Multinational Monitor

MAR 1998
VOL 19 No. 3


Pentagon Welfare: The Corporate Campaign for NATO Expansion
by William Hartung

Fields of Nightmares: The Not-Yet Eliminated Global Landmine Industry
by E.J. Hogendoorn

Guarding the Multinationals: DSL and the International Private "Security Business"
by Pratap Chatterjee


Living Downstream
an interview with
Sandra Steingraber


Behind the Lines

Executive Decisions

The Front
Domesticating Big Tobacco - The Anti-Child Support Act

The Lawrence Summers Memorial Award

Trade Watch
Recolonizing Africa

Money & Politics
The Oil Royalty

Their Masters' Voices
Whipping the Minimum Wage

Names In the News


The Front

Domesticating Big Tobacco

"All we say [to the tobacco companies] is comply with a common, uniform standard: don't market to children anywhere, warn consumers of the deadly effects of your products anywhere."

That was Representative Lloyd Doggett, D-Texas, at a February news conference announcing a legislative package to curb U.S. tobacco companies' international operations. 

Although the package is, in many ways, extremely modest, if passed in its entirety it would constitute one of the most far-reaching legislative efforts ever undertaken to curb U.S. multinationals' activities overseas.

One of its innovative provisions would require U.S. tobacco companies to adhere at least to the same marketing and labeling standards abroad as at home -- a standard of consistency that is applied to bribery outside of U.S. borders, but to almost no other type of corporate conduct.

The International Dimension

The impetus for the international initiative is tobacco legislation pending before the U.S. Congress as an outgrowth of the tobacco lawsuit settlement negotiated last June.

In exchange for annual payments rising to an undiscounted $15 billion a year and adoption of a variety of tobacco control measures, the June settlement proposal between the attorneys general from 40 U.S. states and the tobacco industry would give the industry virtual immunity from all future lawsuits [see "The Great Tobacco Bailout," Multinational Monitor, July/August 1997]. Because of the breadth of the state attorneys general deal, it would require national legislation to go into effect.

The deal would permit the tobacco industry to continue unimpeded in its international expansion. The deal completely excludes any measures to curb the overseas activities of U.S. tobacco multinationals.

This exclusion was not an oversight. The Tobacco Titans jealously guarded their prerogatives to poison the rest of the world in their negotiations with the state AGs. Industry negotiators led by Martin Broughton, the chair of BAT, parent company of Brown & Williamson and the second largest cigarette manufacturer in the world, simply refused to permit any mention of international issues in the settlement. In the face of the industry's hardline, the AGs quickly capitulated.

Increasingly, however, it looks like the U.S. Congress will reject the terms of the June deal -- both the domestic immunity provisions and the exclusion of international controls.

"Comprehensive tobacco control legislation would be incomplete without strong international tobacco controls," said Senator Paul Wellstone, D-Minnesota, at the February news conference. "Unless we include strong international controls as part of tobacco control legislation, this outlaw industry will continue to exploit the overseas market, preying disproportionately on people in developing countries."

"Tobacco control legislation must protect children and protect public health at home and abroad while conceding no special protections to the tobacco industry," Wellstone added.

Along with Doggett and Wellstone, Senators Richard Durbin, D-Illinois, Frank Lautenberg, D-New Jersey, and Ron Wyden, D-Oregon, and Representative Frank Pallone, D-New Jersey, announced the five-pronged international tobacco control initiative.

Curbing the Tobacco Predators

The U.S. tobacco companies already make more than two thirds of their cigarette sales abroad, and all of their sales growth is taking place in international markets.

The World Health Organization (WHO) predicts 10 million people will die annually from tobacco-related disease by the 2020s -- up from a current 3 million annual death toll -- with 70 percent of the deaths taking place in the Third World.

"Tobacco use in developing countries threatens to turn back the clock on public health advances in those nations," said Durbin.

That sentiment, plus an appreciation of the unseamliness of passing domestic tobacco control legislation while permitting the tobacco industry to kill unabated outside of U.S. borders, spurred the members of Congress to develop the international tobacco control package.

International smoking rates will surely continue to soar even if the package is adopted, but it should help curtail the ability of U.S. companies to hook smokers outside of the United States. Key provisions would:

  • Require U.S. tobacco companies and their subsidiaries, affiliates and licensees to adhere to at least as stringent marketing and labeling standards overseas as domestically. If U.S. legislation bans tobacco company use of cartoons or human images, for example, this provision would ensure that the Marlboro Man and Joe Camel are permanently retired, not just exiled to other countries. It would not interfere with other countries' imposition of stronger standards.

