Tobacco's Global Reach

Could Filipino kids end up paying Mississippi's Medicaid bills? That
could be one of the perverse outcomes of ongoing negotiations between
state attorneys general, private trial lawyers, some public health
advocates and the big tobacco companies, says Greg Connolly, head of the
Massachusetts Tobacco Control Program.

Under siege on legal, regulatory and public opinion fronts, Big
Tobacco's search for a "global settlement" to resolve all present and
future U.S. damage claims was still being hotly debated at press time.
In broad outline, it appears the tobacco companies are offering to pay
approximately $300 billion over twentyfive years; accept domestic
marketing and advertising restrictions; perhaps agree not to challenge
some degree of Food and Drug Administration regulation of nicotine; and
perhaps guarantee some decrease in U.S. children's smoking rates. In
exchange, the tobacco companies will receive substantial limitation on
their liability for the ghastly harm they have perpetrated.

Whatever the exact scheme, the tobacco companies will only agree to a
deal that seriously compromises victims' rights and affords the
balancesheet predictability they crave. And one more thing seems clear:
Big Tobacco's overseas victims and operations will be excluded.

This exclusion will enable the tobacco titans to carry out their
longstanding global strategy to hold sales relatively steady in the
United States and in the industrialized countries, while concentrating on
increasing sales and market share in the Third World, Eastern Europe and
the former Soviet Union. In the past decade, U.S. tobacco consumption
dropped 17 percent but exports skyrocketed 259 percent. Philip Morris
and R.J. Reynolds now sell more than twothirds of their cigarettes
overseas, and nearly half of their 1996 profits came from foreign sales
almost triple the proportion of a decade earlier.

When the U.S. companies invade a market in the Third World or Eastern
Europe, they not only capture market share from the sleepy national
tobacco companies, they attract new smokers. After the Reagan/Bush threat
of trade sanctions forced South Korea to open up its cigarette market to
U.S. companies in 1988, smoking rates among male Korean teenagers rose
from 18.4 percent to 29.8 percent in a single year. The rate among
female teens more than quintupled, from 1.6 percent to 8.7 percent.

The tobacco lords promote cigarettes in the Third World and Eastern
Europe through an array of slick marketing techniques that target
children, especially girls, often in ways that would not now be tolerated
in the United States: free samples, TV advertising, celebrity
spokespersons, sponsorship of youthoriented events like rock concerts
and radio shows.

Restrictions on sales practices in the United States, in the absence of
global controls, may well spur the tobacco titans to intensify still
further their marketing and corporate acquisition' strategies abroad.
This prospect is what leads Connolly and others to fear that the tobacco
companies' reimbursement of past Medicaid costs will come out of the
pockets of children in the Philippines and elsewhere in the developing
world and Eastern Europe at the expense of those children's health.

International tobacco control activists are beginning to sound alarms
about the damage a purely U.S. settlement could do to global health
efforts. "To avoid doing public health harm," international activists
said in a June 17 joint statement, "a settlement must set a worldwide
floor on U.S. tobacco company practices, without limiting the ability of
countries to require companies to exceed the global minimum standard."
Already the World' Health Organization predicts that 10 million people
will die annually from tobaccorelated disease by the 2020s, 70 percent
of them in the developing world.

Five years ago, a tobacco analyst with Sanford Bernstein, an investment
management firm, told me that the tobacco multinationals' optimism about
Eastern Europe is predicated on people in the region "not being well
enough educated to have health concerns about smoking." Perhaps "fifty
years from now they will realize that it is bad for you, and consumption
will drop then," she added. A settlement that excludes the rest of the
world would help condemn Eastern Europe and the Third World to

this grim fate.

ROBERT WEISSMAN

Robert Weissman is editor of the Washinton, D.Cbased Multinational
Monitor.