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FROM PHILIP MORRIS SUCES 87.29.1992 16142 To: From PHILIP MORRIS SERVICES INC. ouBAI - uJ1.E. YNTER-OFFICE CORRESPONDENCE P. 2 Mr. Harald Sohadol ONe: July 29, 1992 8isharah G. saroudi xg]; THREAT AF XCL REDUCTIONS IN THE OCC C.C.: SJCt CLN, .788, 2tHO • Qatar will officially implement the 12 and 0.8 T6N limits as of 1.9.1992 and will therefore be the last CCC country to enforce the•Arab Gulf States Health Ministers Council Resolution No. 4 of the 20th Coriferonoe (January 1986) which prescribed these limits. The dates of implementation of the current TSN regulations in the other OCC countries are outlined in the attached chart. proqressive KCL reductions have been one of the favourite anti-smoking measures of the cCC Health Ministers council since its inception. In adopting the most restrictive T&N levels in the world, the OCC countries are keen on assuming a lead position on this issue internationally. in 1990 and 1991, the•CCC Health Hinisters Council Bureau recommended that member countries "consider reducing T&N limits to the lowest possible level". By virtue of its strong professional relatianship with the Council's Secretary General at the tis-e, PK was able to block these recoamendations from being adopted as Health Ninisters council resolutions. it was always pointed out to Area management that the Bureau's recommendation for further MCL reductions remained on record and could be revived at any moment. The OCC Health Ministers Council Anti-soaokinq Comasittee which will most on October 27th, for the first time in more than two years,~wili discuss and review "ynembers' views on reducing maximum allowable TaN deliveries below their current levels". NCLs Linkaae with 180 Tolerancgg and 1jew 190 Ciaaret&gXgjtinQ Standaa'ds The MCL issue in the OCC is strategically linked to two related issues, namely testing tolerances and the implementation of new Ys0 cigarette testing standards. This is because: - Anonq the three countries that currently test imported cigarette consignments for compliance with the 12 and 0.8 mg T&N limits, namely Saudi Arabia, Kuwait and Qatar, only one, Kuwait, adopts and implements in practice the ISO prascribed tolerances of +/- 15-20 t. Saudi Arabia recoqnised these tolerances in 1990 with the adoption of Saudi Arabian Standard $76 "Ciqarettes - Samplinq" which is fully based on ISO 3846 of the same title and incorporates these tolerances, but does not abide by them in practice, while Qatar's cigarette testing lab recognises the need for tolerances, but will not initiate any change in national standards to adopt them. 2501052295 .../z

FROM PHILIP MORRIS SVCES 07.29.1992 16t43 P. 3 2 hs a result, px1s full flavour brands ars produced with deliveries that comply with this zeero-tolerance situation such that each and every oigarQtte imported to the GCC would not wh*n tested yield deliveries above 12 and 0.8 mg. This has entailed avorage deliveries of 9 and less than 0.7 my on HLR. The especially low "tar" deliveries ars caueed by Jhe particularly restrictive limit on nicotine, coupled with the lack of tolerance. Th.* statutory limits of 12 and 0.8 mg in the CCC are abnprmal and do not recoqnise or take into consideration the relationship that exists between nicotine and "tar" deliveries. In ahort, it is not possible with current cigarette design to produce a cigarette that would comply with a zero tolerance fl.8 mg limit on nicotine while delivering 10 mg "tar" (the maximum "tax" delivery that would not violate the zero-tolerance 12 mg limit). ' The low "tar" delivery on MLR in the CCC is therefori driven down by the restrictive limit on nicotine. Ideally, PN would be able to produce a higher "tar" deliv@ry IKLR (within the our0Qnt "tar" limit and zero tolerance) if there were no limits on nicotine. To remove this restriction on "tar" delivery would require that the statutory MCLs be applied to "tar" only. In September 1991, ISO published revised standards for cigarette testing. The development of these standards, which 'arose from the impetus of "1992" in Europe, particularly the requirement for on-pack "tar" and nicotine labelling, was prompted by the heed to achieve parity of yields among the various procedures for measuring "tar" and nicotine throughout the world. When implemented th.y will lead to improved precision both