Tobacco Documents Online

the tobacco retail monopoly and other market rules. The decree contains restrictions and controls on advertising, point of sale promotions and tobacco sales to minors. Vending machine operators, some tobacconists and warehouse distributors are reportedly ready to appeal the new Regulation before the Supreme Court. .................................................................................................... ............................................................._.................._._.._.............. ....._.....-.................- UNITED KINGDOM PRODUCT INTEGRITY, SCIENCE The British Imperial Cancer Research Fund (ICRF), anti-smoking group Action on Smoking and Health (ASH) and the Massachusetts Tobacco Control Programme on Wednesday released a report claiming that tobacco companies have been adding chemicals to cigarettes to make them more "addictive." The study is largely based on extracts of internal tobacco industry documents released during tobacco court cases in the U.S. It alleges that manufacturers "free-base" nicotine, add ammonia and that certain additives, such as cocoa, may be used to dilate smoker's airways or otherwise alter a smoker's body or brain chemistry. The report calls for disclosure and testing of each ingredient usedin cigarettes. In a concerted PR effort, following the publication of the report, U.K. Public Health Minister Tessa Jowell issued a press release saying that she backs the development of proposals at an EU level to address the question of additives in cigarettes. She also stated that she intends to meet with the new EU Health Commissioner, David Byrne, as soon as he is formally appointed to express the U.K. government's support for such proposals and urge the Commission to bring forward a plan of action. Page 7 of 7

- - ..................._..........................._........................._..._......_............... ........................................ SLOVAKIA ENVIRONMENTAL, PUBLIC RELATIONS Media coverage of the Green City project sponsored by Tabak,s.r.o./PM continued with positive press articles and radio interviews. ............---- ..._............ ....... ....... ............... ...._ ......................................................................... -- SLOVENIA _.PA..._ ...........CK .......................... INTEGRI_.T....Y.., ...... YOUTH ..n ..... H Since the beginning of July, Marlboro and Philip Morris brand family packs bear youth labels. L&M is to follow within the next three weeks. The label reads: "Prohibition of Sale to Persons Under Age Specified by Law." The existing legal age is 15 years. All key customers, the Ministry of Health and the Trade Inspectorate will be directly informed of the introduction of youth labeling, while the public will learn of the scheme through a retail access program to be launched in the autumn. .......................I_...._...NTE_G............RIT_....._.......................__.....~......... .......................................................---........................_...............__ ....._..._...._......,. TURKEY PACK Y According to media reports, the Ministry of Health has proposed an amendment to the ad ban law asking that tar and nicotine levels be printed on packs. No more details are available at this stage. EASTERN EUROPE _..........._...._ ................._...__...._........._..............n..................~._.......................... ..............._.....................:..._.............:..........._........ KAZAKHSTAN MARKETING On July 8, the parliament passed to the President for signature the "Law on Mass Media." This law, which covers radio, television and print media, , contains provisions that allow for the advertisement of tobacco products on television and radio between the hours of 11 PM and 6 AM. President Nazarbayev is expected to sign the bill into law. .._..._..._ ..................._..........__.............................._..-..-........,..........,...,....... .............................._................._. - -. LATVIA On July 12, President Vike-Freiberga nominated Mr. Andris Skele, the leader of Tautas Party, to compose a new government. According to Mr. Skele, the main task of his government is to overcome the current state crisis and assemble a coalition government that represents the three main political parties of Latvia. He is expected to have his new government named by July 21. _ ....................................._..................................................~........... ...,_.................................._...___._............_...._._.........................._.._.. ............ UKRAINE FISCAL POLICY On July 15 the Ukrainian parliament held an accelerated 2nd reading of the draft law "Concerning the Introduction of Amendments to the Law of Ukraine 'Concerning Duty on Mandatory Pension Insurance"'. Under the leadership of Deputy Speaker Martynuk, a member of the Communist faction, the debate was abbreviated and representatives of the Banking and Finance Committee, which opposed the bill, were not allowed to speak. The law was passed and is now sent to the President, who is expected to sign it into law. The law stipulates that the import of cigarettes and sale of domestic cigarettes shall be subject to an additional duty of 5% of the taxable base. The taxable base for imports is the customs value including excise taxes, but excluding VAT. The taxable base for domestic cigarettes is the ex-factory price of the product including excise taxes, but excluding VAT. The law comes into force after it is signed by the President and published, and according to its terms, will expire on 1 January 2001. UKRAINE PUBLIC RELATIONS Charitable aid consisting of medications and water purification filters was donated to the Trans-Carpathian mountain region of Ukraine, which suffered heavily from floods during the fall. The event, which was widely covered by media, was given on behalf of PMI by United Way International and the Page 4 of 7

