Tobacco Documents Online

PHILIP MO'RRIS uSiA 1992- 1996 CORPORATE AFFAIRS Pfui'-USA''s Corporate Atfairs objective is to miniimize governmen; intct~ai erice in tiue pioduction and' marketing of cigarettes, and to protect the right of o'ur consumers to~smoke.. During,the plan period, PMrUSA will have to accomplish its volume„share and profit'objectives in an, increasingly hostile socio-politicaf environme'nt. One of the greatestthreats to t'he industry is taxation. Statie excise taxes are forecasito increase overthe plan period betiween17 and 1Q'percent, annually. It is PMLUSA's objective to keep annual cigarette excise tax increases under 7 percent and promote the development of'stable fiscalltax policies which distribute the tax burden equitably. Other major challenges over, the plan period include providing a balancedj accuratie pidture of environmental tobacco smoke (IETS) and preventing marketing restrictions on sa'mpling; POS displays; vending, sponsorships, andi advertising. PM-USA will continue to work with industryy associations, business coalitions, non-profit organizations and grDvemment officials to promote legislation protecting smokers from discrimination by employers. Also, we will work to defeaf anyy legislation mandating product specifications such as 'Yire safe" cigarettes, ingredient labeling or packaging composition. P'M-US~A~CorporatleAffair~s~,go'als fbrthe~ next five years arer Taxation, • Minimize overall rate of excise tax increases.. • Reform legislative ballot process to lirnit'tax initiatives,. • Promote a progressive and equitable tax structure. • Refute myth of "social costs" placed on society by smokers. • Eliminate ad valorem tax systems. Prod uct • Preserve freedom to advertise/promote products. • Demonstrate commitment to market only to adults. • Prevent onerous or burdensome mandated product specifications. Consumers • Defeat or modify state public or workplace smoking bans. • Prohibit employment discrimination against! smokers. • Promote accomrnodation of smokers and non-smokers in public a!ndiprivate sectors. 1

PHIUP'MORRIS USA 1I992- 1996 Marketing and Sales Restrictions The organized anfi-smokingimoverment is attempting to restrict or ban our abilitytbireach existingg smokers with marketing and sales vehicies considered legitimate tools for virtually all other products. :cstricti©iob on advertis:ng„ sponscrship„sarmpling, couponing and sales practices prevent usf,onn maintaining our consumer base, and limit our efforts to increase market-share relative to other cigarette manufacturers. By restricting the indust'ry's ability to use widely accepted marketing and sales techniques, the anti-smoking forces are attempting to reduce our public credibility im selling aa legal product. P'M-USA's goal is to defeat proposed marketing and isafes restrictions ar bans, PMWSA isproactively introducing legislat~ion to prohibit these restrictions, as well as tio estabiish tobacco industry marketing and sales guidefines asstate law. The campany, is also responding to the "youth" issue by developing programs to demonstrate its commitrroentto ensuring that smoking remains an adult practice. - Issue: THE ANTI-SMO'KING1MOVEMENT IS USING FALSE CHARGES ABOUT THE TARGETING OF YOUTH, WOMEN AND MINORITIES TO ADVANCE LEGISLATI'ON TO RESTRICT OR BAN THE MARKETING AND SALE OF CIGARETTES. Strategy: PM-USA will use two strategies to combat! marketingirestrictions: First, we will advance our position that s moking is an adult custom, andlthat PM-USA does not want minors to smoke; and is working in cooperation with re3ailers to prevent minors fromipurchasing cigarettes: Second, we will demonstratie to elected officials, public poJicy decision makers, the media and consurrrers that advertising„ sampling and sponsorship are a form of free speech protectedibythe First Amendment. To increase awareness of companylindustry initiatives we will use PM-USA communication vehicles (PM Editorial Services, Magazine, Advocate and Sfrnoker's Caucus, G1obe), Action Plain: 1992-1994 YoutJt & Smoking • Promote and enforce industry positions on responsible rnarketingiand sales practices: Responsible Living Program (Helping Youth Say No)i Advertising/Marketing Guidelines Responsible Vending Program It's the Law Awareness Program Pass indust'ry age limit (18) in,6 States without limits; • Run:PM-USA Youth Ads and expand presss coverage of PM-USA's "Actions and Initia+ tives" Program. 1992-1994. Youth & Smoking • Sponsor Family C.O:U!R.S.E. Consortium Public Service Advertisements in place of anti-smoking ads.. • Work with state law enforcement groups to develop "Helping Youth Say No" school curricu la. Marketing; Freedorns. 2

