TOBACCO DEAL LEAVES IMPORTANT ISSUES SMOLDERING

THE $206 billion state tobacco settlement announced Monday will not
end teen smoking, bankrupt the tobacco industry or end tobacco
liability lawsuits. So it will not satisfy public health groups and
anti-tobacco advocates who wanted a larger settlement and greater
concessions from tobacco companies.

The settlement will, however, accomplish the intended purpose of the
lawsuits filed by California and other states: to compensate state and
local governments for the cost of treating sick smokers and curb
tobacco advertising aimed at children.

California, a late-comer to the bargaining table, will get $23
billion, of which roughly half will go to local governments. Santa
Clara County and San Jose, which filed their own suit against Big
Tobacco before the state did, will get $500 million and $287 million
respectively.

The settlement calls for substantial concessions from the tobacco
industry: a ban on outdoor advertising, cartoon characters and
promotional marketing of clothing and other products with tobacco
brand names. The brand-name sponsorship of sporting events would
continue, but would be limited to one event per company per year. Two
key industry groups, the Tobacco Institute and the Council for Tobacco
Research, would be disbanded, and the industry would contribute $2
billion to tobacco education.

In addition, many company files would be opened so states could
monitor compliance with the settlement. The industry could not oppose
state or local laws that target teen smoking. It would not be
protected from individual or class-action suits by private citizens.

In return, the industry gets what it wants most: an end to government
lawsuits.

This deal is considerably less ambitious than the $368.5 billion
settlement reached in June 1997 by another group of state attorneys
general. That's why it has a chance of succeeding.

The 1997 deal attempted to settle the question of national tobacco
policy and industry liability once and for all. It would have
protected the industry against virtually all future lawsuits while
requiring sweeping concessions on advertising, disclosure of
documents, regulation of nicotine, compensation of tobacco farmers and
other hot issues. It would have generated billions of dollars for
non-tobacco-related programs.

Unfortunately, that deal was so sweeping that it required
congressional approval. With so many competing interests and so much
money at stake, Congress just couldn't agree on a package.

That's when the states began cutting their own deals. Florida,
Mississippi, Texas and Minnesota settled for a total of $40 billion.
Eight states, including California, joined to negotiate the latest
deal, which is contingent upon most of the remaining states signing
on.

This deal does not require congressional approval, which is a relief.
But it leaves several important policy questions unanswered. The
tobacco industry has challenged the authority of the Food and Drug
Administration to regulate nicotine as a drug, and the case is being
appealed to the U.S. Supreme Court. If the FDA loses in court,
Congress must pass legislation to support the FDA's authority.

Other issues left unsolved include relief for tobacco farmers and U.S.
policy toward marketing of tobacco products to children overseas.
While the tobacco farmers may cut their own deal with the industry,
the question of exporting Joe Camel will require congressional attention.

Those who oppose this deal say it doesn't go far enough. We agree that
there is more work to be done to curb teen smoking and educate the
public about the health hazards of tobacco. But the state attorneys
general couldn't be expected to do it all.

Checked-by: Patrick Henry