US tobacco firm presses hard to open overseas markets to snuff
When the Hong Kong government decided to snuff out smokeless tobacco last summer, banning it for public health reasons, it did not count on the formidable opposition of the United States Tobacco Company. In the six months before the ban was finally signed into law on Jan. 16, the firm mounted a massive governmental, diplomatic, and private campaign against it. US Tobacco's Hong Kong campaign is a case study in how an aggressive multinational company can pull the levers of government to effect its own commerical ends. The case may serve as a preview of coming battles in the smokeless tobacco wars to be waged beyond Hong Kong.Skip to next paragraph
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US Tobacco tried to block the ban because Hong Kong is the gateway to the lucrative Asian market for snuff. Hong Kong's stand is seen as influencing other Asian Pacific countries. Already, New Zealand has followed Hong Kong in instituting a ban on smokeless tobacco. Australia and Singapore are considering similar bans. The Hong Kong ban may also endanger a tentative agreement the company had announced for the sale of snuff in the People's Republic of China. With 300 million smokers, China is the largest tobacco market in the world.
US Tobacco set up its Hong Kong office in 1985 to promote sales throughout Asia of Skoal Bandits, a moist snuff popular with young users. In its efforts to kill the Hong Kong ban, the firm also used the United States Commerce Department, the State Department, four US senators to whom it made hefty campaign contributions, the Department of Health and Human Services, the American Chamber of Commerce in Hong Kong, a powerful Hong Kong legal firm, and representatives of its own Connecticut-based multinational company. Its chief weapon was the threat of action by yet another US government arm, the office of the US trade representative, through trade retaliation under Section 301 of the US trade law.
The precise role of US Tobacco in attempting to influence US and Hong Kong government policy - or in the company's view, have its case heard - is murky. But more than 40 interviews tracing the ban and the company's attempt to overturn it disclose a pattern that raises serious questions about US policy on possible future bans.
Snuff is definitely big business. US Tobacco, based in Greenwich, Conn., had net earnings in 1985 of $93.5 million on net sales of $480 million.
There are several clues as to how persistently, US Tobacco has pursued its goals. One is a letter dated Oct. 23, 1986, and signed by four US senators: Christopher Dodd (D) and Lowell Weicker (R) of Connecticut; Robert Kasten (R) of Wisconsin; and Robert Dole (R) of Kansas, then Senate majority leader. In the letter, addressed to Sir David Akers-Jones, chief secretary of the Hong Kong government, the senators said the proposed ban might ``constitute an unfair and discriminatory restriction on foreign trade.'' The words ``unfair'' and ``discriminatory'' are terms of law used to signal possible retaliatory trade action.
According to Federal Election Commission figures available for 1986 (through Oct. 1), US Tobacco contributed a total of $26,000 to the political-action committees of these four Senators, an amount representing nearly a third of US Tobacco's total contribution of $88,850 for that period to 53 candidates in Congress. Senator Kasten's PAC received $9,000, Senator Dodd's, $8,000, Senator Weicker's, $5,000, and Senator Dole's, $4,000.
Dole said, ``I assume US Tobacco initiated it [the letter]. Don't they make smokeless tobacco?'' An aide for Kasten confirmed that, but the other two senators declined to comment.
When the letter from the four senators arrived in late October, the Hong Kong government was at first worried it was the opening shot in a trade war.
A Hong Kong spokesman says his government first considered a ban when it received a Skoal Bandits import permit request in May from a US Tobacco distributor. A company spokesman says US Tobacco learned about the proposed ban from a newspaper article in mid-July but made no effort to oppose it until November. That view is at variance with what US officials and spokesmen for the Hong Kong government say.
By the time John Chambers, Hong Kong's secretary for health and welfare, announced, on Oct. 29, regulations banning smokeless tobacco, both foreign and domestic, as a hazard to public health, the company had apparently been lobbying against the ban for at least two months. Mr. Chambers said that day that Hong Kong had made its decision based on studies by international health authorities. The US surgeon general's 1986 report on smokeless tobacco warned that those who use it risk oral cancer, gum disease, and addiction. According to the surgeon general, there are 12 million smokeless tobacco users in the US, at least 3 million of whom are under 21. The World Health Organization, which labeled snuff a carcinogen, has tentative plans for an international meeting on the health hazards of smokeless tobacco.