Clear The Air News Tobacco Blog Rotating Header Image

June 30th, 2015:

Commission participation to the Eurasia Tax Forum 2015 Letter

Download (PDF, 227KB)

Making Tobacco’s Case

The U.S. Chamber’s work in support of the tobacco industry in recent years has emerged as a priority at the same time the industry has faced one of the most serious threats in its history. A global treaty, negotiated through the World Health Organization, mandates anti-smoking measures and also seeks to curb the influence of the tobacco industry in policy making. The treaty, which took effect in 2005, has been ratified by 179 countries; holdouts include Cuba, Haiti and the United States.

Facing a wave of new legislation around the world, the tobacco lobby has turned for help to the U.S. Chamber of Commerce, with the weight of American business behind it. While the chamber’s global tobacco lobbying has been largely hidden from public view, its influence has been widely felt.

Letters, emails and other documents from foreign governments, the chamber’s affiliates and antismoking groups, which were reviewed by The New York Times, show how the chamber has embraced the challenge, undertaking a three-pronged strategy in its global campaign to advance the interests of the tobacco industry.

In the capitals of far-flung nations, the chamber lobbies alongside its foreign affiliates to beat back antismoking laws.

In trade forums, the chamber pits countries against one another. The Ukrainian prime minister, Arseniy Yatsenyuk, recently revealed that his country’s case against Australia was prompted by a complaint from the U.S. Chamber.

And in Washington, Thomas J. Donohue, the chief executive of the chamber, has personally taken part in lobbying to defend the ability of the tobacco industry to sue under future international treaties, notably the Trans-Pacific Partnership, a trade agreement being negotiated between the United States and several Pacific Rim nations.

“They represent the interests of the tobacco industry,” said Dr. Vera Luiza da Costa e Silva, the head of the Secretariat that oversees the W.H.O treaty, called the Framework Convention on Tobacco Control. “They are putting their feet everywhere where there are stronger regulations coming up.”

Thomas J. Donohue, the head of the U.S. Chamber of Commerce, has defended the tobacco industry's right to sue under future international treaties.

Thomas J. Donohue, the head of the U.S. Chamber of Commerce, has defended the tobacco industry’s right to sue under future international treaties.

The increasing global advocacy highlights the chamber’s enduring ties to the tobacco industry, which in years past centered on American regulation of cigarettes. A top executive at the tobacco giant Altria Group serves on the chamber’s board. Philip Morris International plays a leading role in the global campaign; one executive drafted a position paper used by a chamber affiliate in Brussels, while another accompanied a chamber executive to a meeting with the Philippine ambassador in Washington to lobby against a cigarette-tax increase. The cigarette makers’ payments to the chamber are not disclosed.

It is not clear how the chamber’s campaign reflects the interests of its broader membership, which includes technology companies like Google, pharmaceutical giants like Pfizer and health insurers like Anthem. And the chamber’s record in its tobacco fight is mixed, often leaving American business as the face of a losing cause, pushing a well-known toxin on poor populations whose leaders are determined to curb smoking.

The U.S. Chamber issued brief statements in response to inquiries. “The Chamber regularly reaches out to governments around the world to urge them to avoid measures that discriminate against particular companies or industries, undermine their trademarks or brands, or destroy their intellectual property,” the statement said, adding, “we’ve worked with a broad array of business organizations at home and abroad to defend these principles.”

The chamber declined to say if it supported any measures to curb smoking.

The chamber, a private nonprofit that has more than three million members and annual revenue of US$165 million, spends more on lobbying than any other interest group in America. For decades, it has taken positions aimed at bolstering its members’ fortunes.

While the chamber has local outposts across the United States, it also has more than 100 affiliates around the world. Foreign branches pay dues and typically hew to the U.S. Chamber’s strategy, often advancing it on the ground. Members include both American and foreign businesses, a symbiotic relationship that magnifies the chamber’s clout.

For foreign companies, membership comes with “access to the U.S. Embassy” according to the Cambodian branch, and entree to “the U.S. government,” according to the Azerbaijan branch.

Members in Hanoi get an invitation to an annual trip to “lobby Congress and the administration” in Washington.

Since Mr. Donohue took over in 1997, he has steered the chamber into positions that have alienated some members. In 2009, the chamber threatened to sue if the Environmental Protection Agency regulated greenhouse gas emissions, disputing its authority to act on climate change. That led Nike to step down from the chamber’s board, and to Apple’s departure from the group. In 2013, the American arm of the Swedish construction giant Skanska resigned, protesting the chamber’s support for what Skanska called a “chemical industry-led initiative” to lobby against green building codes.

