[Intl-tobacco] TFK Urges Administration to Support Canada in Smuggling Case

[Robert Weissman]

FOR IMMEDIATE RELEASE
May 13, 2002
CONTACT: Nicole Dueffert, tel. 202-296-5469

Statement By Matthew L. Myers
President, Campaign for Tobacco-Free Kids

Bush Administration Should Support Canada’s Right to Sue R.J. Reynolds In
Smuggling Case Now Before U.S. Supreme Court

-- Solicitor General Olson Urged to Recuse Himself Due to Conflict of
Interest--

WASHINGTON (May 13, 2002) – The U.S. Supreme Court today asked the Bush
Administration to file a brief outlining the government’s views in a case
that will determine whether the Canadian government can sue R.J. Reynolds
Tobacco (RJR) for damages caused by RJR’s wrongful involvement in cigarette
smuggling into Canada.  We urge the Administration to support Canada.  This
case is critical to holding the cigarette companies responsible for their
involvement in widespread, worldwide smuggling.  The Bush Administration has
voiced strong concerns about cigarette smuggling during negotiations on the
proposed international tobacco treaty, the Framework Convention on Tobacco
Control.

We also urge Solicitor General Theodore Olson to recuse himself from the
case because, as a private attorney, he represented the National Association
of Manufacturers and the U.S. Chamber of Commerce in this case in
support of
R.J. Reynolds (brief filed February 6, 2001).  His recusal is necessary to
avoid any perceived or actual conflict of interest in the Administration’s
approach to this case.

For years, tobacco company executives have fought cigarette tax
increases by
arguing that they would lead to increased cigarette smuggling.  However,
recent investigative news reports and documents show that the tobacco
companies themselves have aided and abetted international smuggling
operations.  These reports and lawsuits indicate that the cigarette
companies have facilitated smuggling to penetrate closed markets, increase
the sale of their brands by making them available at reduced prices, and
undermine national efforts to reduce tobacco use by increasing cigarette
taxes and import duties.  Canada’s lawsuit is a critical test of whether
foreign governments can turn to U.S. laws and courts to combat these massive
smuggling schemes and the tremendous harm they cause.

Lower courts have dismissed the Canadian lawsuit on the basis that it
violates the so-called “revenue rule,” which bars one country from enforcing
its tax laws in the courts of another country.  However, this case is much
broader than a tax matter, involving possible violations of racketeering,
wire- and mail-fraud statutes, and other organized criminal activities.
When it passed the Financial Anti-Terrorism Act, commonly known as the
Patriot Act, last fall, Congress took explicit action to delete language
that would have restricted the ability of foreign governments to bring
lawsuits against U.S. cigarette companies related to cigarette smuggling.
Based on this legislative history and the importance of this case to
combating cigarette smuggling, the Administration should file a brief
supporting Canada’s right to sue R.J. Reynolds for its role in cigarette
smuggling.