...__...._....... ...__....__......._....__..... CZECH REPUBLIC PES _.....R._...._..S ...._ ............ COVE..R.........._...AGE At the closing ceremony of the Karlovy Vary Film Festival, the President Vaclav Havel thanked PM for its continued support. Earlier in the day, the Philip Morris Freedom Award was held at the Thermal Hotel, attracting vast media attention. ....................._....._......_..................._...._....._..........................._...... ....................._......_....._..........._...._..._............._...._...................__.... __ . GCC ADVOCACY, FISCAL POLICY, MARKETING The Qatari Minister of Health, the most radical anti-tobacco activist among GCC Health Ministers, focused on anti-tobacco issues at a regional WHO meeting. He criticized Gulf authorities for not implementing past anti-smoking ~ resolutions and recommendations by the GCC Health Ministers Council, but suggested that many of the measures (including punitive fiscal measures on cigarettes and extensive advertising restrictions) would be adopted in 2000. ISRAEL LEGAL Five individuals, on behalf of 950,000 people, filed a 17 billion NIS ($4.2 billion) class action suit against PM, BAT, RJR, Dubek, Eliachar and TLC (BAT distributor). They are seeking compensation for damages allegedly related to the consumption of tobacco products. ISRAEL PRODUCT INTEGRITY A Knesset member submitted a private bill seeking ingredient disclosure and control of tobacco products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KUWAIT . . . . . . . . . . . . . . . . . . .BLIC. . S . . . . . . . . . . . . . . . . . . . . . . . MOKIN. .G PU The Ministry of Health has imposed a total ban on smoking in the country's medical facilities and threatened legal action against violators. The decision is in accordance with the Anti-Smoking Law of 1995, which banned smoking in all public places (including hospitals, medical centers, primary clinics and other such facilities). ................................................................................................__.. ............_...._...................._...._.........._....._.........._....._...._...._...._....._. ._._.._..... LA REUNION PUBLIC SMOKING, MARKETING The retail group Vindemia (with 16 outlets) has banned smoking, advertising and promotion in its POS. The decision follows pressure from the anti-tobacco movement and the appearance before a criminal court of a Vindemia store manager for allegedly inciting cigarette sales during the Brooklyn promotion. . .........._............._......... ............................................................._...._....._...._...................... ..._........._.................._...._.............._...._...._............. LEBANON FISCAL POLICY During a meeting with the President's top aide, the Regie management was asked to comment on a recent MoF report claiming that Regie sales of imported cigarettes and other tobacco products have returned to normal and customs duty revenue for the year will increase by LLi 52 billion. The Regie's comments shed serious doubt on the MoF projections and reminded the authorities that while the increase in duty sought to secure an additional LL300 billion in revenue, the MoF report projects that the best that can be hoped for is a return to the sales and duty revenue that prevailed prior to the increase. The Regie proposes a reduction in customs duty to 48% compared _ with 54% before the April increase. . ..................................................._...._.................._....__...._...._...._... ._....._.._....._........._................_...._.............._............._............._ POLAND FISCAL POLICY In light of the future introduction of the EU mixed tax structure, the entire industry agreed to support a 25% ad valorem rate. The MoF and other relevant government bodies will be notified of the industry's common position. .......................................:..._...._................... _..... _.......................... _.... _.... _..... _................. _......... _..._........... _..... ............ ..... _.... _............. ROMANIA FISCAL POLICY At the request of Finance Ministry experts, PM Romania organized a follow-up seminar on EU tax harmonization. Page 3 of 7

