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PHILIP MORRIS INTERNATIONAL INC. WORLDWIDE CORPORATE AFFAIRS ISSUES AND OBJECTIVES TABLE OF CONTENTS Within each section issues are listed by PMI Regions in the following order: EC, EEMA, Asia-Australia, Latin America. 1. FISCAL POLICY 1.1 TAX LEVELS 1.2 TAX STRUCTURE 1.3 DUTIES 2. MARKETING 2.1 ADVERTISING 2.2 SPONSORSHIP 2.3 VENDING 2.4 LABELING 2.5 GENERICS 2.6 BRAND DIVERSIFICATION 3. SMOKING RESTRICTIONS 3.1 WORKPLACE 3.2 RESTAURANTS 3.3 TRANSPORTATION 3.4 PUBLIC PLACES 4. PRODUCT 4.1 INGREDIENTS 4.2 MCLs 5. TRADE 5.1 MULTILATERAL GATT-URUGUAY ROUND 5.2 TRADE BILATERAL 5.3 ANTI-EXPORT * This report does not include international food issues.

PHILIP MORRIS INTERNATIONAL INC. WORLDWIDE CORPORATE AFFAIRS ISSUES AND OBJECTIVES 1. FISCAL POLICY 1.1 TAX LEVELS EC: Germany: Netherlands: Israel: Finland: Sweden: Switzerland: Turkey: GCC: Taiwan: Singapore: Cambodia: Ecuador: Colombia: Mexico: Mercosur: Amend 57% minimum incidence or introduce a minimum specific tax element; Defeat community-wide excise tax increase; Defeat "health taxes" directed at cigarettes Tax equalization with rolls Tax equalization with RYO Tax equalization for international brands; Lift price controls Increase minimum specific tax level Tax equalization with snuff/RYO Minimize tax increases and negotiate timing Tax equalization with Monopoly brands Delay increases in cigarette duty; ensure high minimum specific duty (Duty functions as excise in GCC countries) Tax equalization with Monopoly brands Tax equalization with locally manufactured products Minimize tax incidence Reduce tax rate to 45% of retail price Reduce excise tax rate Maintain formula which reduces tax when cigarette price increases Tax harmonization among members (Uruguay, Argentina, Brazil, Paraguay) i

1.2 TAX STRUCTURE EC: Italy: France: Spain: Belgium: Greece: Finland: Sweden: Switzerland: Poland: Hungary: Turkey: GCC: Egypt: Korea: Taiwan: Philippines: Indonesia: Enact definition of "rolls" as "cigarettes"; Maintain ability to set prices Increase specific tax incidence to 20% of total tax; Delay application of Ecofin; Put cigarettes back into CPI Increase specific tax incidence to 10% of total tax Increase specific tax incidence to 20% of total tax Increase specific tax incidence to 20% of total tax Increase specific tax incidence and ensure move to 25% specific incidence over 3 years Convert current ad valorem system to a predominantly specific structure Maintain specific tax structure Maintain specific tax structure; Avoid banderole system Obtain a specific element in existing tax structure; avoid penalty tax discouraging tobacco use Convert structure of excise towards specific Replace all taxes, funds and duties, except the retail sales price-based VAT, with a single excise tax Convert current ad-valorem system to fully specific tax structure Maintain current specific tax structure Maintain specific tax structure Maintain specific tax structure Convert mixed ad valorem and specific to fully specific tax structure Convert to specific tax structure

Pakistan: Ecuador: Venezuela: Colombia: Canada: IMF: World Bank: 1.3 DUTIES Convert mixed ad valorem and specific to fully specific tax structure Reduce the number of tax categories (currently 7) Minimize impact of VAT on cigarettes by eliminating overlapping taxation Convert ad valorem structure to specific Decrease tax incidence in the face of cross-border activity Overturn IMF preference for ad valorem taxes Ensure anti-tobacco loan policy remains dormant Duties are covered in TRADE; Section 5, except for GCC countries where duties function in lieu of excise and are found in Section 1.1.

