Anne Landman's Collection
Corporate Affairs
Abstract
This Philip Morris (PM) Regional Corporate Affairs plan lists as an objective to "Stop the decline in, and start re-building the social acceptability of smokers and smoking in society," thus revealing PM's internal corporate goal of reversing the gains made by public health authorities against tobacco use since the 1964 Surgeon General's report. PM worried that the EPA's looming classification of environmental tobacco smoke (ETS, or secondhand smoke) as a Class A carcinogen could cause "the ultimate threat" of "widespread smoking bans." In this report, PM also links public concern about secondhand smoke to the double threat of declining cigarette sales and reduced influence with policymakers: "We also risk consumption decreased due to shrinking possibilities to smoke at the workplace as well as a deterioration of the social acceptability of smokers and smoking. With the lack of social acceptability, we will face further problems in ally-building and government relations work."
A PM strategy was to shift discussion about ETS away from science, saying "The messages on ETS-related issues will focus on solutions and accommodation rather than on a scientific debate." PM also worked to influence indoor air quality and ventilation standards in part to "focus more on standards and regulations and less on scientific base work." The report also discusses the emergence of concern about "the primary issue" [smoking-induced illness] in less developed countries of Africa and Eastern Europe, saying the information had been "channeled effectively to the global media by our opponents."
The document reveals PM's internal corporate policies were squarely at odds with the goals of governments around the world to reduce tobacco use. It describes PM's vast activities to derail and minimize public policy attempts to regulate tobacco in Switzerland, Finland, Sweden, Norway, Austria, Poland, Hungary, Russia, Turkey, the Gulf Council Countries, Egypt, the Czech Republic and North Africa.
Fields
- Quotes
The objectives of EEMA Region Corporate Affairs can be summarised as follows: • Work with other HQ departments (principally Planning) and the Areas to maintain or introduce excise tax and import duty structures and levels which contribute to the Region's volume and income growth objectives. • Prevent legislation detrimental to smokers' rights in society. • Counter-act attempts to further limit the freedoms of producing and marketing cigarettes. • Stop the decline in, and start re-building the social acceptability of smokers and smoking in society. • Communicate information about the Company's business, policies and contributions programmes to the general public and decision makers through press and public relations in order to enhance PM's Corporate image and create a positive business environment for management throughout the Region. • Communicate information about the Company's business, policies and contributions programmes to all staff and their families in order to strengthen employee morale...
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In Turkey, an anti-smoking bill which included an advertising ban and public smoking restrictions was vetoed by President Ozal in 1991. Virtually identical legislation has been re-introduced for consideration in the Fall 1992 parliamentary session... Our aim is to defeat this legislation and establish a self-regulatory or, alternatively, legal code which allows reasonable advertising and marketing freedoms over the next 5 years. We will use the vehicle of the local publishers' and advertisers' association to submit a counter proposal allowing for point-of-sale, press, cinema and branded promotions and sponsorships. We have also created within the association of foreign investors ('YaseD'), a tobacco working group to leverage the entire business community. We will also enlist the support of the tobacco farmers' lobby, to argue that a ban would destabilise tobacco farming and thereby jeopardise Turkey's major agricultural export product. We are also lobbying, with assistance from the Sabanci group, for a favourable interpretation of the Ozal decree. In Poland, a comprehensive anti-smoking bill has been reintroduced, as expected. We will continue to use direct and third party contacts to maintain lobbying pressure on government officials and parliamentarians to reject or modify this and future bills. Organisations such as the IAA, the Publishers Union, the ICC, and other traditional allies, will be organised and supported so that an indigenous coalition, opposed to restrictions on marketing freedoms, is established and vocal in Poland. In Hungary, we will seek by direct lobbying and proposing amendments to supersede obsolete tobacco legislation which unduly restricts communications with smokers. We will directly link this effort to our tax lobbying. In the Czech Reoublic, we have proposed a voluntary code for advertising as an alternative to WHO inspired restrictions now being drafted by the Czech Republic Ministry of Health. Our aim is to achieve a voluntary or, alternatively, acceptable legal code. We also plan, for 1993, a "Libertad" conference in Prague. In the Slovak Republic, we will work with Jacobs Suchard and Reemtsma to achieve reasonable tobacco legislation. In Russia, there exists an emerging threat of anti-smoking legislation which we will work, along with market personnel, to neutralise.