Weekly Highlights for week of July 12, 1999 ASIA HONG KONG ..........__ ...................................................................._....._......_......._....._.... ..........._.............................................. .S PUBLIC RELATION Corporate Affairs held a two day workshop on Communications and Ally Building with participation from all regional markets, July 8-9 in Hong Kong. Market and headquarters staff heard presentations by colleagues from WRA, PMMC, EU and Eastern Europe. _ ................................_......_....._.................._....._.........................__.. .._....._...._...._...._...._.............................................._ ....._............_......._.....DUSTRY KOREA IN Maeil Business Daily reported that BAT will begin producing tobacco products in South Korea as soon as the country allows foreigners to do so. John Taylor, President of BAT Korea, said it is time for BAT to aggressively expand Korea. The ultimate goal of BAT Korea is to make tobacco products in Korea with local tobacco and local labor, Taylor said. KOREA LEGAL The government will propose a product liability law that will cover all products including tobacco in 2001, according to a Ministry of Finance and Economics announcement on June 12. The proposed draft law will hold manufacturers responsible for bodily harm and material damages to consumers caused by their products on consumers. After public hearings, the law is expected to be proposed to the legislature in September. KOREA YOUTH The Commission of Youth Protection (CYP) published new regulations for Underage Sale Prohibited labels on July 12 for all tobacco products and alcoholic beverages. From September 10, labels reading "Sales to under the age of 19 is prohibited" will be required; the grace period runs until June 30, 2000. MALAYSIA PUBLIC RELATIONS The Malaysia Art Awards prize-giving and official exhibition opening ceremony was held on July 13. The Deputy Minister of Culture, Arts, and Tourism officiated and former ASEAN Secretary General, Tan Sri Ajit Singh attended. Seventeen media representatives covered the event. The Malay Mail featured a page 3 full color, full page report on July 14. .................................................................................................... .................................................................................................... ...................................._ .. MALAYSIA INDUSTRY Speaking at Rothmans of Pall Mall (Malaysia) Bhd annual general meeting, the Managing Director said that Rothmans is not in a rush to complete the merger, The New Straits Times, Star and Sun newspapers reported on July 7. He said the company needed more time to look into every aspect including the current share prices of the companies. MTC's rising share price has created an obstacle for merging the two local companies. During the financial year ended March 31, 1999, Rothmans recorded pre-tax profit of RM616.6 million (US5162.2 million), compared with RM653.53 million in 1998. Turnover slightly eased to RM1.947 billion against RM1.963 billion in 1998. However, Rothmans was able to maintain its market share above 55%. MALAYSIA INDUSTRY The independent adviser to RJ Reynolds Malaysia Bhd in a stake-purchase offer said shareholders should reject the proposal by Japan Tobacco, The Sun reported on July 7. The offer price of RM3.94 (US$1.04) per RJR share is well below the net price-to-earnings multiple of rival Rothmans of Pall Mall Malaysia Bhd, the adviser said. Page 1 of 7

UKRAINE AGRICULTURE, FISCAL POLICY On July 9, a group of parliamentary deputies submitted to the parliament a draft law "On duty for tobacco growing development in Ukraine." The draft contemplates the introduction of a 2% tax, based on the net ex-factory price for cigarettes sold in the Ukrainian market, payable by tobacco manufacturers to support the development of the Ukrainian tobacco agronomy sector. The draft also provides for the mandatory use of Ukrainian fermented tobacco in local non-filter cigarettes commencing in the year 2000, starting at 8% and rising incrementally to 25% by 2003. The deputies submitting the draft law are associated with the Peasants' Party of Ukraine. The draft has been referred to the Finance and Banking Committee and the Committee of Agrarian Policy and Land Issues for their consideration and recommendation. Area anticipates that this law will be heavily amended and debated in second reading, which is currently anticipated for October, 1999. ..SCAL ......................_.........._......................._....._............._..............._...... ........................................._.....__................................................~.. .. ....................... POLICY UKRAINE FI The Parliament rejected a Presidential decree "On procedure for amending rates of excise tax and import duty on some goods" that would have transferred the right to set rates of excise and import duty from the Parliament to the Cabinet of Ministers. EUROPEAN UNION ALL EUROPEAN UNION _ ........................._..._.........---.........F....._...._........................_....._...... ............... ._......................................._.............._.................................._........ P OLITICAL Incoming European Commission President Romano Prodi announced the final nominees for the 20 Members of the Commission and their portfolios. Their appointment is subject to approval by the European Parliament in September. The proposed Health Commissioner, David Byrne, was reportedly chosen for his extensive knowledge of the EU's legal framework. He was appointed Ireland's Attorney General in 1997 and is a close confidant of the Irish Prime Minister Bertie Ahern. He played a key role in negotiating the peace agreement for Northern Ireland. Frits Bolkestein, the nominated Internal Market Commissioner, was until last year the Leader of the Dutch Liberal Party. In the past he has been categorised as euro-sceptic. He started his international career with Royal Dutch Shell, became a Member of Parliament in 1977 and was until recently Defence Minister and Junior Economics Minister. If approved by the European Parliament, the new team of Commissioners will not reflect the centre-right European People's Party (EPP) majority of the newly elected European Parliament as 10 out of 20 Commissioners are Socialists, five represent the EEP, two are liberals, one green and two non-affiliated. BELGIUM ....POLITICAL....._...._....._ Following the elections of June 13 a new Belgian Federal Government has been formed. It is composed of Liberals, Socialists and Greens. The new Prime Minister is the Flemish Liberal, Guy Verhofstadt. French Socialist, Rudy Demotte, has been appointed Minister of Economic Affairs. The new Finance Minister is the French Liberal Didier Reynders, while the new Minister of Health, Consumer Protection and Environment is Magda Aelvoet of the Flemish Green Party. ........................_.................................................._........................ ....._.........................._......,...,.. ~..................................._.............................._........... GERMANY LEGAL A German smoker this week filed a-lawsuit with the Regional Court in Hagen against the German affiliates of Philip Morris and R.J. Reynolds Tobacco. The suit was filed on behalf of lung cancer patient Dieter Kuehn by Burkhard Oexmann, a lawyer who specializes in medical law. Kuehn alleges that the Page 5 of 7

_ ......................._....._............._............ PRC INDUSTRY The China Daily reported the government has tightened controls on representative offices for foreign tobacco companies. According to the rules laid out in a joint circular issued by the State Tobacco Monopoly Administration, the Ministry of Foreign Trade and Economic Cooperation, and the State Administration for Industry and Commerce, only companies with an average of more than USS10 million in cigarette and cigar exports to China over the past two years would be allowed to set up a third local representative office. In addition, only firms with authorized technical cooperation with domestic cigarette makers would be allowed to set up more than two offices. Promotional activities by foreign tobacco firms would also receive closer scrutiny. ..........................................._......................... ..... .....~.._..... _...... .... _.... _................. ....... ............... .._...._.... ...... _................................................ _........ HEALTH ARTICLES The Committee on Healthy Lifestyle took a full-page advertisement urging women smokers to quit in the July 4 Sunday Times. The advertisement ~ claimed smoking harms complexion, fertility and children. .... P......._- ......................_............G ..._..._...._....._....................................._....._................_.................... ........................................................................ UBLIC SMOKIN TI representative attended a meeting for reviewing the draft Smoking Hazard Protection Law amendment called by Department of Health on July 14. Industry positions were presented and discussed. DOH said it make its conclusions after more meetings. ..................._......................._................._..._......._........ ..._.... _.... _...... ......... ....... ..................... ....... ....... ....... ....._...._...._...._.......... _...............- INDUSTRY, RETAIL Small stores selling cigarettes or alcohol without a license may be reported and penalized. The Ministry of Finance will soon demand tax arrears and fines be collected on the grounds of omitted income tax filing. Customs Excise & Tariff Services reported that since late May 1998, 65,258 cases of confiscated contraband cigarettes have been destroyed. .................................................................................._....._...._....._ ...._........_......_...._..._......... THAILAND FISCAL POLICY In an effort to end the nation-wide confusion over the provincial tax introduced in May, the Ministry of Finance announced on July 13 that all local cigarettes produced and sold by the Thailand Tobacco Monopoly will have the same price throughout the country from August 2. Originally, consumers buying local cigarettes from outside of Bangkok had to pay an additional one baht (US 2.7 cents) per pack. Tax collection procedures and differing prices of cigarettes between provinces created confusion among consumers and the industry. It is likely the new measure will help stop the flow of cheaper cigarettes from one province to others. However, the measure will produce little overall improvement in Thailand's confusing and arduous tax collection procedures. CEMA CAMEROON _ ....IN..............................._...._......