  • Prohibit the use of U.S. government funds to promote U.S. tobacco interests in foreign markets. This measure is intended to block U.S. government agencies, especially the wild-eyed, trade-above-all Office of the U.S. Trade Representative, from challenging other nations' public health laws, even if they affect U.S. producers more than domestic companies. In the late 1980s, for example, the United States challenged a Thai tobacco advertising ban on the grounds that it hurt U.S. companies that needed to advertise to gain market share -- such a challenge would not be permitted under the tobacco control proposal.

  • Impose tough anti-smuggling provisions. One-third of all internationally traded tobacco now winds up on the black market, which thrives due to tobacco import restrictions, tax differentials between countries and tobacco company complacency if not complicity. The anti-smuggling rules would require all U.S. tobacco exports to be labeled with the country of final destination and require manufacturers to post bond to be returned when they certify the product reached the country of final destination.

  • Create a new U.S. non-governmental organization that would funnel money to overseas anti-tobacco groups and would produce and help get television counteradvertisements aired in developing countries and in Eastern Europe and the former Soviet Union. The U.S. entity would be funded to the tune of $150 million annually.

  • Impose a special fee on tobacco companies to support governmental and nongovernmental tobacco control efforts overseas, and to fund WHO, UNICEF and other international agencies.

Tobacco Politics

T he legislative package is certainly not as aggressive as it might be. It does not mandate that if cigarette performance standards (e.g., nicotine limits) are adopted in the United States that they be imposed on cigarettes sold abroad by U.S. companies. It would allocate far too little money for international tobacco control efforts -- even though international tobacco control investments yield a very high return in lives saved. It does not require the tobacco companies to turn over documents related to their predatory international activities. It does not guarantee that non-U.S. tobacco victims will maintain their limited rights in U.S. courts (though this will not be a problem as long as the industry is not granted any special protections from lawsuits).

Some tobacco activists believe the marketing and labeling standards represent a misguided approach, and that efforts should be focused on promoting adoption of a WHO International Framework Convention on Tobacco. But while a Framework Convention would set out a model for how countries should regulate tobacco, countries would be free to disregard it. Among those countries that introduce strong tobacco control legislation, experience shows that many underfunded government agencies will not be able to enforce it in the face of Big Tobacco's political power and evasive tactics. And, in any case, holding the U.S. companies to a minimum standard of conduct worldwide should convert them into advocates of similar standards to be applied to tobacco companies based in other nations.

Whatever the limitations of the proposed international tobacco control legislative package, however, in the current U.S. political context, it represents a bold tobacco control and corporate accountability initiative.

Of course, bold corporate accountability initiatives have not fared well in the U.S. Congress in recent years, a problem which poses a challenge to supporters of the international proposals.

Backers of the international tobacco legislation are not introducing the package as a stand-alone bill. Rather, they are working to see as much of the package as possible included in the many tobacco bills now under consideration in Congress. Most of the proposals have already been included in leading Democratic bills introduced by Senator Kent Conrad in the Senate and Representative Vic Fazio in the House of Representatives, and at least some provisions are likely to find their way into Republican bills, though they are not there yet.

The public health community is bitterly split over tobacco legislation -- with the American Cancer Society, the American Heart Association and some other groups willing to accept partial immunity for the industry, and the American Lung Association, the American Public Health Association, Public Citizen and virtually every U.S. grassroots anti-tobacco group opposed to any form of immunity -- but united in its support for international tobacco legislation.

This unanimity -- despite the fact that  international issues are not a priority for most of the public health groups -- combined with the staggering WHO estimates has generated some momentum for the international proposals. If any tobacco legislation is passed this year -- a proposition that is more probable than not -- at least some portion of the international package will likely be included.

-- Robert Weissman

Call it the Anti-Child Support Act

It is the product of a full-throttled campaign by the credit card companies and financial services industry to rewrite U.S. bankruptcy laws.

Their goal: to make it harder to declare bankruptcy and to impose heavy burdens on debtors who do fall into bankruptcy.

More than one million people in the United States declare bankruptcy each year.

