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~au. 3!; No. 3 Ta fa'MER~ ~ ~~T e ROTATING WARNINGS . & CONSTITUENT LIABECIN'~G~ 'The Swed'i sh Exper i ence 0 UPDATE ISSUE' March-April 1982, OCIATION OF THE U. S. FOLJNDED, 19,15 On December 9, 1975,theSwed'ish Parlia-ment passed a law, requiring the mandatory labeling of all tobacco products with a warning,text and a declaration of contents, effective January 1, 1977. The law pro- vide&that each pack of tobacco would bear a warning text on the front side. Though , each pack would bear only one warning text, 16 various warning,texts were required to be randomly printedlon the pack. The size, wording and lay-out of the warning texts had to be in accordance with detailed re- quirements announced' in a sp~ecial Ordinance. B'ecause of these packaging complications 5' foreign brand's,, with relatively small mar- ket shares, disappeared'from the market. Another Government Commission was set up to: studyal'cohoh and tobacco advertising with the result that in July 1979 the rotating warnings were extended to newspaper and magazine advertising. Other advertising, content restrictions were also enacted. In the first year of the rotating warning; system, cigarette sales declinedlfrom~ 11.988 billlion u.nits in 1976 to 11.357 bil- lion in 1977. In 1979 222' million more cigarettes were sold'than the 11.72'7 billi'arn (Continued'on page 2) C01VGRESS UPDATE The 2nd Session of the 97th Congress, which formally commenced January 25, will remain in session until October 8, with the exception of a number of recesses.„ The 2nd Session began on an up-beat note for the industry with President Reagan announcing in his State-of-the-Union message that no excise taxes would be soughtto improve thedeficit picture, and with tobacco-state Congressmen thank- ful that changes in the Tobacco Support Program would occur„ not randomly on the floor of Congress,, but as a result of an extended hearing andlconsultative process. Efforts by the Special Trade Representa- tive, to open the Japanese market to US tobacco products were in progress and'thie CAB' softened its smoking,rules somewhat. Congress's first two months have seen the introduction of 4 bills to increase the cigarette excise tax - from an 8C in- crease proposed by Mr., Jacobs (D-IND)! to a 20C inereaseproposedby Mr. Oberstar (D- MN) ;, a bill to reduce cigar excise taxes by lowering the tax base (the definition of "wholesale price"'); a bill to restri'ct the FTC's rule-making authority andlover- si'ght hearings on the FTC required1for renewal of its hegislative mandate; a series of reciprocity and other trad'ee legislation the introduction of whichihas oftenn been accompanied by Congressional attacks on the restrictiveness of the Japanese market. (Continued' on page 7), IN 1H'7S ISStE 1. Rotating Warnings & Constituent Labeling...... i ........ ........ ......1,2 2. 3. Congress Update and State Highlights............................ .,..,....1,7 . Social and Business Issues........ i .......... ................. ....... 7,8 4., Tobacco Economd:cs Update ..................................... ........3-6

m fESSI04VAL SOCIAL & BUSINESS ISSUES ' M Acreage Limitation 55. Medicare and Medicaid Reform 2. Agricultural Marketing/'Bargaining; 56. Mineral's Policy -3. Antiboycott Regulations 57. Minimum Wage Amendments 4. Antitrust Damage Contribution 58. Nlaturali Gais Acceleratedi Decontrol 5. Balanced Budget Constitutional Amendment 59 . NLRA Almend'ments 6. Bankruptcy 6U. Nuclear Licensing Delays 7. Block Grants/New Federalism 61. Nuclear Waste Management 8. Budget Act Amendments 62. Occupational Disease Compensat.ion, 9. Budget for FY '83 611. Omnibus Regulatory Reform 10. Budgetary Control of Federal,Lending 64. OSHA Reform 11. Building Energy Performance Standards 65. PAC Restrictions 12. Clean Air Act Amerndments 66. Patent Term Restoration 13. Clean Water Act Amendments 6'7. Political Use of Union Dues 14. Coal Slurry Transport 68'. Private:P'ensions: ERISA Benefit 15. Competition Health Insurance Standards 16. Congressional Campaign Subsidies 69. Private Pensions: ERISA Enforcement 17. Consumer Price Index (CPI)1 Reform 70. Private Pensions:: Pension Guarantee 18. Contracti'ng, Out Insurance 19. Corporate Governance 7i1. Private Pensions: Withdrawali Liability 20'. Criminal Code Revisions 72. Product Liability 21. DavisrBacomRepeal/Reform 73. Public Employee Bargaining 22. Delinquent Payments Act 74. , Public Pension Reform 23. Domestic International Sales Corp. 75. Regulatory Analysis 24. Education Block Grants 76. Rental Housing Production Incentives 25., EEO Policy ' 77.. Sales Representatives''Protection 26. Employment and Training, Programs 78. Service Contract Act Repeal/Reform, 27. Energy Conservation Programs 79. Small Business Lnnovation ~ . 