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Future
hazy for success of tobacco pact
By Alan Boyd
SYDNEY - Late last month, Asian medical chiefs helped sponsor the most sweeping
anti-smoking treaty in history so that they could keep multinationals out of
the world's prime market for tobacco products. But there are fears that the
treaty could fail unless there is a tradeoff on home-grown commercial interests
that help keep addiction rates high even while legislation is being tightened.
What is causing most concern is the dual role of Asian governments as both
producers and suppressors of an enormous industry that simultaneously fills tax
coffers and stretches health systems. Already there are doubts that governments
in three of the continent's biggest tobacco markets - China, Japan and
Indonesia - will be prepared to separate the two functions for the sake of
edicts that at best are going to be difficult to enforce.
"It is not the happy end of the story but rather the beginning of a new
challenge for WHO [the World Health Organization]," Japanese chief negotiator
Yoshio Kimura acknowledged after the treaty's adoption.
The accord passed by WHO in Geneva is the first to advocate a comprehensive
global ban on tobacco advertising and promotion, and to provide for graphic
health warnings to be displayed on cigarette packets. Governments are
encouraged to stamp down on deceptive marketing slogans that classify
cigarettes as "mild" or "low tar", and there are tougher rules on exposure to
second-hand smoke.
Significantly, the WHO package proposes the concept of manufacturer liability,
paving the way for possible class litigation, and calls for global cooperation
against cross-border smuggling of cigarettes.
After four years of tough negotiations, which ironically were slowed by
opposition from the more health-conscious developed economies, only 40 country
ratifications are needed to put the treaty into action. While it appears likely
to be implemented, reservations expressed by the major tobacco exporting
nations, including the United States and Japan, also struck a chord in Asia,
which has a tremendous commercial interest in the issue.
Japan bitterly opposed the treaty. China and South Korea were lukewarm, but saw
an even greater potential danger in sitting on the sidelines while the agenda
was set by the multinational producers.
According to the World Bank, almost 80 percent of tobacco consumption worldwide
occurs in Asia, with China alone accounting for half of the global total. It
has an estimated 350 million regular smokers.
About 11 percent of all tax revenues in China, the Philippines and Turkey are
derived from tobacco sales and 9 percent in Indonesia, while Australia,
Pakistan and Russia get 70 percent of the income from every cigarette that is
sold.
Yet most developing countries in Asia still backed the WHO treaty because they
wanted to keep this trade to themselves, resuming a 1980s battle that was once
compared to Britain's Opium Wars in China.
In 1998 the US trade office invoked the threat of economic sanctions to gain
access to tobacco markets in Japan, Taiwan and South Korea, even using this
leverage to overturn advertising restrictions. The multibillion-dollar campaign
opened a new sales frontier for tobacco companies at a time when consumption
was steadily falling in Western markets because of health concerns.
But the drive ended abruptly in Thailand, where a determined if incongruous
coalition of health professionals and tobacco farmers won a landmark ruling
from the General Agreement on Tariffs and Trade (GATT).
"Washington's case was built around the contention that foreign tobacco had to
be granted the same access as domestic products. GATT essentially agreed, but
it added a proviso that they also had the right to restrict sales on health
grounds if all suppliers were being treated equally," said a diplomat.
Bangkok responded with the most stringent tobacco controls in Asia, including a
blanket ban on advertising, sponsorship restrictions and - more recently - a
prohibition on smoking in some public places. After capturing 6-7 percent of
the Japanese, South Korean and Taiwanese markets, US manufacturers were able to
secure only 3 percent of official Thai tobacco sales, though their share is
probably closer to 10 percent if smuggled cigarettes are included.
In backing the WHO treaty, Asia again drew on the health argument in advocating
more marketing restrictions. But as in the 1980s, they have made few efforts to
curb consumption of state-owned brands, even though these are often two to
three times as potent as US and European cigarettes.
East Asian countries produced a combined 2.4 trillion cigarettes in 2000 and
grew 3 million tonnes of tobacco leaves. Although the tobacco crop was down
from a 1997 record of 4.8 million tonnes, only 2 percent of total requirements
had to be imported. South Asia is a net exporter. In 2000 the region's five
countries collectively produced 170 billion cigarettes and 857,000 tonnes of
leaves. The crop has doubled since 1961.
At an economic level, domestic tobacco industries employ an estimated 3 million
to 5 million people in Asia, often in regions that would be unsuitable for
other types of production. Yet they do not always bring a net economic gain. A
World Bank study in India found that productivity losses resulting from medical
afflictions were almost twice as great as national earnings from the
production, sale and taxation of tobacco products.
State-owned cartels either have monopolies over tobacco output or have strong
market positions in Japan, China, South Korea, Taiwan, Thailand, Indonesia,
Malaysia, India, Vietnam and most of Central Asia. But they face a new threat
to this dominance as trade reforms progressively lower structural defenses -
and this time the intruders are likely to originate much closer to home.
"East Asia will be the first battleground, if we weigh up the liberalization
commitments under AFTA [the ASEAN Free Trade Area] and add their other
commitments to GATT. I would be looking at countries like Indonesia, Thailand
and the Philippines," said the diplomat.
Import tariffs are due to fall to a maximum of 5 percent in Indonesia,
Singapore, Thailand, Malaysia, the Philippines and Brunei by 2010 and in
Vietnam, Cambodia, Laos and Myanmar five years later, in effect overriding all
trade-based tobacco controls. Cigarettes will gain entry at base tax rates if
40 percent of their content has originated from another ASEAN (Association of
Southeast Asian Nations) country. China, South Korea and Taiwan will get
similar access if they proceed with a planned free-trade arrangement with
ASEAN.
Multinational producers have responded by establishing tobacco farms and
export-oriented plants in ASEAN. Most recently, Philip Morris of the United
States built a US$300 million plant in the Philippines, and British-American
Tobacco set up a factory in Vietnam.
The WHO treaty has been seen as a preemptive strike by Asian countries to gain
the moral high ground by brandishing the health card before competitors begin
to arrive in force. But first they will have to fill in some of the glaring
gaps in tobacco-control regimes that undermined the East Asian position during
the 1980s US offensive and could still be exploited by multinationals.
While 33 of the 35 Asia-Pacific nations monitored by WHO have some tobacco
controls, only Singapore, Thailand and Australia have legislation that in
essence matches the WHO's guidelines.
A key failing is inadequate safeguards against the sale of tobacco products to
minors, who have been one of the chief targets of advertising campaigns in
recent years, according to the anti-smoking lobby. Indonesia, Brunei, the
Philippines, Myanmar and Cambodia have no restrictions on sales to minors.
Japan, China, Thailand, Vietnam, Malaysia, Taiwan, India and Laos do, but don't
enforce them.
Likewise, there are few laws against the use of tobacco in sponsorship. Hong
Kong's arts festival, China's soccer league, Asia Cup golf and Malaysia's
motoring Grand Prix are among the events dependent on funding from the tobacco
industry. WHO is targeting sponsorship deals and product placements as part of
its 2003 anti-smoking campaign in Asia, and aims to give these marketing levers
the same treatment as mainstream advertising.
"The product placement in films is getting very much worse, because what is
happening is advertising bans are kicking in all around the world," WHO policy
advisor Dr Judith Mackay said at the campaign launch.
"Traditional advertising, whether it be on TV, on radio, on billboards, in
magazines, is disappearing, and therefore, product placement has been a very
good way for the tobacco companies to put their products in front of the
population."
(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please contact
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