11i MORRIS USA 1992 - 1996 1992-1994 • Develop state legal fellowship programs with the American Civil Liberties Union and Washington Legal Foundationto oppose bans or restrictions ('Fieedum of Speech). • Develop Sports Sponsorship Coalition to promoterdefendi corporate right ofsponsor- ship. 1992-1994 • Coordinate with minority business organiza+ tions to demonstrate the economic benefiits of the industry on minority communities.,": • Use PM-USA communication vehicles (PM Editorial Services,, Magazine, A'dvocatie and Srnoker's Caucus, Globe)~to increase aware- ness of responsible sales practicesa • Coordinate with minority interestigroups to counter anti'-smoker's claims on"targeting": Work with our advertisers and advertising associations in developingi grass roots lobbying activities to assist Governrnent Affairs. • Work with the National Conference ofStatle Legislators and other government associa- tions to oppose resolutions on bans and restrictions. • Continue to broaden coalition of free speech advocates and work with other industries "targeted" for marketing bans or restrictions. Long Termi Goals • Counter ASSIST Program in 17 states: - Work with grass roots organizations to divert state health departmenti funds,, equivalent to the amount of ASSIST funding„ to support other health programs (pre-natal care, half-way houses, etc.),. • Rollback Program: Particularly in localities, introduce lagisla- tion to reinstate marketing activities, such as sampling and couponing„ t'hat, have been banned or rest'ricted. Pass state preemption. Sales Freedoms • Develop retailer mobilization program to aid in identifyingiand fightingilocal sales restrictions - particularly vendingiand free standing dis- play bans or restrictions. Work with the National' Conference of State Legislators and other government associations to oppose resolutions o n bans and ire strictions, LongiTerm Goals • Rollback Program: Particularlyin localities, introducelegislation to reinstate sales practices,sueh as free standing displays, that have been banned or restrictedl - Pass state preemption. 3

PHIUP'MIORRIS USA 19'92'- 1996 "Social Costs" Cigarette smoking has been inappropriatieliy associated with a number of adverse social and economic consequences. Productivity losses, absenteeism, rising health care costs and increases in various type of insurance coverages are just a fev:.. The association of smoking withthese'sociai problems has spawned Inumerous antii-smoking ipoiicias. Smokingibans andirestirictions, divestiture of'tobacco stocks, attacks on'the tobacco price support program, segregationsof'smok'ers and privacy infringement are activitibs which~have been promofed in the name of "social'cost" offsetsa Issue: THE ASSOCIATION OF SMOKING AND' ALLEGED HEALTH/SOCIOECONOMIC COSTS IS BEI NiG LEWERAGED BY ANTI-TOBACCO FO'RCESTO ADVANC'E ANTI-TOBA'CCO LEGI'SLATION. Strategy: Educate the media, policy makers and relevant business and civic groups to' create ai truthful, balanced view, of't~he "sociallcost" issue. Action Plan: 1992-1994 • Develop and publish studies: Systematic, external micro-economic models to provide a clear picture of smoking's imp'act on society. Applicability and measurement of'social costs and social benefits to fiscal/tax policy development. The value ofifree~choice in a dernocratic! society. 1992-11994 • Develop studies comparing social fund performance vs. PM and industry as a whole. • Write op-ed pieces in financial publications on dangers of fu.nd mismanagement,ernpha- sizing managiers' fiduciary responsibility. Long Term Goals • Identify andiaddresspoliticallgroups, fiscaVl tax analysts groups and appropriate govern- mental bodies on social costs and the valuee of individual freedoms. • Develop, disseminate and publish editorials on social cost theory. • Write op-ed pieces on various poiidy deci- sions which have incorrectly used social cost theory as a basis for justification. • Sponsor sessions at annual conferences on social costtheory and its application in public policy development. • Co-sponsor symposiums with Centers in Public Policy andiSocioty of Government Econbrnists on social cost theory for legislators andlother government officials. 4

PHIUP MORRISUSA' 1992 - 1996 Accommodation PM'-USA is takling a proactive approachtbsrnoking~bans and restriction bypromofing accommodation programs as the prirnary legislative and private sectioraltiernative. Issue: ONEROUS RESTRIICTION'SA'ND BANS REDUCE THE NUMBER OF ENVIRONMENTS IN WHICH INDIVIDUALS CAN ELECT TO SMOKE. Strategy: Demonstrate to elected'officials; public poliay decision makers, industry; unions, and trade associations that the public supports accommodatiion programs. In addition, bans and restrictions impose costs on the private sector, redUce tax revenue and promote government interference inibusiness, ActioniPianc 1992-19941 • Introduce and market restaurant accomrno- dation program with state restaurant asso- ciations, restaurateurs, and chains. 1992-1994 • Sponsor study of: Costs of work plate bans (e.g; morale; productivity). The fallacy of'costs savings (e,g. health, • Promote building systems approach over source control. • Promote innovative HVAC (Heating, Ventila- tioniAir Coni) Systems. • Develop andlmarket workplace and servic& venue accommodat~ion programs with: National Federation of Independent Businesses American Manufacturers Association International Councillof Shopping Centers Hospitality/Service Associations • Use indoor air quality experts as witnesses, testimony, op-ed and editorial visits to: promote sound indoor air quality programs andldemonstrate the problemiof sick build- ing syndrome. absenteeism claims). - Present results initrade journals. • Publicize PittSburgh Benedurn Project ar1d other innovat~ive indoor air quality technology through journal articles, trade publications, etc. • Implement EPA "Class A" mitig,ationistrat- egy: - Host IndoorA'ir, Quality Workshop wit'h NFIB Foundation and National Chamber Foundation. Develop a business coalition to advocate uniform federal risk assessmea guide- lines. Persuade OSHA to establish acceptable ETS threshold levels for the workplace, Encourag;e~further investigationiof proce- dUral biases in EPA review process~ Long Term Goals • Enact~acceptable ventilation rates inistatee building codes. 5