- Company
- Philip Morris
- Author
- Corporate author, Philip Morris
- Recipient
- Corporate recipient, Philip Morris
Tobacco Industry public relations firm.
Tobacco industry law firm. Was involved in organizing the Whitecoat Project.
An independent group of companies working in the fields of banking and finance, pensions, investment consulting and financial planning for private investors in Europe.
Fabriques de Tabac Reunies, Philip Morris Research and Development facility in Nuechatel, Switzerland. Many of the documents generated by this facility are in German or French language.
International Organization for Standardization - AN international federation of national bodies covering stadardization in all fields except electrical and electronic engineering standards. The largest non-governmental system of industrial collaboration on standards and technical regulations.
Used to support freedom of commercial speech. Group that shares ideas with Philip Morris (e.g., freedom from government regulation) that Philip Morris supported as a third party ally to help push their agenda.
Run by Gerard Wirz. Organized PM's opposition to smoking restrictions in Europe.
International organization concered with public health worldwide
Manager of Corporate Scientific Affairs for Philip Morris in 1990. Also worked for PM Corporate Services in Brussels.
Partner of industry law firm Shook Hardy and Bacon before going to work for PM. Was VP of PM Corporate Scientific Affairs in 1990. Defends PM on television.
Duty-free signifies that the importers can bring in certain items for resale to travelers who then take these goods out of the country without being required by the host country, to pay taxes and duties (or paying less tax and duty than importers selling the merchandise domestically). [Source: Travel Asisst magazine http://www.travelassist.com/mag/a86.html)
Document Images
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CORPORATE AFFAIRS
REGIONAL G RPORATE AFFAIRS
MISSION STATEMENT
The Corporate Affairs department is responsible for optimising the multitude of resources within and
outside the Corporation that
can together positively influence the working environment of the Corporation.
OVERVIEW
The objectives of EEMA Region Corporate Affairs can be summarised as follows:
Work with other HQ departments (principally Planning) and the Areas to maintain or introduce
excise tax and
import duty structures and levels which contribute to the Region's volume and income growth
objectives.
Prevent legislation detrimental to smokers' rights in society.
Counter-act attempts to further limit the freedoms of producing and marketing cigarettes.
Stop the decline in, and start re-building the social acceptability of smokers and smoking in
society.
Communicate information about the Company's business, policies and contributions programmes to
the general
public and decision makers through press and public relations in order to enhance PM's Corporate
image and
create a positive business environment for management throughout the Region.
Communicate information about the Company's business, policies and contributions programmes to
all staff and
their families in order to strengthen employee morale.
The general strategies to achieve these objectives are:
Continue to improve the ability of Corporate Affairs personnel to respond effectively to all
issues, by relevant
training programmes and coordination with PMI and other Regions, and by Increasing headcount in key
markets
where necessary. Taxation, communications, ETS and environmental issues will receive particular
attention.
SSE9Vi TOSZ
Further develop the argumentation and messages to ensure that they are relevant, persuasive and
Interesting, and
to more actively seek opportunities to communicate with key decision makers and the media through
well-trained
and briefed PM or external spokespersons.
Improve the effectiveness of our government and community relations programmes, by expanding the
role of
senior management in these activities, maximising the benefit of having PM manufacturing plants In
Switzerland,
Turkey and Central and Eastern Europe, and developing relevant social and cultural contribution
programmes,
which are carried out with sufficient frequency.
Sustain a pro-active media relations programme by building on the success of the Nordic and
Turkish programmes,
coordinating with PMI to communicate with EEMA journalists residing in the US, and using the PMCS
Brussels
office to build contacts with EEMA journalists in Brussels.
Continue to build and support industry working groups, consumers' smokers' rights and tax-payers
movements
groups, and to establish effective PM and industry positions and solutions on all issues which
create conflict
between smokers and non-smokers.