_.................................................. .......... .. ...... ............... _..._..._..._..._........................................ __..._..... PACK TEGRITY A ministerial working group presided over by the Ministry of Health announced a new law concerning the printing of HWL on cigarette packs. The law will be promulgated soon and be effective from January 2000. CEMA PRESS COVERAGE, LEGAL N The Engle verdict received coverage in all key markets, much of it a straightforward reporting taken from the~ wire agencies or American Crt correspondents. In some markets, such as Poland and the Czech Republic, the U media raised the issue of whether a similar suit could be filed locally. V 0 $ -P. Page 2 of 7

......... ......... ............ ............ ..... ...... ............... ..:.......... ~._K...._F...__ ~.._..-..u___...._........._...__........... ....... _.._:..._........ tobacco companies failed to warn about the "addictive effects" of nicotine and other substances in tobacco. He is demanding DM 100,000 in compensation for pain and suffering. ...UBLIC ._........................._.........__....._............_.~......_..........,.......:...._......... ................__...........................................................:::............ GERMANY P ................... RELATIONS Philip Morris Germany sponsored a trip for a group of German Journalists to the Karlovy Vary International Film Festival in the Czech Republic, which is sponsored by Philip Morris TABAK a.s. Among the participants were representatives from the leading Berlin newspapers BILD, Berliner Morgenpost and Die Welt. ITALY INDUSTRY ' On July 8 ETI submitted to Assotabacco's President, Renzo Patria, a formal request to officially adhere to the Association. A board meeting of Assotabacco is scheduled for the last week of July to examine and approve ETI's request. ......................................................................_....__...._.,...,,........... ................~.........................~..._...._................................................ ........................,,. ITALY PUBLIC RELATIONS During the weekends of July 2-4 and 10-11, PM hosted a total of 60 VIP guests at the Spoleto Festival, including representatives of the ministries of Finance, Health, Foreign Affairs, Interior, Transportation and EU Policies. Representatives of other social and economic institutions also attended. All guests were invited to the performance of a dance group supported by PM and to a dinner with the artists and the organisers of the festival. ............._......................._...................................................._....._... ............................................~...............................:................._..... ...........__._...._..._ NETHERLANDS MARKETING On July 6, Holland's Council of Appeal confirmed a verdict by the country's Advertising Code Committee's that "switch & sell" is allowed in a tobacconist store. Philip Morris had filed an appeal in June 1999 against the decision by the Committee. Philip Morris believed that an ad hoc and very infrequent occurrence of switch & sell outside the tobacconist channel could not be perceived as out of line with the Code for Tobacco Advertising. A member of the non-smokers association CAN made the original complaint. NETHERLANDS PUBLIC SMOKING, MARKETING, YOUTH Dutch parliamentary fractions have filed their preliminary positions and questions regarding the draft proposal for the so-called Tobacco Law I(TL-l). The main aspects of TL-I are a legal framework for (future) marketing restrictions, the minimum selling age of 18 year, smoking restrictions in public places, specific sales bans and a ban on outdoor advertising. The parties agree on further activities to discourage smoking. The Minister of Health is likely to provide parliament with written answers to the parties' question in August. This will lead to discussions within the Select Committee on Health, followed by plenary decision-making, which will most probably take place in the fourth quarter of this year. ............._..........................._.__............_...r_........_....._..........:..........: .._....._..........._....._...._.,.................................... NORWAY PACK INTEGRITY Norway's Health Ministry has asked the country's Tobacco Damage Board to look into the possibilities of printing cigarette ingredients on packs, similar to the ones detailing tar and nicotine content. According to the "Dagsavisen" newspaper, the Ministry says the current rules are insufficient and has asked the Board to present proposals for new rules by September 1. The proposals will then be subject to a hearing. ..._........._....... .......................................................:.....___...._..............._............... _..,_......_.........._........................_.........:..................._................... SPAIN MARKETING, RETAIL, YOUTH A Spanish Royal Decree containing the Tobacco Market Regulation has been published in the Official Journal on July 13, 1999. It includes the statute of Page 6 of 7