| Mon 24 Nov 2008, 15:00 | | BTI - British American Tobacco p.l.c. - Extreme regulation would make illegal |
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BTI
BTI
BTI - British American Tobacco p.l.c. - Extreme regulation would make illegal
tobacco trade worse - or Governments can choose a better way
British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
("British American Tobacco p.l.c." or "the Company")
Extreme regulation would make illegal tobacco trade worse - or Governments can
choose a better way
British American Tobacco`s Chief Executive Paul Adams today warned that
important efforts by governments to reduce the health impact of tobacco could go
badly wrong and make the huge illegal tobacco trade even worse if regulation is
pushed by pressure groups into extreme and unworkable measures.
He was responding as a global World Health Organisation meeting in South Africa
adopted this weekend three extreme `guidelines` to be positioned as "best
practice" for governments in tobacco policy-making. These suggest, for example,
that governments should:
- Ban almost all communication by tobacco companies;
- "Denormalise" tobacco companies` corporate social responsibility activities
and ban them, or others, from disclosing publicly any support given to good
causes;
- Minimise government contact with tobacco companies;
- Ban any display of tobacco products in shops;
- Consider forcing all tobacco product packaging to be `plain` or unbranded.
The `guidelines` are intended to give governments a guide to implementing their
obligations under the Framework Convention on Tobacco Control1, a WHO treaty
setting out a framework for tobacco regulation. But they have been heavily
influenced by a coalition of anti-tobacco activists and pressure groups who have
special access to the official proceedings of the treaty - while the tobacco
industry and many other relevant stakeholders have been effectively excluded
except for limited contact with some governments at national level.
Aspects of the `guidelines` conflict with widely accepted legal principles and
existing legal obligations of governments and could drive the tobacco trade yet
further into the hands of smugglers, counterfeiters and criminals.
Paul Adams said: "We fully agree that the manufacture, distribution and sale of
tobacco products should be regulated. But these `guidelines` raise serious
questions about real best practice in policy making. They are a potential
recipe to vilify and marginalise legitimate, tax-paying, regulated businesses
employing thousands of people, and risk forcing tobacco products `underground`
where the illicit, non-taxpaying, unregulated trade is already flourishing."
"Sharp tactics"
He added: "Anti-tobacco activists openly talk of creating "the impression of
inevitable success" to sway governments to their will. We have seen public
boasts of tobacco regulation influenced by "sharp tactics" and "forcing"
governments further than they want to go.
A better way
"But there is a better way. Despite the clamour for "denormalisation",
exclusion and extremism, many governments seek balanced regulation that is
transparent, accountable, proportionate and properly targeted. Indeed, some this
week spoke out against the extreme proposals.
"Governments do not have to follow the more extreme proposals - the `guidelines`
are not binding. They can turn their backs on extremism - as many already do -
and consult properly with the well run and responsible part of the tobacco
industry to shape sound regulation that can reduce the impact of smoking on
public health while also sparing their countries from the chaos of tobacco
markets run by traffickers.
"The legitimate tobacco industry can help to block illegal sales to children,
fight illicit trade, set standards for appropriate marketing, invest in
researching potentially less harmful products - and also support thousands of
jobs and pay valuable taxes, especially in tough economic times."
Canada - a warning
British American Tobacco calls on all governments to look at Canada as a serious
warning.
Canada seems not to have anticipated that its well intended efforts in health
regulation would produce the unintended outcome of a widespread unregulated
illegal tobacco sector.
As Canada has gradually become one of the world`s most heavily regulated
countries for tobacco, it has seen the growth of an illicit tobacco market that
is now out of control. In some areas, the Government is now regulating only
half of the industry, while illegal traders have stolen the other half and
flourish.
Regulation has brought hefty tobacco tax increases and now bans product displays
in shops.
But in the large lawless market, 200 cheap illegal cigarettes are readily sold
loose in polythene bags for less than $6, including to children. A new survey
has found that one third of all cigarettes smoked across Canada are illicit2.
The figures are even worse in the most populated provinces - 48.6% of all
cigarettes in Ontario and 40% in Quebec are contraband.
Meanwhile Government statistics show that as many Canadian adults were smoking
in 2007 as in the two previous years3. And in Saskatchewan after retail display
bans began in 2002, the number of adult smokers in the province actually rose
from 21% in 2002 to 24% in 20034.
Global illicit tobacco trade
British American Tobacco estimates that some 335 billion counterfeit and
smuggled cigarettes will be smoked in 2008, a record high. This is about 6% of
total world consumption and will cost governments worldwide some US$20 billion
in lost tobacco taxes5.
Organised crime is increasingly dominant, as rewards can be high. One 40-foot
long container of 8.5 million cigarettes smuggled into the UK and sold at half
the recommended retail price could net a US$2 million profit. Interpol, the
international police organisation, has said that gangs trafficking drugs, arms
and people are also behind the illicit cigarette and alcohol trade, and the US
Department of Justice says some have ties to terrorist organisations.
Efforts to prevent sales to children are undermined by `underground` illicit
sales. Counterfeit cigarettes may also be more harmful to health than genuine
product, through unapproved ingredients and not complying with tar, nicotine and
carbon monoxide regulatory standards.
ENQUIRIES
British American Tobacco Press Office
David Betteridge, Kate Matrunola, Catherine Armstrong
+44 (0) 20 7845 2888 (24 hours)
Notes to editors
- British American Tobacco is the world`s second largest stockmarket-listed
tobacco group by global market share, with brands sold in over 180 markets
and employing 54,000 people. It is the only tobacco business selected for
the Dow Jones Sustainability Indexes, for the 7th year running in 2008-09,
scored on its economic, social and environmental performance.
- 1. The FCTC has been ratified by 150+ countries. Governments can interpret
it as they judge appropriate taking guidance from guidelines adopted at
Conferences of the Parties, like the one in South Africa. A coalition of
NGOs has been given accreditation allowing them to speak at these meetings
and influence proceedings. Guidelines adopted in Durban cover `tobacco
industry participation` in policy making, `packaging and labelling` of
tobacco products and tobacco `advertising, promotion and sponsorship`.
- 2. Illicit Usage of Cigarettes: 2008 GfK Research Dynamics National Study
for Canadian Tobacco Manufacturers` Council.
- 3. Smoking incidence is 19% of the adult population. Source: Statistics
Canada.
- 4. Health Canada Tobacco Use Monitoring Survey, 2002 and 2003.
- 5. British American Tobacco research based on market surveys, consumer
research and analysis of packs collected from consumers to estimate the
difference between duty paid legitimate shipments and actual consumption.
24 November 2008
Sponsor: UBS South Africa (Pty) Ltd
Date: 24/11/2008 15:00:01 Produced by the JSE SENS Department.
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