Establish permanent working groups to monitor and deal with environmental and ecological issues,
including
contingency planning and response training, in coordination with PMCS, PMI, KGFI and Miller Brewing.
KEY ISSUES AND ACTION PLANS
Taxation and Fiscal Issues
The issues under this heading include tax structure, import duties and penal taxation. Penal
taxation can be expected to be driven
not only by government revenue pressures but also by cost to society claims and the emerging threat
of environmental claims.
This will be especially true of the Nordic countries.
However a key issue in most, If not all markets, will be the tax structure for both local and
imported brands. Our objective,
simply put, is to preserve specific taxation in those markets where it predominates (Sweden,
Switzerland, Norway, CSFR, Egypt,
Denmark) and to push for a higher specific component in countries with fully or mainly ad valorem
tax (Poland, Austria, Russia,
Morocco). In every instance, we will work to minimise the total tax burden on cigarettes.
9SE9tiTIQSZ
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~,
The EFTA countries which have applied for EC membership, and/or will join the EEA, will be guided
and increasingly influenced
by EC tax harmonisation. Whilst the ECOFIN directive will be subject to review and possible change
during 1993-1994 It will be a
basis from which EFTA and to a lesser extent Eastern European markets and Turkey will work. This
presents us with some
difficult problems but also some opportunities. For example, the negotiations between prospective
member states and the EC
may allow us to postpone or revise implementation of relevant EC directives such as ECOFIN, in the
context of the debate over
"subsidiarity".
Plans
Action
Switzerland is likely to be a major target for tax increases over the plan period and beyond.
Today's incidence of
50% contrasts with an incidence of more than 70% in surrounding EC countries. Furthermore, there are
signs that
a widening Federal Budget deficit will intensify the need for additional revenues from consumption
taxes.
In October 1992 we submitted a detailed and comprehensive paper to the Ministry of Finance outlining
the
dangers of a rapid increase in the tax level and arguing strongly for a maintenance of today's
predominately
specific regime. This will be followed up in early 1993 by a more detailed review of alternative tax
structures
which will be acceptable to the authorities and in line with EC practices.
Finland. After a long process of pressure from the industry, and in the face of declining state
revenues, the
government finally announced a change in the tax system as of September 1 st 1992. A specific
element of
FIM 50 per 000 was introduced into the previously fully ad valorem system and the excise tax on RYO
and snuff
was increased significantly. Whilst full EC membership is not imminent, Finland almost satisfies the
ECOFIN
requirement on tax incidence already, and our clear objective is to push for an increase in the
specific to total tax
ratio (currently 8%) towards the EC maximum of 55%. We will also strive to keep cigarettes in the
basket of
goods used to measure consumer price infiation.
Sweden. The emergency budget package of October 92 included a big increase in excise tax levied
on both snuff
and RYO (of over 100% in each case). The package of changes, which reflected intensive PM lobbying
efforts,
reduced the relative tax advantage of STA's snuff and RYO products versus cigarettes, but made all
tobacco
products less affordable.
Our objective is to minimise further tax increases on cigarettes and argue strongly for the
maintenance of a mainly
specific regime. In early 1993 we plan to present relevant documentation and arguments in the
context of EC
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harmonisation to the Ministry of Finance. Sweden falls well short of the minimum EC requirement on
tax Incidence
and is above the maximum 55% specific to total tax ratio.
Norway. As before, we will continue to work for annual rectifications of the present imbalance
between cigarettes
and RYO taxation and strive to preserve the mainly specific tax system. As Norway and Sweden will
have to
accommodate ECOFIN requirements as conditions of EC membership, we will lobby In both markets to
ensure
VAT is taken into account in determining the appropriate tax burden.
Austria. In the wake of the ECOFIN directive we have the opportunity to move today's fully ad
valorem system to
one which incorporates a specific element. We plan to open up a dialogue with ATW as a first step In
early 1993.
Poland. We have been active in pushing with the MOF for the introduction of a specific element
into today's fully
ad valorem structure, at or before VAT introduction (probably mid 93). Such a change has been agreed
by the
Council of Ministers and the proposal now goes before Parliament. Whilst the exact amount of
specific tax has not
been determined it is likely that the level may be linked to the usage of Polish tobacco following
Ministry of
Agriculture pressure to protect tobacco growing. We plan to continue to lobby to obtain the highest
possible
specific component and to argue against the logic of linking the tax to tobacco usage.