The chamber’s tobacco lobbying has led to confusion for many countries, Dr. da Costa e Silva said, adding “there is a misconception that the American chamber of commerce represents the government of the U.S.” In some places like Estonia, the lines are blurred. The United States ambassador there, Jeffrey Levine, serves as honorary president of the chamber’s local affiliate; the affiliate quoted Philip Morris in a publication outlining its priorities.

The tobacco industry has increasingly turned to international courts to challenge antismoking laws that countries have enacted after the passage of the W.H.O. treaty. Early this year, Michael R. Bloomberg and Bill Gates set up an international fund to fight such suits. Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, an advocacy group that administers the fund, called the chamber “the tobacco industry’s most formidable front group,” adding, “it pops up everywhere.”

In Ukraine, the chamber’s involvement was no surprise to Hanna Hopko, the lawmaker who led the hearing in Parliament. She said the chamber there had fought against antismoking laws for years.

“They were against the tobacco tax increase, they were against placing warning labels on cigarettes,” she said. “This is just business as usual for them.”

Plain packaged tobacco products with health warnings in Sydney, Australia.

Plain packaged tobacco products with health warnings in Sydney, Australia.

Country-by-Country Strategy

More than 3,000 miles away, in Nepal, the health ministry proposed a law last year to increase the size of graphic warning labels from covering three-fourths of a cigarette pack to 90 percent. Countries like Nepal that have ratified the W.H.O. treaty are supposed to take steps to make cigarette packs less appealing.

Not long afterward, one of Nepal’s top officials, Lilamani Poudel, said he received an email from a representative of the chamber’s local affiliate in the country, warning that the proposal “would negate foreign investment” and “invite instability.”

In January, the U.S. Chamber itself weighed in. In a letter to Nepal’s deputy prime minister, a senior vice president at the chamber, Tami Overby, wrote that she was “not aware of any science-based evidence” that larger warning labels “will have any discernible impact on reducing or discouraging tobacco use.”

A 2013 Harvard study found that graphic warning labels “play a lifesaving role in highlighting the dangers of smoking and encouraging smokers to quit.”

While Nepal eventually mandated the change in warning labels, cigarette companies filed for an extension and compliance has stalled.

“Since we have to focus on responding to the devastating earthquake, we have not been able to monitor the state of law enforcement effectively,” said Shanta Bahadur Shrestha, a senior health ministry official.

The episode reflects the chamber’s country-by-country lobbying strategy. A pattern emerged in letters to seven nations: Written by either the chamber’s top international executive, Myron Brilliant, or his deputies, they introduced the chamber as “the world’s largest business federation.”

Then the letters mention a matter “of concern.” In Jamaica and Nepal, it was graphic health warnings on packages. In Uruguay, it was a plan to bar cigarettes from being displayed by retailers. The Moldovan president was warned against “extreme measures” in his country, though they included common steps like restricting smoking in public places and banning advertising where cigarettes are sold.

A proposal to raise cigarette taxes in the Philippines would open the floodgates to smugglers, the government there was told. Tax revenue has increased since the proposal became law.

“We are not cowed by them,” said Jeremias Paul, the country’s under secretary of finance. “We meet with these guys when we’re trying to encourage investment in the Philippines, so clearly they are very influential, but that doesn’t mean they will dictate their ways.”

Protecting tobacco companies is portrayed by the chamber as vital for a nation’s economic health. Uruguay’s president is warned that antismoking laws will “have a disruptive effect on the formal economy.” El Salvador’s vice president is told that “arbitrary actions” like requiring graphic health warnings in advertisements undermine “investment and economic growth.”

On the ground, the chamber’s local affiliates use hands-on tactics.

After Moldova’s health ministry proposed measures in 2013, Serghei Toncu, the head of the American Chamber of Commerce in Moldova, laid out his objections in a series of meetings held by a regulatory review panel.

“The consumption of alcohol and cigarettes is at the discretion of each person,” Mr. Toncu said at one meeting, adding that the discussion should not be about “whether smoking is harmful.”

“You do not respect us,” he told the health ministry at another. At a third, he called the ministry’s research “flawed from the start.”

His objections were not merely plaintive cries. The American chamber has a seat on Moldova’s regulatory review panel giving it direct influence over policy making in the small country.