28. Energy Impact Assistance 80. Small Business Tax Relief 29. Energy Mobilization Council 81. Social Security: Benefits 30. Eximbank Financing 82. Social Security: Financing 31. Export Controls 83. Social Security: Universal Coverage 32. . Export Trading Companies 84. State Taxation of Interstate Commerce 33. Fair Housing Act Amendments 85. Sunset 34. Federal Election Campaign Amendments 86. Tax: Cuts 35. Federal Paperwork Statute of Limitations 87. Tax Expenditures 36. Federal Pay Reform 88. Tax Increases 37. Federal Property Sale 89. Tax Status of'Independent Contractors 38. ForeigniAssistance 90. Taxation of Employee Benef'its 39. Foreign Corrupt Practices Act 91. Taxes: Corporate Minimum 40. Freedom of Information Act Reform 92. Trade Adjustment Assistance 41. FTC' Reform 93. Unemployment Compensation: Benefits 42. Fuel Use Act Amend'ments 94. Unemployment Compensation: Financing; 43. Hatch Act Repeal 95. Unemployment Compensation: Special 44. Health Cost Containment Programs: 45. Housing Assistance Block Grants 96. Unemployment Compensation: Taxation 46. HUD Budget 97. Urban Enterprise Zones 47. Illilegal Aliens: Employer Sanctions 98. . Usury Ceilings on Consumer Credit 48. Ilndexi'ng of Spending Programs 99. Vocational Ed'ucarion Reauthorization Q 49. Lnternationall Trade in Services .100. Wage-Price Controls G7i 50. Intervenor Funding 101'.Wagner-PeyserAct ~ 51.. Labor Violence/gxtorti'on, 102.WaLsh-Healey/'Flexibl!e Working,H'ours 52 Lav of the Sea Ttreaty 103. Workers' Compensation ~ W . ~. 53. Legislative Veto 104. Worksharing 54 . Longshoremen's J!ob Inj,ury:Compensation, L05. Youth Employment ~'~i Source: Chamber of Commerce of the United 8tates February I9'82 TMA Tobacco Merchants Association of the tJ:S. 122'0' BROADWAY NEW YORK, NEW' YORK 10001 (2'12) 239-4435

7 ~ State Highlights .Proposals toiincrease the cigarette tax in the 1982 session have,so far been intro- d'ucec in Vermont, Massachusetts, Rhode Is- land, New Jersey, Pennsylvania,.Indiana, lrfiichigan,, Missouri, Nebraska,, Kansas, Mary'1'andl„ Virginia, West Virginia, South Carc'_i'^c, I: .t,::.:::y., Mississippi, Idaho, Utah, Waahington and'Oregon. To date onlv two of these proposals have been enacted--Utah (S6)' increasing, the cigarette tax from 10C per pack to 12'C. per pack goes intoleffect 7/1/82,, and Rhode Island (H720'6), increasing the cigarettee tpx fTn,,, i R& ..m,-- ml~_ .- _~y~ to 23, per pack, took e,:feet 3/15/82. Ttiis makes Rhode Is- land's cigarette tax rate the highest inn the nation. Oregon's H32'96, increasing the tax from 16c per pack to 19'C per pack, .has passed the H'ouse and Senate but has not yet been approved'by the Governor. A Massachusetts bill (H139'7') would' tax to- bacco products at the rate of 10%'of whole- sale saies price, an Idaho bill (H545) in- creases the tax on tobacco products from ,,.~ _ . _ _ _. .i.ib vi waivi¢~ait bd1e'S pr] Ce t0 53%. A Florid'a:bi11'(H87'4), would' taxcigarette papers at the rate of 25% of retail sales ; price; a Michigan bill (H5371)lwoulditax pipetobacco,,and two:Kansas~billls (H26911 andi S'789) would increase the tax on tor- bacco products from ]i0% of the wholesale sales price to 15X, The introduction of drug paraphernalia bills has been particularly heavy in Mis- sissippi,, Missouri, Hawaii, Massachusetts, IKinne'sota, Oklahoma and'West Virg,inia. A larga number of bills further regulating, „U..rLug, a"u Lne sate of cigarettes and other tobacco products in public places have beeniintroduced especially in Mass- achusetts and New Jersey. Clean Air Acts were introduced' in IKaryland'„ New York, Washingtoni„ West Virginia an&Georgiai. Both West Virginia bills died'with adjourtr ment and' Ceorgia''s was killed'in committee. _: , - 4.- iv.. =A -. , : Congress Update (Continued from page 1)' Sen. Jesse Helms, in addition to chairing Tobacco Support Program hearings in Raleigh, and Lexington, introduced a bill to put the USDA's market information service on a pay- as-you-receive basi's and asked the Office- of Technology Assessment to investigate li'quid protein extraction from tobacco. The cigarette contraband enforcement func- tions of the BATF appear headed for ex- tinction as the April 1' appropriation dead'~- line nears. Reports indicate that the Japan Tobacco and Salt Monopoly may be broken~-up intoa separate importing com- pany and perhaps a separate distribution company. . If you wish more d'etailed' treatment of the social and business issues presented' on page 8„ please contact us. STATE LEGISLATIVE RECORD- Subject 1982 11981 1980 1979 (1st Quarter Number), 1« Cigt. Tax Increases --Enactments 2' 1 --Pending Bills 37 26 --Defeated'Bills 15 6 --States Consi'd!ering, 27' 21 2'. Other Tobacco Prod's. Tax Increases --Enactments 01 0 --Pending Bills 3 4 --Defeated' Bills 01 0 --States Considering, 3 3' 3'.Smoking Restrictions& Penallties --Enactments 01 0' --Pending Bills 69' 7'0' ---Defeated B'ills 9' 12 --States Considering . 22 .27 4. Sampling, --Enactments 0 0 --Pend'ing Bills 8' 5 --Defeated Bills 0 0 -States Considering 6 3 01 38' 5 2 3 20 4 20 0 0 E.J 0 9'~ 4'. 10 5.1 3'