CSFR. As of January 1, 1993 VAT will be introduced at 23%. This will involve a part compensatory
reduction in
the excise tax which today is fully specific but two-tiered (with a lower level for 70mm and
non-filter brands). Our
objective is to ensure that the specific structure is maintained and that over time the reduced rate
for 70mm and
non-filter is eliminated. We have established good contacts with the Ministry of Finance and we are
also active In
lobbying for continued high import duties on cigarettes (including a high minimum specific level),
equal tax
treatment between cigarettes and tobacco rolls and RYO/MYO and the maintenance of the currently low
import
duty on tobacco (10%).
Hungary. Good contacts have been established with the Finance and Customs Ministries. We will
continue to
argue for tax increases to be based only on the specific part of today's mixed system. We have
succeeded In
~ achieving this again this year which increases still further the specific to total tax ratio. With
the Customs
o authorities we plan to continue to work for a reduction in the import duty on tobacco (currently
47%) and to
~
~ argue for a high minimum import duty on finished cigarettes to counteract under-invoiced imports.
m
w
~ Russia. We will work to minimise excise taxes, and argue for an increase in import duties on
cigarettes (currently
15%) in conjunction with our large proposed investments in St. Petersburg. Furthermore, we will
strive to
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eliminate the current excise tax discrimination between high priced local brands and cheap local
brands and to
ensure that imports are also subject to excise tax.
Turkey. The tax systems for both locally produced and imported products are complicated and in
the case of local
brands predominantly ad valorem. We have presented a detailed proposal to the Ministry of Finance
and Customs
(November 1992) which argues for a simplification and stream-lining of today's systems, a higher
ratio of specific
tax on local brands and a system which moves Turkey more in line with EC. We plan to follow up in
more detail
early in 1993 when they have fully reviewed our proposal.
f&Q. Our objectives and action plans remain as previously detailed: to delay any increase in the
duty level,
especially in those states where duty remains at 30% (Saudi, Kuwait, UAE) and to argue for a fully
specific duty
in all states. We will continue to lobby vigorously with the GCC Secretariate, Finance and Customs
officials and
the USTR.
Favnt. We have been active both in convincing Eastern and the Ministry of Industry (responsible
for the tobacco
industry) of the merits of retaining today's fully specific (two-tiered) cigarette tax system. We
had been led to
believe that pressure to convert today's system to one which is fully ad valorem had come from the
IMF.
Consequently, we met representatives from the IMF in Washington and argued our case against such a
change
and have presented our proposal to local Ministry of Finance representatives. We plan to monitor the
situation
very closely and to use all our local contacts, including both Eastern and our new Egyptian partners
to argue
strongly in favour of the status quo.
Marketing Freedoms
PM EEMA will be strongly influenced by the outcome of the proposed advertising ban in the EC.
Branded sponsorships as well as
contributions programmes have come Into the risk zone, as has the right for third parties to
purchase and use tobacco
trademarks in other fields. EEMA also has the challenge of securing and maintaining relevant
marketing freedoms in Turkey and in
the emerging markets in Central and Eastern Europe.
Actfon Plens lnrlorftv maiketsJ
In Switzerland a popular initiative aiming for a total ban on tobacco advertising, and a Federal
counter project
which would only allow point-of-sale advertising and corporate contributions, threaten to severely
restrict the
industry's marketing possibilities in the near future. The industry voluntary code should weigh very
favourably
6SE9Vi TOSZ - 5 -
~
with public opinion and this is being reinforced by relevant mass advertising. Organisations and
individuais who
benefit from industry advertising and sponsorship have been mobilised, extensive lobbying of
influential MPs Is
underway to promote the industry's proposals to limit the restrictions to advertising aimed at
youth, and all media
opportunities to put the industry's case to the public will continue to be taken. Our pro-active
approach, in 1992,
resulted in a 92% favourable response rate to continued advertising freedom.