within a single laboratory and between laboratories in different countries. They will aiso lead to a reduction in anQAsNred "tar" xields for manv oountrie .!includina those in the CCC. The major practical consideration in the adoption bf the new ISO standards is modifications to smoking machines to eeaet new air flow control criteria. Previously this has been ill-defindd and difficult to check. Adjurtnent and regulation of the airflow hAa beon a major factor in the elimination of differences between existing smoking procedures. The rotro-kits for the modification of smoking machines are now available from hiltrona. These retro-kits ars the ones that YtETA agreed at the last meeting to donate to SASO lab to enable them to adopt the now standards. It is obvious from the above that the recognition and adoption in practice of ZSO tolerances in the interpretation of T&N test resolts in the CCC coupled with the adoption and implementation of new 180 #tandards, would enable PM to increase (within present statutory MCL limits) the "tax" targets of its full flavour brands in the CCC or to comply with reduced statutory limits for TO of 10 and 0.8 mq, without any change in the product. 2501052296 .../3

FROM PHILIP MORRIS SVCES 87.29.1992 16e44 P. 4 0 01jectives .. 3 Prevent reductions in xCLS below the current levsls. Qecurs gains in the measured "tar" yield within curXent or future 1tCLs through the adoption of new ISO testing standards. Secure the adoption of 180 tolerances in the interpretation of "tar" and nicotine test results and their implementation in practics in all CCC countries that test cigarstt.s. Seek to restrict limits on deliveries to "tar" only, or keep the level of nicotine intaot should P!M and the Industry be forced into a compromise. As a fall-back opt for a slight reduction in the "tar" ceiling. Backaround and Current status PM's success in 2990 and 1991 in defeating proposals for MCi, reductions was attributed mainly to its good relations with Dr. dalal 'Ashii Executive Director of the Health Ministers Couna3.1, who was fairly amenable to PN's arguments against further tobacco restrictions, but who has since stiepp.d down and was replaced by Dr. Abdul Rahman A1-8uwsilim, Undersecretary of the Caudi Ministry of Health. The professional relationship with Dr. Ashi took years to develop and it was not possible over the p4st two years to replicate a similar relationship with Dr. Al-Suwoilim, who in our first meeting with him seemed quite resolute in his anti-tobaaco stance. PM's good working relationship with Dr. Abdul Wahab Al-Muhaideb, Assistant Undersecretary of Health in the UAE, was also instrumental in blocking the proposal for lower tsCLs. At the January 2992 oCC Health Ministers Conference which was held in Abu Dhabi, the t1AE opposed NCL reductions based on arguments provided to Dr. Al-Ituhaideb by PH. At a recent meeting with Dr. A1-liuhaideb intimated, howevsr, that the uBs is under increasing pressure from other GCC countries' representativps at regional health forums because of its "liberal and permissive position" vis-a•vis tobacco companies and their activitiss. He blamed ths current situation on tobacco companies' failure over more thaft two years to "reciprocate responsibly" to the government's and the Health Ministry's policy which as he put it "recognisss and endorses free market principles and freedom of choice in smoking" which so far has not included excessively restrictive anti-smoking a+easures. He cited excesses in sports sponsorship, which he views as "targeting young smokers", outdoor advertising, particularly road hoardings, and indicated that no further understanding and assistance can be expected from him on tobacco issues until and unless tangible signs of self regulation among tobacco companies become evident, starting with the removal of outdoor cigarette hoardings on the Dubai-Abu Dhabi road. While proposals on how marketing freedoms in the GCC can be safeguarded against further deterioration will be addressed separately :(action plan 2501052297 9 ../4