“The American Chamber of Commerce is a very powerful and active organization,” said Oleg Chelaru, a team leader on the staff that assists the review panel. “They played a very crucial role in analyzing and giving an opinion on this initiative.”

Mr. Toncu, who has since left the chamber, declined to comment. Mila Malairau, the chamber’s executive director, said its main objective was to make sure the industry “was consulted” in “a transparent and predictable manner.”

Protesters displayed fake body bags at a tobacco trade show at Pasay, the Philippines, in 2013.

Protesters displayed fake body bags at a tobacco trade show at Pasay, the Philippines, in 2013.

After recently passing in Parliament, the long-stalled measures were subject to fresh objections from the chamber and others, and have not yet been enacted.

Fighting a Trade Exception

In Washington, the U.S. Chamber’s tobacco lobbying has been visible in the negotiations over the Trans-Pacific Partnership, a priority of the Obama administration that recently received critical backing in Congress.

One of the more controversial proposals would expand the power of companies to sue countries if they violate trade rules. The U.S. Chamber has openly opposed plans to withhold such powers from tobacco companies, curbing their ability to challenge national antismoking laws. The chamber says on its website that “singling out tobacco” will “open a Pandora’s box as other governments go after their particular bêtes noires.”

The issue is still unresolved. A spokesman for the United States trade representative said negotiators would ensure that governments “can implement regulations to protect public health” while also “ensuring that our farmers are not discriminated against.”

Email traffic shows that Mr. Donohue, the chamber’s head, sought to raise the issue in 2012 directly with Ron Kirk, who was then the United States trade representative. In email exchanges between staff members of the two, Mr. Donohue specifically sought to discuss the role of tobacco in the trade agreement.

“Tom had a couple of things to raise, including urging that the tobacco text not be submitted at this round,” one of Mr. Donohue’s staff members wrote to Mr. Kirk’s staff. The emails were produced in response to a Freedom of Information request filed by the Campaign for Tobacco-Free Kids, which provided them to The Times.

Mr. Kirk is now a senior lawyer at Gibson, Dunn, a firm that counts the tobacco industry as a client. He said in an interview that during his tenure as trade representative, he met periodically with Mr. Donohue but could not recall a specific conversation on tobacco.

He said trade groups were generally concerned about “treating one industry different than you would treat anyone else, more so than doing tobacco’s bidding.”

The chamber declined to make Mr. Donohue available for an interview.

A Face-Saving Measure

In Ukraine, it was Valeriy Pyatnytskiy who signed off on the complaint against Australia in 2012, which was filed with the World Trade Organization. At the time, he was Ukraine’s chief negotiator to the W.T.O. His political career has survived the revolution and he is now an adviser to the Ukrainian prime minister, Mr. Yatsenyuk.

In a recent interview, he said that for Ukraine, the case was a matter of principle. It was about respecting the rules.

He offered a hypothetical: If Ukraine allowed Australia to use plain packaging on cigarettes, what would stop Ukraine from introducing plain packaging for wine? Then Ukrainian winemakers could better compete with French wines, because they would all be in plain bags marked red or white.

“We had this in the Soviet times,” he said. “It was absolutely plain packaging everywhere.”

Some Ukrainian officials have long been troubled by the case.

“It has nothing to do with trade laws,” said Pavlo Sheremeta, who briefly served as Ukraine’s economic minister after the revolution. “We have zero exports of tobacco to Australia, so what do we have to do with this?”

Last year, he urged the American Chamber in Kiev to reconsider.

“I wrote a formal letter, asking them, ‘Do you still keep the same position?’ ” Mr. Sheremeta said. “Basically I was suggesting a face-saving way out of this.” But when he met with chamber officials, the plain packaging case was outlined as a top priority.

They refused to back down. After Mr. Pyatnytskiy, a tobacco ally, was installed as his deputy, Mr. Sheremeta resigned.

“The world was laughing at us,” he said of the case.

Shortly after The Times discussed the case with Ukrainian government officials, there were new protests from activists. Mr. Yatsenyuk called for a review of the matter. Ukraine has since suspended its involvement, but other countries including Cuba and Honduras are continuing to pursue the case against Australia.

Andy Hunder, who took over as president of the American Chamber of Commerce in Kiev in April, said the organization was moving on, adding, “We are looking forward now.”
Sofiia Kochmar contributed reporting from Kiev, Bhadra Sharma from Kathmandu and Palko Karasz from London.