This is the result, in part, of the credit industry sending out 2.5 billion solicitations each year; a consumer culture that encourages extravagant purchases and constantly upgrades the measure of what is an "essential" versus a "convenience;" and stagnation or decline in real wages over the last two and a half decades for 80 percent of the population.

When a person declares bankruptcy, they are required to undertake court-supervised repayment plans. During a period of three to five years, with some money set aside for essential needs like food and rent, the debtor allocates their income to pay off their debts as best they can. At the end of the repayment period, their debts are wiped clean.

For the credit industry, personal bankruptcies mean unpaid accounts. That's why the industry wants to make it harder to declare bankruptcy and more onerous to live through it.

The industry-supported "Responsible Borrower Protection Act" (H.R. 2500) would force debtors to litigate their right to be in bankruptcy, and impose expensive new filing and other bureaucratic requirements -- just to get into bankruptcy. Once in bankruptcy, debtors would be forced to stay in repayment plans for five to seven years. The legislation would place payment obligations for credit card debt on a par with secured debt on critically important items like a home mortgage or a car loan.

It even would place credit card debt on equal footing with child support payment obligations, says Gary Klein of the National Consumer Law Center.

In other words, debtor repayment plans could not prioritize paying off mortgages -- enabling people to keep their homes -- or paying back child support over payments on overdue Visa or Mastercard accounts.

The industry spin on this draconian legislation is that it would crack down on what it calls a growing trend  of "bankruptcies of convenience." The American Financial Services Association (AFSA) argues that debtors routinely file for bankruptcy to escape debts even when they have the means to make payments. Bankruptcy is becoming a "financial planning tool," according to the Association.

"The industry's message is simple," says the first point on a list of "AFSA Member Company Talking Points on Bankruptcy Reform." "All we want to do is require people who can afford to pay all or part of their debt to do so, so the rest of us don't have to pay higher prices due to their misuse or abuse of the bankruptcy system."

The AFSA's line ignores some inconvenient facts: Bankruptcy debtors have an income 40 percent below the national average, for example. And the existing bankruptcy system imposes tough oversight provision on debtors, with strong civil and criminal penalties for fraud and dismissal of claims by people who can afford to pay their debts.

But the credit industry doesn't intend for facts to get in its way. It has launched a massive PR and lobbying blitz to generate public support for the Anti-Child Support Act.

Financial interests have banded together to form the National Consumer Bankruptcy Coalition. Members of the coalition poured more than $700,000 into federal candidate campaign coffers in the first half of 1997 alone.

The AFSA has hired a Dream Team of lobbyists and consultants to push the Anti-Child Support Act. Among its mouthpieces: Verner Liipfert, a law firm-lobby shop that is the current home of Bob Dole and Lloyd Bentsen, former Treasury Secretary; Timmons & Co., which is run by William Timmons, a top White House official in the Nixon and Ford administrations; and the law firm of former Republican National Committee Chair Haley Barbour.

The AFSA's strategy is to run a steady campaign on behalf of the Anti-Child Support Act, slowly building congressional support, rather than trying to rush the radical measure through at once.

In its November/December newsletter, the association reports that this strategy, and member companies' substantial investment in big-time lobbyists, is paying off.

"With strategic guidance and hard work from a team of top-notch government affairs consultants, through the implementation of an aggressive legislative and communications strategy and working in close coordination with allies like the National Retail Federation," the newsletter informs AFSA members, "AFSA has helped put the issue on this Congress's radar screen."

More than 150 members of the House of Representatives -- most but by no means all Republican -- had co-sponsored H.R. 2500 by early December.

-- Robert Weissman

The Lawrence Summers
Memorial Award

The March 1998 Lawrence Summers Memorial Award* goes to Philip Crane, R-Illinois, who shepherded the Africa free trade bill through the House of Representatives in March.

"Of those countries in sub-Saharan Africa, to be sure, a lot of them are retards," Crane said in a February address to an International Fiscal Association gathering in Chicago. "I mean they've got a long way to go." Crane added, "Ben Franklin said a good example is the best sermon. So, if you're living in one of those retard countries and your neighbor over here suddenly goes to free enterprise and encourages people to work for a living and engages in the advancement of democratic institutions and they start to prosper, the people in your country are going to start rebelling." (Congress Daily, March 12, 1998)

*In a 1991 internal memorandum, then-World Bank economist and current Deputy Secretary of Treasury Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" Summers wrote. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I've always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City." Summers later said the memo was meant to be ironic.



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