Developing World Lights up Big Tobacco

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WASHINGTON (UPI) — They aren’t even allowed to smoke in their own corporate headquarters, not since New York City Mayor Michael Bloomberg banned cigarettes from public areas, including the workplace.

But that hasn’t stopped cigarette manufacturer Philip Morris from keeping up the fight to sell and promote cigarettes both in the United States and abroad, despite the ever-growing pressure from both U.S. policymakers and private watchdogs alike to make life as uncomfortable as possible for smokers and tobacco purveyors.


The facts are clear; tobacco kills, and even cigarette manufacturers no longer argue with the science that nicotine is indeed a deadly drug that causes cancer and heart disease. Moreover, after years of struggling to deny the ill-effects of tobacco and disclaim any responsibility for smokers who have died from lung cancer, some companies are actually trying to go out of their way to comply with the U.S. Food and Drug Administration’s efforts to regulate tobacco products.

Bearing in mind that cigarette manufacturers already face considerable pressure to cut down on advertising, including corporate sponsorships, further regulation will only make it that much more difficult for companies to sell their products beyond their already-addicted client base. Still, the prospect of facing a rapidly shrinking U.S. market can hardly be heartening for any company, let alone a multinational such as RJ Reynolds and British American Tobacco with shareholders to please.

The fact that Lexington, Kentucky and Montgomery County, Maryland joined New York City earlier this month in banning smoking from all public spaces, including bars and restaurants, exemplifies just how difficult it is becoming even for adults who are fully aware of the consequences of cigarette smoke to have a puff in some U.S. metropolitan areas.

So it comes as little surprise that Big Tobacco is prepared effectively to write off the U.S. market, and be content simply with providing a steady flow of nicotine to its core fans, rather than to endeavor cultivating new customers.

But the quickly growing U.S. regulatory burden doesn’t apply when it comes to the overseas market, especially in the more impoverished countries which are desperate for private capital, or in countries where government regulation of health concerns are relatively lax. In fact, Philip Morris, R.J. Reynolds, and British American Tobacco own or lease plants in at least 50 countries.

Africa, for instance, is a prime target for tobacco purveyors, as they have secured a symbiotic relationship with many governments on the continent. For cash-strapped Malawi, for instance, provides steady income, as it manufacturers 140,000 tons of the 5.7 million tons produced worldwide. The result is that Malawi rakes in $165 million a year from its tobacco crop, or just over two-thirds of its annual foreign revenue. Zimbabwe is similarly dependent on tobacco income.

Meanwhile, one in four Kenyans, or nearly five million people, are smokers. Government regulation of advertising cigarettes and sponsoring sporting events is loose, while smoking in public places is rarely banned. The country gains about $100 million in revenue from tobacco companies as a result, whilst cigarette makers also provide jobs for tens of thousands of its citizens.

In short, governments get addicted to the income generated from cigarette marketing and sales, but it may be worth bearing in mind that money generated is often offset by longer-term costs.

“Most developing countries spend far more foreign exchange on tobacco imports than they gain from tobacco exports,” reported the Campaign for Tobacco-Free Kids, a Washington-based anti-tobacco group. It also pointed out that cigarette smokers increase a country’s overall healthcare costs, whilst there is a loss in productivity amongst smoking workers, not to mention that disposable income is wasted to satisfy the smoking habit.

The biggest foreign market by far is China. It is not only the biggest consumer, but actually also the biggest producer of tobacco as well, manufacturing over 30 percent of the total number of cigarettes produced worldwide. As a result, tobacco taxes in China make up around 8 percent to 10 percent of the national budget.

But the anti-tobacco activist group argued that even in China, health care costs “already exceed tobacco tax revenue and are projected to increase sharply in the future.”

Meanwhile, the U.S. Center for Disease Control reported “tobacco may eventually kill about 50 million of all children and youth alive today in China…during the mid-1990s there are between 500,000 to 700,000 annual tobacco-related deaths. This is predicted to rise to 2 million by 2025.”

Granted, China passed a law in 1992 not only forcing cigarette packages to carry health warnings, but also control smoking in public spaces, and ban advertising in the media. The law was tightened in 1995, further preventing advertising of tobacco products in public places. Nevertheless, the number of smokers continues to rise, while the state-owned China National Tobacco Corporation employs over half a million workers, 10 million tobacco-growing farmers, and 3 million retailers, and remains by far the single biggest revenue earner for the government.

And while the World Health Organization’s framework convention on tobacco control treaty signed this June was a major step towards cracking down on cigarette sales worldwide, it clearly will not be as effective a disincentive to smoke as anti-cigarette groups would like it to be. For one, even though 28 countries and the European Union signed the agreement, neither the United States nor China were signatories to this agreement which aims to cut down cigarette advertising, increase taxes and prices, crack down on illicit trade, and enhance labeling on packages to indicate the toxic nature of cigarettes.

What many anti-smoking activists fail to understand is that in some developing countries, not only is the cigarette industry a major cash-earner, there are few lucrative alternatives to replace it. Until other business prospects are in place, it may prove an uphill struggle to convince many governments to tighten control over the tobacco industry.

Copyright 2003 by United Press International. All rights reserved.