Tobacco Documents Online

Probe of Tobacco Imports Threatens to Run Away With Its Backers:. , By Ward Sidelair Watthlngtott Po~t 8t~f! Writer Two days before he left office, Pres- ident C~r did a favor for a ~litic~ lri~nd from Noah C~o~na who ~ng Srouble ~th the s~'s ~r- ,nicety Repub~ ~r, Ht~, At the ~h~t of h~ p~, G~. J~ B. Hunt Jr., ~d ~nst the advi~ of trade expo~ at the Dop~- m~nt of A~ic~e, C~r ~ ~e In~fional ~ade Commi~ion (I~) ~ I~k ~ t~ ~ im~ situation. Six mont~ lair, the H~t-He~s b~lay h~ @xp~d~ in~ what no one an Toba~ ~ad app~entiy re- ~ly w~ or ~ on- a f~- dr~ renew by the ITC of the feder~ pri~ suppo~ pro~ for ~ba~. The I~ pro~ ~d ~gle the Rc~ adreinistration in a sticky flap ~th no~ U.S. Wading ~nem, who ~r~dy ~ whis~ring of re~- iation if the Uni~d S~ c~bs ba~ impel. Back in J~u~, it s~m~ like a clevor bit of political one.upm~hip. Helms had b~n hacking away at C~- ~r, Htmt m~d then~on. Ro~ Mer- ge, bl~ing them for what he garded as ireproperly low tariffs placed on tobacco imports by the U.S. Custon~ Service. Thus Carter's request for an ITC probe could somewhat dull the edge of Helms' complaints, and allow Dem- ocrat Hunt, regarded by many as a challenger to Helms in 1984, to score points with North Carolina tobacco powers disgruntled with imports. North Carolina is the large~t pro- ducer of flue-cured tobacco, the prin- cipal componeht of cigarettes. The state's crop producez cash receipts of more than $1 hi[lion yearly. Helms, now chairman of the Senate Agriculture Comreitteo, has not let up the pressure. He reportedly has reit- erated his views on tobacco tariffs to the administration and has left a clear impression that he will closely review nantes of Treasury appointees who • ~.'!l be in a position to make tariff de- cisions, George Dunlop, the senator's chief tobacco adviser, said he has "visited" • recently with possible Reagan nom- inees to head the Customs Service, seeking to push the case for higher duties on foreign leaf. Key Treasury officials will be the custems commissioner -- not yet named- and the assistant secretary for enibrcement. The White House choice for that job is New York at- torney John M. Walker Jr., a first cousin of Vice President Bush. Walker's selection was announced May 13 after weeks of delay resulting from questions raised by the National Rifle Association. Walker declined to discuss his nomination, but said no one had ever suggested he should have a predetermined position on the tobacco tariff question. As this goes on, the ITC is prepar2 ing to begin hearings hero June 24, m l~u't of its Carter.requested investi- gation, to determine if imports are im- pairing the controversial price-support program. The ITC could hold that there is no harm to the program. Or it could reeomniend lireits on imports, a move that could put the free.trade politics of Reagan to a quick test. The pres- was prepared to bear the possible con- sequences. He noted that Helms, too, had sup- ported an ITC probe of impor~ and had discussed the question %n many occasions" with Reagan, "Ate you confident tha~ public hearings.., would not result in leg- islative reaction that would be adverse The byplay between the gov rnor and the senator has expanded into what no one on Tobacco Road apparently really wanted or counted a frill-dress review of the federal price support program. I., ident could support or reject the ITC timings, The proceedings hold the potential for giving critics of the price-support program a rare chance to spotlight the system of |L~dera[ly backed acreage al- lotments and market controls they find ~o objectionable. Agriculture Secretary John Block, in a February letter to Hunt, outlined the peril to tobacco advocates if they continued to push for the ITC investigation, asking if the governor to the interests of tobacco producers in your and other states?" Block asked Hunt. The governor never re- sponded to Block's letter. Helms, sensitive to a political am- bush, now says he supports the ITC investigation only because "his state's farmers, principally the North Caro- lina Farm Bureau, wre|t it. Helms and other tobaoco-state leg- isle,ore over the years have success- fully thwarted challenges to the sup- port program, although their strength

may be waning. A recent effort by Sen. Howard M. Metzenbaum (D- Ohio) to cut federal tobacco outlays drew 49. supporters and could have succeeded with a change in eight votes. So at a time when the critic~ seem to ha picking up ground, the ITC forum gives them an unusual new op- portunity. To determine the impact of imports, the rrC will have to examiue closely the price-support program. The program has had problems for a variety of reasons in the last several years, with increasing amounts of low~" grade flue-cured tobacco finding their way into government warehouses be. cause of poor marketability. Increasing government stocks have given rise to ~ fear that the program soon may fred itself in serious economic difficulty. The quick reaction among growers has been to blame lo~er-priced im- ports and tariffs- which Helms and others say are unreasonably low -- for their problem, But others in the industry contend that the.. problem is the price-support program itself, which automatically pushes up domestic prices and en- courages farmers to grow poorer grades of tobacco that cannot compote with the imported leaf, "The problem is not imports," said an official of the Ie.~ Exporters sedation in Raleigh. 'q'ho major prb~~ lore is that certain I3.S. tobacco ~: overpriced and the quality .is .dete/i~.~ orating: ~ f, U.S. farmers' costs am increased ~. a feature of the program that nonfarmers to hold tobacco-growi_fi'~- allotments, Which they in turn.lease h~ farmers at an a~;ersg~ of about ~ cents a pound. Fewer than 9.0 percent~ of the allotment holders actually are~ growers, according to the.Department, of Agriculture. By some estimate, these lease fees add at least $279 rail; lion a year to farmers~ prodt~cti~/i' costs- forcing the federhl probe" port to increase and re'eking U.go less competitive. . ". .... .- ~0: Even in that situation, export~.l~. keep the U.S. tobacco farmer afloatr. Exports of lcef.und cigarettes bring about $2.5 billion a year;, impofls c~."_ only $500 million. "What's happening is that the pol- iticlans have miscalculated," said an industry official. "If the ,ITC vetoes a limit on imports,! the: .administration . and farmers am going t~ ha~m.t~ lace up to changes in the sul~ort program because its problems are going to be in full public vlew.'~