Multinational Monitor

MAY 2000
VOL 21 No. 5


The Corporate PNTR Lobby: How Big Business is Paying Millions to Gain Billions in China
by Ian Urbina

The Joys of PNTR According to the Fortune 500
by Charlie Cray

The Marlboro Man Rides To China
by Robert Weissman

Wall Street Singes the Dragon: PetroChina's Failed IPO
by Braden Penhoet

The Effect of WTO Entry on the Chinese Rural Sector
by Robert Weil

Puppets, Protesters and Police: April 16 Mobilization Builds Momentum Against the IMF and World Bank
by Robert Weissman


Chinese Rights, U.S. Wrongs
Interviews with Wei Jingsheng and Alice Kwan


Behind the Lines

The Case Against China PNTR

The Front
Ford's Smokescreen

The Lawrence Summers Memorial Award

Names In the News


The Marlboro Man Rides To China

by Robert Weissman

Big Tobacco is one industry that has made out surprisingly well in the U.S.-China bilateral trade agreement negotiated as part of the process involving Congressional consideration of permanent normal trade relations (PNTR) status for China and China accession to the World Trade Organization (WTO).

The agreement contains specific provisions mandating a reduction in tariffs on imported cigarettes, from a base rate of 65 to 25 by January 1, 2004. It also requires China's compliance with the WTO's Trade-Related Investment Measures agreement, which prevents discrimination against imports on the basis of performance requirements of any kind.

"We believe that the deal would increase U.S. tobacco company access to the Chinese market, increase the companies' political influence in China, undermine tobacco controls in China and result in increased smoking rates and tobacco-related deaths," wrote the Save Lives, Not Tobacco coalition in a May letter to President Clinton. Save Lives is a U.S. national tobacco control coalition consisting of the American Lung Association, Public Citizen and dozens of local, state and national tobacco citizen groups.

"Smoking in China is already predicted to claim the lives of more than 150 million current smokers and more than 50 million of the children alive in China today," notes the Washington, D.C.-based Campaign for Tobacco-Free Kids in a recent statement. "While it was not the intention of the Administration to affect smoking rates in China, we believe that the proposed tariff reductions could have that result. If this were to occur by 'only' 1 or 2 percent, millions of additional deaths will result."

The Clinton administration adopted an informal policy of not using trade policy to advance the interests of tobacco companies when it took office in 1993. In recent years, Congressional appropriations language has made that informal policy into law.

The inclusion of the tariff reductions in the U.S.-China trade deal does not appear to violate the administration policy or the law, because both permit trade initiatives to assure that U.S. tobacco products are treated as favorably as those of other countries, including those of domestic manufacturers.

The law and administration policy were enacted on the heels of the Reagan and Bush administration use of the U.S. trade bureaucratic machinery to knock down tobacco trade barriers and tobacco control regulations in Asia.

When the U.S. companies entered markets in Japan, South Korea and Taiwan following U.S. trade pressure, not only did they gain substantial market share, but smoking rates rose significantly. In the case of South Korea, after the entry of U.S. companies, smoking rates among teenage boys went from 18 to 29 percent in a single year, according to the General Accounting Office, the U.S. Congressional research agency. The rate among girls nearly quintupled, rising from 1.8 to 8.7 percent.

Tobacco control advocates argue that the introduction of slick U.S. marketing and advertising techniques entices new smokers, particularly women and children.

"Providing open access to China's vast existing and potential tobacco market will create a huge economic incentive for domestic and foreign companies to compete aggressively for 'new smokers,' which in China means targeting traditionally nonsmoking women and children," notes the Campaign for Tobacco-Free Kids in its statement. "Increased competition will also make highly sophisticated Western cigarettes much more available. Cigarettes such as Marlboro are carefully engineered to create and sustain addiction, and include flavorings and other additives that make them more appealing than Chinese cigarettes to traditionally nonsmoking women and children."

Administration officials contend that the trade deal's lowering of tobacco tariffs should not significantly affect smoking rates because the agreement specifically excludes "tobacco" from the retail and distribution rights granted to other importers.

But tobacco control advocates point out that the term "tobacco" is not synonymous with "cigarettes" in the trade deal, and that cigarettes may in fact be covered by the retail and distribution provisions.

In any case, they say, the tariff reductions themselves represent a major gain for Philip Morris and other U.S. cigarette makers. And, as Save Lives notes, "the tariff reductions will give Philip Morris a substantial foot in the door to push for elimination on restrictions on its ability to do business in China."


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