U.S. Chamber of Commerce Works Globally to Fight Antismoking Measures


A demonstration against World No Tobacco Day in Jakarta, Indonesia, in 2013. The U.S. Chamber of Commerce and its foreign affiliates have joined efforts to fight antismoking laws around the world.

A demonstration against World No Tobacco Day in Jakarta, Indonesia, in 2013. The U.S. Chamber of Commerce and its foreign affiliates have joined efforts to fight antismoking laws around the world.

KIEV, Ukraine — A parliamentary hearing was convened here in March to consider an odd remnant of Ukraine’s corrupt, pre-revolutionary government.

Three years ago, Ukraine filed an international legal challenge against Australia, over Australia’s right to enact antismoking laws on its own soil. To a number of lawmakers, the case seemed absurd, and they wanted to investigate why it was even being pursued.

When it came time to defend the tobacco industry, a man named Taras Kachka spoke up. He argued that several “fantastic tobacco companies” had bought up Soviet-era factories and modernized them, and now they were exporting tobacco to many other countries. It was in Ukraine’s national interest, he said, to support investors in the country, even though they do not sell tobacco to Australia.

Mr. Kachka was not a tobacco lobbyist or farmer or factory owner. He was the head of a Ukrainian affiliate of the U.S. Chamber of Commerce, America’s largest trade group.

U.S. Chamber Of Commerce: Lobbying Hard For Big Tobacco Worldwide

By Kate Cox June 30, 2015

The term “Chamber of Commerce” plants visions of a quaint, local organization helping hang banners in the town square at Christmas time, or sponsoring youth groups in a Fourth of July parade during warmer seasons. Realistically, however, the U.S. Chamber of Commerce is the nation’s largest business and commerce trade group. And among all their other lobbying work, the Chamber of Commerce has become one of the world’s biggest advocates for Big Tobacco, pushing that industry’s interests globally.

The New York Times reports today on the U.S. Chamber of Commerce’s extensive efforts overseas, where it’s doing everything in its power to torpedo other nations’ anti-tobacco efforts.

Big tobacco is, after all, big business — and the Chamber of Commerce exists to promote business interests. From one point of view, it’s a natural fit. And so the organization has taken on a global effort in order to bolster the interests of tobacco companies against other nations’ attempts to curtail the industry.

It’s a tricky time for the tobacco industry, as the NYT points out. A global treaty, negotiated through the World Health Organization, has pushed anti-smoking and anti-tobacco measures worldwide. The treaty went into effect ten years ago and so far there are 179 signatory nations — but the United States, built in so many ways on the existence of tobacco farming, is not among them.

In that intervening decade, many of the signatory nations have gotten moving on their promised anti-smoking legislation — and that’s where lobbying from the U.S. Chamber of Commerce, and its international partners, comes in.

One of the biggest examples of the Chamber’s intervention that the NYT cites is one that comedian John Oliver delved into earlier this year: Ukraine’s unexpected support of Philip Morris in a claim the company made against Australia a few years ago.

In their filings, Ukraine claimed that Australia’s plain packaging law would hurt Ukrainian exports. If Ukraine had ever exported tobacco to Australia, that might make sense — but they don’t. “Ukraine is inserting themselves into something they have nothing to do with,” as Oliver described it in February. “They’re taking the Kanye West approach to international trade disputes.”

But of course Ukraine did not act without encouragement, and that encouragement came from the U.S. Chamber of Commerce. This March, the NYT reports, Ukraine’s parliament convened a hearing to try and sort out why they were involved in a lawsuit against Australia.

“When it came time to defend the tobacco industry, a man named Taras Kachka spoke up,” the Times writes. “He argued that several ‘fantastic tobacco companies’ had bought up Soviet-era factories and modernized them, and now they were exporting tobacco to many other countries. It was in Ukraine’s national interest, he said, to support investors in the country, even though they do not sell tobacco to Australia.”

The speaker, as the NYT explains, was neither a tobacco industry member nor lobbyist. He was the head of a Ukranian affiliate of the U.S. Chamber of Commerce. And indeed, the Ukranian prime minister recently revealed that Ukraine’s case against Australia was in fact prompted by a complaint from the Chamber.