FROM PHILIP MORRIS SUCES 87.29.1992 16e44 4 P. 5 will follow in a separate not*), it is important to note that Dr. 1-1-Nuhaideb's potential support on the HCL issua, as well as other tobacco issues (including but not limited to mollifying MM pressure for an increase in duty and continued deferment or avsntual deletion of the requiremnt for month of production on cigarette packs) now hinges on how quickly and effsotively PM and the industry addrsss his concorns. Kev stratM To Prevent Further MCL lkedations W Address the proposed reduction in MCLs with members of the Anti-SmokinQ Conrmittes who are amenable to industry arguments and who s,mbrace a rational attitude on tobacco rsgulations. Attached is a chart which identifies the key players within the Anti-Smoking Coamittee. Encourage individual countries' itoa officials who are opposed to McL reductions to block any attempt to obtain a 4C0 Hoaith Ministers council resolution for such rvductions and provide them with tailored arguments to support their position. strass that very few countries in the world set maximum limits on sa-oks deliveries (the attached table provides a list of th@se) and that current KCLs in the GCC are the lowest in the world. Seek to limit statutory osilinqs to wtaro levels only, stressing the very limited number of precedents in limiting nicotine deliveries. use the ZEC model which only in 1990 adopted a directive setting statutory "tar" ceilings in member countries and which will enforce a maximum "tar" limit of 15 ag by 1.1.1993, and 12 mg by 1.1.1998 without envisioning or calling for any reductions below 12 mg (attached is a copy of the relevant LBC Directive). Detract the GCC Aoalth Ministers council's emphasis from KoL reductions to enforcing complianoe with current MCLs. Emphasiss the fact that non-complying brands continue to enter GCC markets that have cigarette testing labs while those that do not have labs are unable in practice to effectively police and enforce compliance of all brands with current or lower McLS. Raiss the ability to comply aspect of lower KCLs and its discriminatory nature by highlighting the fact that manufacturers who currently do not comply with the 12 & 0.8 mq limits are unable to do so dus to lack of know how and their violation of curront or future lower limits will continue unchecked, thus rendering lower HCLs a discriminatory roquirement that applies to reputable manufacturers. Address the tolerance issue, i.e. the lack of 180 tolerances in the cCC, with health officials and emphasiss that the lack of testing tolerances impliss, in effect, a greater reduction in Kel.s than what these officials are aiming at. 2501052298 .../s

FROM PHILIP MORRIS SUCES 07.29.1992 16145 P. 6 0 0 g Zvoke the consumer choice argument, stressing the availability of a wide rangs of brands on the market with an equally wide ranga of deliveries. Emphasise that consumers, who can be informed through advertising, can make their choices, while limiting their choices may oncourage tampering with the product (e.g. tearing off the filter, turning to non-cigaretta products, including hookah and roll-your-own, whose deliveries can neither be controlled nor tested). Considar using the media and discreetly placing articles that question the wisdom of further reductions in NCLs and health officials policy on this issue which can be summed up as "trying to run b.fore they can walk", namely by aiming at lowar 13CLS whila violation of current Ievals continues. To Pr.oar. 1gr Pos ibls 1dGL_ Reductions - Complste the modification of smoking machines at IIASO°s cigarette testing lab and training of lab technicians to enable them to implsm.nt revised ISO standards for cigaratt• tasting which would secure a,0 ; gain in measured tar. - Ensure that similar modifications are sffactad, independently or with the industry's assistance, in ths two other GCC countries that tast cigarettes, Kuwait and Qatar, to secure the adoption of revised ISO standards and similar gains in measured tar. - Continue to work with SASO and Qatar's speoif ications and testing officials to secure ths incorporation of ISO tolerancas (of +/- 15 to 20 %) in their cigarette specifications and ensure th• adoption of such tolerances in practice. If ISO tolerances are adopted in practice without an amendment of cigarette specifications, obtain confirmation in writing that such tolerances are recognised and enforced. - snsura that the Gulf Standard for Cigarettes that SASO finally adopts contains a clear provision recognising ISO tolerances in the intprpretation of "tar" and nicotine tost results. I look forward to discussing thi with you. Kind regards, 8isharah 0. 8auoudi 2501052299