Tuesday, January 26 1999
Thank you Rob for accepting our " rendez-vous ".
May I ask you to introduce yourself ?
I am co-director of Essential Action, a corporate accountability group founded by Ralph Nader that works especially on international issues. I've followed tobacco issues for many years, and began working on tobacco in a sustained way a couple years ago.
1. Essential Action recently published a report by Ross Hammond "Addicted to profit: big tobacco's expanding global reach" and supported a letter sent by US representatives to the International Monetary Fund concerning its policy of pushing for the privatization of state run tobacco operations. Why and what's next?
While there are probably thousands of people in the United States working on tobacco control, there are no more than a handful working on international issues -- even though most tobacco death and disease occurs outside of the United States, and even though two of the three leading international companies are based in the United States.
In our work, we are trying to focus attention on international tobacco issues, pressure the U.S. government to restrict and regulate U.S. companies' overseas activities, funnel support to NGOs in developing countries and, over time, force changes in tobacco company practices.
2. About the letter to the IMF, I have been quite surprised and interested by the fact that it was in favor of state run operations Vs privately owned corporations. This could appear like a "socialist" point of view coming from a country where "free enterprise" is a sacred motto. How come?
The central element of the letter -- which was sent by more than a dozen members of the U.S. Congress, not by NGOs, left wing or otherwise -- was the notion that public health concerns should be prioritized over narrow economic measures. I happen to think that this notion should be a guiding principle applying to all IMF programs, but the letter was restricted to tobacco issues.
The Members of Congress were familiar with the experience in Asia following the opening of national tobacco markets to U.S.
firms (the result of pressure by the Reagan and Bush administrations).
After
markets in Japan, South Korea and Taiwan were opened, smoking rates
rose, especially among women and girls. There is good reason to believe
that the IMF's current effort in support of tobacco company
privatization will lead to the sale of all or parts of tobacco
monopolies to Philip Morris, BAT or RJR -- and that the eventual result
will be more aggressive advertising, more subversion of tobacco
regulations and, ultimately, higher smoking rates.
3. Looking at the recent BAT/Rothman's merger it seems the new corporation will reach a quasi-monopolistic position in certain markets/countries, like Canada and Australia. There have been talk of anti-trust initiatives, what about eventual nationalization initiatives? If one company has 90% of the market, one can assume there is no competition left, so why not go for one public state run company? Would that make sense in a public heath perspective?
First, I think it is very important for tobacco control advocates to attempt to intervene in the merger, and convince competition authorities to block it. Concentrated market power intensifies post-merger companies'political power, making it harder to adopt and enforce sensible tobacco control policies. Because of this, highly concentrated markets may be *more* difficult to nationalize.
Nationalization may make sense from a public health perspective, especially if it was done for the purpose of implementing a public health program to lessen smoking rates, rather than as a business proposition. However, it is very hard to see the political space for nationalization any time in the near future, especially in the developing countries -- where the BAT-Rothmans merger will pose the largest difficulties.
4. Ross Hammond's report is titled "addicted to profits". When one talks about big corporations (or any business) it seems their first goal is turning a profit. So why would tobacco companies be different and how could one expect private companies not to be "addicted to profits"? Could the answer be that tobacco is too dangerous a product to be entrusted to profit driven organizations?
Tobacco companies both are and are not like other companies.
They are profit seeking, like others, and prioritize profits over other concerns. But they are unusual, or at least more extreme, in selling a uniquely hazardous and addictive product, in their concerted and longstanding criminality, in their extraordinary influence over the political process in countries around the world and in their innovative and aggressive marketing practices including to prohibited constituencies (children).
5. I assume certain people could find the above questions quite removed
from today's reality with privatization running full speed and
megamergers but still do you think it is possible to imagine that in a
not too distant future the way the tobacco industry operate will be
quite different from what it is now?
And that those changes will be in favor of public health?
Well, of course the future of the industry depends a great deal on the choices and actions of tobacco control advocates --
probably the most organized and influential force for corporate accountability in the world.
I think your questions are important because, in my view, ultimate solutions to the tobacco problem will require us to rely not only on government regulation, but on restrictions of corporate "rights" and quite probably in basic changes in the form of tobacco sellers and marketers. Your suggestion that nonprofit entities, including perhaps governments, should be entrusted with control of tobacco selling may well be right.
Thank you Rob for taking the time to be with us today.
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