In Turkey, an anti-smoking bill which included an advertising ban and public smoking restrictions
was vetoed by
President Ozal in 1991. Virtually identical legislation has been re-introduced for consideration in
the Fall 1992
parliamentary session. Tekel is not expected to join the international manufacturers' lobbying
efforts. Our aim Is to
defeat this legislation and establish a self-regulatory or, alternatively, legal code which allows
reasonable
advertising and marketing freedoms over the next 5 years. We will use the vehicle of the local
publishers' and
advertisers' association to submit a counter proposal allowing for point-of-sale, press, cinema and
branded
promotions and sponsorships. We have also created within the association of foreign investors
("YaseD"), a
tobacco working group to leverage the entire business community. We will also enlist the support of
the tobacco
farmers' lobby, to argue that a ban would destabilise tobacco farming and thereby jeopardise
Turkey's major
agricultural export product. We are also lobbying, with assistance from the Sabanci group, for a
favourable
interpretation of the Ozal decree.
In Poland, a comprehensive anti-smoking bill has been reintroduced, as expected. We will continue
to use direct
and third party contacts to maintain lobbying pressure on government officials and parliamentarians
to reject or
modify this and future bills. Organisations such as the IAA, the Publishers Union, the ICC, and
other traditional
allies, will be organised and supported so that an indigenous coalition, opposed to restrictions on
marketing
freedoms, Is established and vocal in Poland.
In Hun rv, we will seek by direct lobbying and proposing amendments to supersede obsolete tobacco
legislation
which unduly restricts communications with smokers. We will directly link this effort to our tax
lobbying.
In the Czech Reaublic, we have proposed a voluntary code for advertising as an alternative to WHO
Inspired
restrictions now being drafted by the Czech Republic Ministry of Health. Our aim is to achieve a
voluntary or,
alternatively, acceptable legal code. We also plan, for 1993, a"Libertad" conference in Prague. In
the Slovak
Rel2,ublic, we will work with Jacobs Suchard and Reemtsma to achieve reasonable tobacco legislation.
In Russia, there exists an emerging threat of anti-smoking legislation which we will work, along
with market
personnel, to neutralise. 09C9bI IOSZ
6
Product Restrictions
EC legislation on labelling and maximum levels will be applied in EFTA countries which join the EEA,
probably in 1993. This
legislation will also likely become a model for other markets, especially in Central and Eastern
Europe. This constitutes an
opportunity in Nordic markets, where much stricter rules have been repeatedly proposed.
Action Plans
We will emphasise our new labelling policy in EEMA markets when this is useful.
In Finland, we will continue to contest proposed Health Warning Labels to cover 16% of the pack,
which is at
variance with EC directives. This will entail working alone as other Finnish manufacturers are
hesitant to confront
the authorities.
In the _QUJI states, where mandated tar and nicotine levels, at 12 and 0.8 mg respectively are
the lowest in the
world we will forestall any further reductions and will seek adoption of ISO sampling standards.
In Central and Eastern Eurone imposition of T&N limits implies increased quality assurance
measures in
manufacturing as well as limits on use of local tobaccos.
ETS Issues and Smoker Discrimination
ETS claims are rapidly becoming the major driving force behind anti-smoking activities in EEMA
markets, and ETS-driven
proposals for smoking bans and restrictions are no longer limited to the industriaiised world.
Public place smoking bans are in
place in certain African and Middle Eastern countries and far-reaching work and public place smoking
restrictions have been
discussed both in Turkey, Hungary and Poland. While severe workplace smoking restrictions have been
defeated in markets like
Sweden, the anti-smoking movement is re-focusing their attention on new markets, inciuding Finland
for restaurant and
workplace smoking restrictions, Eastern Europe and also Northern Africa. WHO are planning a focused
attack on Russia, Poland,
the Czech and Slovak Republics and Lithuania.
With the expected EPA classification of ETS as a"Class A carcinogen" in the US, we must be prepared
for intensive media focus
on ETS issues in EEMA in the years to come. While the ultimate threat is widespread public smoking
bans, possibly driven by EC
legislation, or global indoor air quality and ventilation standards that penalise smoking, we also
risk consumption decreases due
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to shrinking possibilities to smoke at the workplace as well as a deterioration of the social
acceptability of smokers and smoking.
