[mgj-discuss] DATE CHANGE: Tobacco Privatization Kills - Demo at IMF, 5pm Mon 9/23

[Robert Weissman]

*** ACTION ALERT *** ACTION ALERT *** ACTION ALERT ***

This MONDAY, come protest one of the IMF's deadly lending
requirements...

DEMONSTRATION AT IMF - TOBACCO PRIVATIZATION KILLS!

The global Merchants of Death, a.k.a Philip Morris British American
Tobacco, have a good friend in the International Monetary Fund. The IMF
doesn't think twice about forcing low-income nations to sell their
inefficient tobacco monopolies to multinational tobacco corporations
that are true masters of killing for profit. On Thursday, Essential
Action will release a report detailing how IMF pushes policies that
undermine public health and help Big Tobacco. Come to the demo and help
us expose the IMF's pack of lies!

What:    DEMONSTRATION AT IMF - TOBACCO PRIVATIZATION KILLS!
When:    5pm, MONDAY (September 23)
Where:   IMF headquarters, 700 19th Street

For further details about this issue see below. For more information
about the demo, contact Anna White <awhite at essential.org> or
202-387-8030

See you there!

#####

BACKGROUND INFORMATION

The International Financial Institutions and Tobacco

An estimated 4 million people will die worldwide from tobacco-related
disease this year, according to the World Health Organization. By 2030,
WHO projects 10 million will die from tobacco-related causes, with 70
percent of those deaths occurring in developing countries. There is
overwhelming evidence, much of it from the United States but also from
countries as diverse as Thailand, Poland and Norway, that sound tobacco
control measures can significantly reduce cigarette consumption and save
millions of lives.

The World Bank has been a leader in recognizing the severe health
consequences of smoking and, particularly, the economic costs to society
of cigarette consumption. The Bank has done a good job in arguing for
the economic benefits of public health measures to discourage smoking,
and it will not make loans for tobacco-related projects. As a policy
recommendation, the Bank has supported increased excise taxes on
cigarettes -- a vital tool to discourage consumption -- and the Bank and
the International Monetary Fund have supported cigarette tax increases
as revenue earners.


International Financial Institution Support for Policies that Undermine
Tobacco Control and Public Health Objectives

However, the Fund has supported privatization of tobacco-related
enterprises, despite evidence that such measures increase the power of
tobacco multinationals and increase cigarette consumption. And the Fund
has also supported, through its adjustment lending and
adjustment-related plans and strategies, reductions in tobacco tariffs
and, in some cases, tobacco excise taxes -- again despite strong
evidence, including from the Bank, that such measures are among the most
important to discourage smoking.

The Fund has pressed for privatization in, among other countries,
Turkey, Thailand, South Korea and Moldova, in many cases despite strong
opposition in the countries to these measures. The Fund has supported
tariff or excise tax reductions in Uganda, among several other nations.

Whatever the merits of privatization of other sectors of the economy,
tobacco represents a unique case, and policies relating to tobacco must
be guided above all by public health considerations.

Selling off state-owned tobacco enterprises generally has the effect of
transferring control of cigarette markets from state companies to the
handful of tobacco multinationals (BAT, Japan Tobacco, Philip Morris and
a couple more minor players) which are the almost certain acquirers.
This transition harms public health, because state-owned tobacco
enterprises are less aggressive market and political participants than
the multinationals. The state companies tend to be less aggressive and
innovative marketers of cigarettes, both in terms of
advertising/promotion and in designing products that have broad and
diverse appeal. They are less likely to attempt to influence, skirt or
undermine domestic tobacco control regulations.

The impact of privatization is suggested by the experience in opening of
Asian markets to foreign imports. After misguided U.S. pressure forced
open markets in Japan, Taiwan, South Korea and Thailand, smoking rates
jumped. Tobacco liberalization led to aggregate increases in smoking
rates of 10 percent, according to World Bank analyses. The effects are
particularly serious among teens and women, who have lower smoking rates
in many developing countries, and who the multinationals have expertise
in inducing to smoke. In South Korea, according to the General
Accounting Office, the smoking rate among teenage girls quintupled in a
single year following the opening of the market to the multinational
tobacco companies.

The evidence on the impact of price on smoking rates is
incontrovertible. Higher prices deter smoking; lower prices lead to
higher smoking rates. In industrialized countries, cigarette price
increases of 10 percent produce a 4 percent decline in cigarette
consumption; in developing countries, evidence suggests the benefits may
be twice as great.

The main way governments control cigarette price is through taxation.
The World Bank supports higher taxes on cigarettes but favors
nondiscriminatory excise taxes over tariffs. Yet IMF adjustment packages
and and adjustment-related plans and strategies have supported cuts in
tariffs without correlative increases in excise taxes -- with the impact
of decreasing prices -- as well as occasional cuts in excise taxes.

These price cuts are sometimes justified on the grounds that high
tariffs or taxes encourage smuggling, but this argument is not well
supported. Tobacco smuggling is a serious problem -- it is estimated
that as many as one third of all internationally traded cigarettes are
smuggled -- but it is not due to tax differentials between countries.
Only a small proportion of smuggled cigarettes are moved from a low-tax
country to a high-tax neighbor; the norm is diversion of cigarettes
while in transit and before any tax or tariff is paid at all. Moreover,
there is emerging evidence suggesting some tobacco multinationals may be
deeply involved in smuggling; and it is clear that both exporting and
importing countries have effective measures available to them to prevent
smuggling that leave taxes and tariffs in place.

Appropriate Policies at the International Financial Institutions to
Support Tobacco Control

Given the life-and-death stakes in the case of tobacco, public health
must be absolutely prioritized over countervailing considerations of
ideology and generic policy preferences. The IMF and other international
financial institutions should end all support for, or endorsement of,
tobacco privatization, reductions in tobacco excise taxes and reductions
in tobacco tariffs and duties (at very least without simultaneous,
offsetting increases in excise taxes).