2. MARKETING 2.1 ADVERTISING EC: Reverse positions of countries which support the draft Directive to ban advertising and maintain the blocking minority France: Eliminate financial gains from private lawsuits to ensure enforcement of broadcast/advertising bans Spain: Prevent Royal Decree to ban advertising; Reverse position on draft advertising ban Directive Belgium: Prevent King from signing Royal Decree to ban advertising Netherlands: Renegotiate industry code to minimize loss of marketing tools; Maintain vote against draft EC advertising ban Directive Greece: Agree on industry advertising code; Maintain vote against draft EC advertising ban Directive Italy: Safeguard diversification advertising Germany: Defeat local restrictions; enact voluntary agreements or secure national preemption Israel: Prevent reemergence of ad ban legislation Sweden: Maintain current advertising freedoms in light of the review by the Magnusson Commission Switzerland: Fight current proposals restricting commercial speech; Ensure effectiveness of voluntary advertising code Poland: Ensure ability to advertise in non-electronic media Hungary: Replace existing advertising ban with marketing freedoms through adoption of voluntary advertising code Turkey: Defeat extensive ad-ban proposal; establish self-regulatory code which ensures reasonable marketing freedoms over the next 5 years

GCC: Taiwan: Hong Kong: Malaysia: Cambodia: Japan: Argentina: Costa Rica: Uruguay: Venezuela: Canada: 2.2 SPONSORSHIP EC: France: Italy: GCC: Argentina: Defeat proposals for bans on tobacco print advertising in countries where still allowed Maintain interior Pos through bilateral negotiations Maintain marketing freedoms Maintain marketing freedoms Maintain marketing freedoms Forestall further reductions in TV advertising; Retain access to other forms of advertising and promotion Defeat pending legislation (similar to Neri law) to ban all cigarette advertising through adoption of industry code Defeat pending legislation to ban all cigarette advertising Maintain marketing freedoms Defeat pending legislation bills to ban all advertising Reinstate marketing freedoms in lieu of legislative ban Reverse positions of supporting countries in opposition to draft EC advertising Directive Amend Loi Evin to protect motorsports brand sponsorship; Maintain current sponsorship freedom Defeat proposal for bans on tobacco sports sponsorship in the 3 countries where still allowed N O N 91 Defeat pending legislation (similar to Neri law) +A to ban all sponsorships through adoption of ~ industry code ~ it Costa Rica: Defeat proposal to ban all sports ~ and cultural sponsorships

2.3 VENDING .4 Korea: Japan: Canada: Venezuela: LABELING Maintain vending machine sales Counter any threats to limit vending sales Prevent legislation to ban vending machine sales Prevent legislation to ban vending machine sales .5 Thailand:, Australia: GENERICS Preserve pack integrity through reasonable labelling standards Preserve pack integrity through reasonable labelling standards Australia: Canada: Eliminate generic pack threat Eliminate generic pack threat 2.6 BRAND DIVERSIFICATION Finland: Counter the proposed ban on brand diversification advertising EC: Counter the proposed ban on brand diversification advertising

3. SMOKING RESTRICTIONS 3.1 WORKPLACE EC: Italy: Germany: Spain: Finland: Sweden: Switzerland: Defeat potential EC smoking restrictions Directive; develop moderate policies in EC Directive Develop national law to preempt local restrictions Defeat workplace smoking bans; develop contingency, national legislation to preempt local restrictions Keep smoking restrictions out of workplace-related health and safety legislation Legislate accommodation principles Legislate accommodation principles Legislate accommodation principles ~ .2 Argentina: Venezuela: Canada: ILO: RESTAURANTS Legislate accommodation principles Legislate accommodation principles Legislate accommodation principles Prevent possible development of a workplace smoking standard Finland: Sweden: Switzerland: Legislate accommodation principles Legislate accommodation principles Legislate accommodation principles ~ Argentina: Venezuela: Legislate accommodation principles Legislate accommodation principles O Cr1 A ~ ~ ~ CA N

3.3 TRANSPORTATION Germany: Netherlands: Argentina: Costa Rica: Venezuela: ICAO: 3.4 PUBLIC PLACES Costa Rica: Argentina: Panama: Japan: Canada: Prevent legislated bans on airlines and trains Overturn smoking ban on short haul train routes before implementation 1/94 Legislate accommodation principles Legislate accommodation principles Legislate accommodation principles Prevent ICAO passage of a binding "standard" banning smoking on all commercial airlines Legislate accommodation principles Legislate accommodation principles. Legislate accommodation principles Legislate accommodation principles Legislate accommodation principles F

4. PRODUCT 4.1 INGREDIENTS Switzerland: Adopt EC Directives Thailand: Adopt alternative to government initiative for brand-by brand disclosure 4.2 MCLS GCC: Prevent reduction in MCLs; Adopt ISO testing standards