Thailand. They found
that, by 1991, per-capita cigarette consumption was about 10% higher on
average than it would have been if the markets had stayed closed.

In a broader study, Dr. Chaloupka and others found that freer trade has a
"large and significant" impact on smoking in low-income countries.
Middle-income countries are affected less, and there's no effect on
high-income countries, where people are more aware of the health hazards.

Cigarette makers oppose limiting trade in tobacco. "There is no
justification for creating new structures that undermine or contradict the
principles" of international commerce protected by the WTO, says David
Betteridge, a spokesman for British American Tobacco PLC of London.

Current trade rules allow countries to take steps to protect the health
and safety of their citizens, as long as all goods are treated equally,
tobacco companies argue. A trade-dispute panel told Thailand, for
instance, that while it couldn't ban foreign cigarettes, it could ban
advertisements for both domestic and foreign-made smokes.

But tobacco-control activists worry that the rules could be used to stop
governments from imposing antismoking measures. European health officials
say that Japan has threatened to go to the WTO to challenge new EU
regulations barring the use of the terms "light" and "mild" in cigarette
brand names. The Japanese government -- which owns about two-thirds of
Japan Tobacco Inc. -- told the EU that the new rules could amount to a
technical barrier to trade.  Japan could also claim that they violate
provisions protecting trademarks and other intellectual property.

Special products need special rules, say tobacco-control activists,
pointing to weapons and dangerous chemicals as goods already exempt from
regular trade regulations. The Bush administration last month dropped a
WTO complaint against a Brazilian patent law aimed at giving poor people
greater access to AIDS medications. Cigarettes kill more people every year
than AIDS. Antitobacco activists think it's time for health concerns to
trump trade rules in the case of smoking, too.



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