The U.S. Chamber of Commerce not only meddles in existing legislative processes around the world in favor of tobacco companies, but also works to maintain their interests in future agreements as well. The current head of the U.S. Chamber of Commerce has lobbied extensively to make sure that as part of the Trans-Pacific Partnership, the pending trade agreement the U.S. is poised to sign with a dozen Pacific Rim nations, that tobacco companies retain their rights to sue governments when they feel they are being too strongly impinged upon.

That’s not a hypothetical scenario: Since 2010, Philip Morris has sued Uruguay, Australia, and the U.K. as well as making legal threats against other, smaller nations like Togo, Moldova, and Nepal.

The Chamber has sent letters and reports to several nations, taking different approaches. To smaller or less wealthy nations, the letters might be an implicit threat for U.S. businesses to take their ball and go home.

“The U.S. Chamber of commerce is committed to promoting a robust and growing trade and investment relationship with Jamaica,” reads a 2013 letter to that nation’s Prime Minister. “For this to occur, the decisions made by public policymakers must have a sound basis in science and reflect global best practice.”

In other countries, the Chamber has taken alternate approaches. A 2014 letter to New Zealand’s parliament takes a different tactic, claiming that nation’s plans to implement plain packaging — which strips branding and logos from the exterior of tobacco products and replaces it with health warnings — are in violation of trademark and intellectual property laws. That’s the same approach that Philip Morris took in its 2011 lawsuit against Australia.

Of course, not everyone involved with the Chamber of Commerce is necessarily on board with this plan. The organization has over three million member companies, including health insurers and pharmaceutical companies, as well as 21st century tech giants that tend to promote healthful living.

When the Times asked the Chamber of Commerce for a statement, the organization replied: “The Chamber regularly reaches out to governments around the world to urge them to avoid measures that discriminate against particular companies or industries, undermine their trademarks or brands, or destroy their intellectual property. We’ve worked with a broad array of business organizations at home and abroad to defend these principles.”

American tobacco companies might be feeling the strain as other countries try their hardest to enact anti-smoking measures, but American lobbying exports seem to be doing just fine.

U.S. Chamber of Commerce Works Globally to Fight Antismoking Measures [New York Times]

Tobacco firms decry Hong Kong plan for bigger warnings on packaging

Cigarette producers cite their own research to argue against Hong Kong’s plan for health notices to cover 85 per cent of packaging

Timmy Sung

Dr Kevin Tsui of Clemson University in the US.

Dr Kevin Tsui of Clemson University in the US.

Tobacco companies have asked the Hong Kong government to scrap its plan to enlarge pictorial warnings on cigarette packs from half of the packaging to 85 per cent, citing US research that shows no evidence of oversized warnings reducing smoking.

The study findings came from Dr Kevin Tsui Ka-kin, an associate professor of economics at Clemson University in South Carolina who was commissioned by the Coalition on Tobacco Affairs, an umbrella group of tobacco producers.

“There isn’t a correlation between reducing the number of smokers and enlarging the warning signs,” Tsui said yesterday. He said the number of smokers was little affected after the government first introduced health warnings on packaging in 1994, nor later when the pictures were enlarged in 2000 and 2007. Government figures show a downward trend in the proportion of people who smoke daily, dropping to a low of 10.7 per cent of all smokers aged 15 or above in 2012, the last year for which data is available.

That downward trend was also evident in the United States, where the size of the warnings was not regulated, the researcher said. In Hong Kong, health warnings must cover at least half of the surface of a packet of cigarettes. The Food and Health Bureau wants bigger health notices from early next year. The proposal is up for discussion in the Legislative Council’s health services panel on Monday. A spokeswoman for the coalition criticised the government for failing to consult the industry when proposing the plan. She also said local regulations were already tougher than in neighbouring regions and countries including Taiwan, mainland China and South Korea, and that World Health Organisation guidelines merely specified the warning should be no less than 30 per cent of the packaging.

“If smokers cannot distinguish which brands they want to buy, this may prevent competition,” the spokeswoman said. “In the long run, smokers may turn to cheaper brands or even illicit cigarettes.” Earlier, an anti-smoking group, the Council on Smoking and Health, had said larger notices could educate smokers and the public on the health hazards of smoking, as well as prevent tobacco companies from using cigarette packs for promotion.

The bureau said that, according to the WHO, it was important to rotate health messages and packaging designs to maintain saliency and enhance impact. The proposed amendments would increase the number of warning designs from six to 12, the bureau said. The message, “HKSAR government warning”, would also be replaced by “Tobacco kills up to half of its users” and the cessation hotline number 1833 183.