Tobacco Industry Influence and Deep Pockets: A Brief Look at Financial Power in Tobacco Control

In the year 2000, Derek Yach and Douglas Bettcher wrote: ‘As the vector of the tobacco epidemic, an increasingly globalised tobacco industry is acutely aware of the characteristics of globalisation... In an increasingly globalised marketplace ‘mega mergers and acquisitions have dramatically changed the face of the worldwide cigarette industry.’’ (Derek Yach and Douglas Bettcher, ‘Globalisation of Tobacco Industry Influence and New Global Responses’ (2000) 9 Tobacco Control 206 at 207)

Mega mergers and acquisitions are not the only way that the tobacco companies try to influence tobacco demand and supply and also to inhibit tobacco control successes. In the face of increasing public awareness and increasing legislative restrictions on tobacco advertising, Big Tobacco is finding new, innovative ways to market their products and infiltrate public health organisations. In most nations, Big Tobacco end up influencing legislation and other tobacco control initiatives. We have all heard of certain heavy handed tactics used by Big Tobacco. They’ve got fancy Ivy League lawyers and last but not least, we’ve got to remember that we are dealing with companies that have made billions and billions of dollars selling lethal products. In other words, they are PR experts, are armed with armies of expensive lawyers, AND they’ve got the money to back it up.

So let’s talk about money.

In her 2010 article, Cynthia Callard points out that estimated funding for tobacco control in 2008 was $240 million. This may seem like a large amount, but when compared with tobacco multinational profits, this figure is dwarfed. The figures in 2008 for the top five tobacco companies showed that they earned a combined revenue of $300 billion. Callard continues in her article to point out: ‘From the sale of cigarettes made by the four largest tobacco multinationals, governments received over $100 billion in tobacco specific taxes and almost $7 billion in corporate income taxes. Total payments to governments exceed $170 billion when payments by other tobacco companies are included.’ (Cynthia Callard, ‘Follow the Money: How the Billions of Dollars that Flow from Smokers in Poor Nations to Companies in Rich Nations Greatly Exceed Funding for Global Tobacco Control and What Might Be Done About It’ (2010) 19 Tobacco Control 285 at 288)

Some simple math will show that the ratio of tobacco control funding to tobacco industry revenue is 0.08 percent. So we’ve got this unfortunate – but interesting, nevertheless – difference in the financial power dynamics between Big Tobacco and public health organisations and governmental bodies. Now, it’s useful for us to have a look at Article 5.3 of the Framework Convention on Tobacco Control (FCTC) before I go on to make my next argument. Article 5.3 basically states that: ‘... Parties shall act to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law.’ And there’s a bunch of Guidelines on Article 5.3 too that speak about the fact that governments should not grant incentives or financial benefits to the tobacco industry.

But what about the tobacco industry granting incentives and financial benefits to the government?

That aside, I’d like to refer to a piece on the Sydney Morning Herald about the tobacco industry allocating a hefty budget to fighting the government’s decision to adopt plain packaging in July next year. It’s a clear Article 5.3 case, but the tobacco industry in Australia is going on employment grounds and not health grounds. The article says: ‘They will attempt to persuade people that the world-first Australian laws will not prevent smoking but will instead hamper small business and cost jobs.’ (Julie Robotham, ‘Tobacco Ads Aimed at Plain Packaging’ Sydney Morning Herald (4 August 2010) http://www.smh.com.au/national/tobacco-ads-aimed-at-plain-packaging-20100803-115hi.html Accessed 4 August 2010.)

And... then there’s foreign direct investment (FDI) and mergers and acquisitions. FDI is a long term investment and as Chang-fa Lo points out, is not covered in sufficient detail in the Article 5.3 Guidelines. Lo says: ‘Tobacco industry FDI erodes the health benefits of tariffs on tobacco products... Companies can overcome these tariff constraints by establishing production facilities within high-tariff countries, thus reducing the price of their products in these markets and increasing their sales.’ (Chang-fa Lo, ‘FCTC Guidelines on Tobacco Industry Foreign Investment Would Strengthen Controls on Tobacco Supply and Close Loopholes in the Tobacco Treaty’ (2010) 19 Tobacco Control 306 at 307)

Now, I don’t know enough about FDI to comment on it, but these are interesting thoughts in thinking about the Article 5.3 Guidelines. What I can say is that strategies in Australia vary widely to those in Malaysia and Asia has a whole. These are interesting times.