With the lack of social acceptability, we will face further problems in ally-building and government
relations work.
Also, EEMA has pioneered the move toward political messages and solutions based on accommodation
rather than focusing on
the scientific debate.
Action Blans
In line with a special EPA plan, key markets such as Switzerland and the Nordic countries have
intensified the
media briefings on ETS prior to the expected EPA report. The preparations for an active media
defence also
include a new Indoor Air Quality video and special ETS/EPA brochures in local languages, instruction
videos on
IAQ and accommodation strategies by Steve Parrish and Tom Borelli, plus ETS and EPA media statements
coordinated by PMI.
PMI will coordinate an emergency "action plan" which will be implemented once the publication
date of the EPA
report is fixed. This will involve providing all spokespeople worldwide with the official PM
response. The
spokespeople will adapt this to their local markets. EEMA, with PMI support, has now 8 fully
qualified
spokespeople with 6 more to be trained during the first quarter of 1993. A special briefing of EEMA
journalists in
the US will take place with EEMA representatives cooperating with PMI staff in the US.
We will continue our new focus on Labour Union channels. Our media strategy, invoiving major
union IAQ science
briefings, ETS briefings at locations such as Imperial College in London and Science and Technology
in Neuchatel,
as well as media briefings and articles for union media, will reflect this strategic shift.
The messages on ETS related issues will focus on solutions and accommodation, rather than on a
scientific
debate. For 1993 and 1994 EEMA is looking at possibilities to steer the public debate in the
direction of tangible
and practical solutions of the smokers versus non-smokers relations by running advertising, along
the EC "Basta"
N lines.
~
0
~ EEMA is, together with PMI, intensifying the work to infiuence the setting of Indoor air quality
and ventilation
~ standards. Parallel to this outside advisors will focus more on standards and regulations and less
on scientific base
0, work and science conferences. The existing scientific witness groups are upgrading their public
work, for instance
N by forming more formal IAQ experts groups or legal entities and communicating the expert
viewpoints in public
media. The use of relevant publications will also continue in key EEMA markets, in cooperation with
PMI.
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We will also find scientific witnesses for Central and Eastern Europe, North Africa, Turkey and
the Middle East,
where increased ETS defence activities will be needed during the Plan period. We will also work to
steer the
debate more toward solving the growing intolerance in the Western societies of today.
EEMA has developed, with the Science and Technology group at FTR, a new presentation concerning
ETS
solutions.
We will encourage PMI to initiate and fund research into the causes and consequences of social
intoierance.
EEMA now has a full-time ETS and Environmental Issues Manager on board and trained.
Smoking and Tobacco Industry Social Acce a iiity
A vast majority of anti-smoking measures have been made possible, directly or indirectly, due to the
decline In the social
acceptability of smoking and the tobacco industry. Marketing conduct issues, the ETS misconceptions
inciuding the adverse
publicity created by the US EPA issue, misinformation about tobacco and marketing in the Third World
and alleged sales to
minors have been systematically used by the opponents of the industry to create a suspicion about
tobacco related issues.
PM, and the tobacco industry in general, must find practical and long-lasting solutions to relations
between smokers and
non-smokers. This is not unrealistic, as long as our proposals are relevant, practical and
meaningful for all interested parties.
Intensified information efforts regarding the business aspects of PM as a company, correcting
misinformation about Third World
issues, relevant and ongoing corporate contributions programmes and active media and government
relations programmes, with
sufficient frequency and impact, will all contribute to meeting our objectives. Our ability to work
with allies to persuade
legislators and government officials to resist efforts to persecute smokers will also be crucial to
the maintenance of the social
acceptability of smokers.
Action alans
We will continue to show an example to the entire industry in supporting spontaneous and genuine
consumer
interest groups. Through the participation of high profile delegates from labour unions, social
welfare boards etc.,
smokers' rights groups will attract global media attention on their call for tolerance and on
examples of practical
solutions for workplace smoking, restaurant smoking, transit smoking arrangements etc.
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