PHIUP MORRIS USA 1'992- 1996 Taxation Forecasts of state fiscal and economic conditions conducted by the National Conference of State Legislatures and the NationallAssociation of State Budget Officers, as well as others indicate that more than haC the biates are unoer, substantial fiscal ctress. Governors and Iegislators stilllface increasing pressure to provide services and fund escalating infrastructu!re; education and medical' costs. This significant'ly raises the probability of increased cigarette excise taxes which continue to be alrevenue source for legislators seeking to close budget deficits. In additio~n, the Hawaii ad valorem tax systemiplaces more of a burdenion premium priced products.. Issue: STATE LOCAL EXCISE TAX INCR'EAS'.ES RAISE THE RETAIL PRICE OF C'IGARETTES AND CO'NTRIB'UTE TO INDUSTRY VOLUME DEC'LIN!E. Strategy: Defeat cigarette excise tax proposals by participating int'he development stages of'tax ppJicythrough the dissernination of information rto public policy analysts, aswell as executive officers and legislators.. These efforts are designed to cultivate them into reliable and well versed allies. Action Plan: 199'2-1I994 • Develop and publishistwdies on: Bootlegging/cross-border activities. Regressive nature of proposed taxes. Inflexibility/instability of "earmarked" taxes. Progressive solutions to deficit redtuctions.. Efficiency of' localltaxing authority. Wasteful governrnent'prograrms and exces- sive spending. Tobacco economic impact' analysis. Stability of taxes derived via the ballot'vs.t those derived via the legislature. 1992-1994 • Initiate, coordinate and develop grass roots lobbyingiactivities through Smokers' Cau- cus, "Mobilizations", Smokers' Advocate. • Identify and address community, civic andl business groups on excise taxes and tax ballot initiatives. • Publish editbrials on tax developments inefficiency of tax ballot initiatives, gowern, ment waste and regressivity, etc. - Prormulgat'e~ analysis of alternative revenue sources. • Co-sponsor forums and special events to strengthen constituency development: Role of private sector in the delivery of government services and efficient govern- ment. History of'the tax initiative and its impact on development of'fiscal and tax policies.

PHI!UP MORRIS USA 199'2 - 1996'. Anti~-discrimInation and Privacy Increasingly, Ibgal off-the-job activities and lifestyle choices are used as criteria for empibyment: diicisions includingi hiring, promotion and dismissaii Emp1o ,ee privacy rights are vivlated by ernpi'oyer mandates regulating off'work actiivi!lies an:'testing.rr,ec:::,nisms established ily empioyers to ensure compliance with these mandates. Employers argue that these measures are necessary to control costsi including health care benefits a'ndl productivity allegedly linked to certain lifiestylee choices and behavior. Issue: LEGAL AVOCATIONAL ACTIVITIES SUCHI A'S'~ SMOiKIIN,{^a+ UNRELATED, TO JOB PERFOR- MANCE, ARE BEING~ USIED~ BY ~ EMRLOYERS'~ IINi MA'TTERS~~ OF~ HIRING, PROMOTION AND~~ DISMISSAL. Strategy: Demonstrate to elected ofticials and private sectordecision makersthat t'he pubiicsupports individual privacy rights that protect legal, avocational activities. In addition, show thatthe pubiic favors only the use of! job p'erfbrmance criteria for employment decisions. Action Plan: 1992~~-11994 1I992'-1994 in print and broadcast media. • Further develop coalitions with labor unions, ACLU, human resource officials to promote anti+discrimination effbrts. • Demonstrate public support for privacy rights and nondiscrimination. • Use privacy experts for speeches, expert wit- ness testimony incourtcases, legislative/rule making bodies, rnedia:' op-ed, editoriallvisits and feature articles, etc. • Place privacy/anti-discrimination news items • Utilize PM-USA communication vehicles such as PMI magazine, Srmo'ker's Advocate artd Smokers' Caucus to: - Identify aggrieved parties. - Raise public awareness of privacy and dis- crimination issues, - Specifically alert smokers to private/pufj';lic sector infringerments'. • Pass legislation prohibiting, discrimination in employment conditions based on smoking status in a tbt'aI of 40 states. Long Term Goals • Pass anti-discriminatiion legislation in all ;50 states: 7

PFHIUP MORRrS'WSA 11992• 1998 Mandated Product Specifications Through mandatiedlproduct specifications, anti-srrnoking groups are atrtempting to eliminate b'rand competitiveness, increase manufactiuring costs, or ba'n the sale of tobacco products in their present forrncr packaging. Presently, two efforts inithis area pose a significant threa: tc tf,a tubacco iiidustry: 1) "Fire Safie'' Cigarettes: Anti'-smoking,groups allr3ge thatcigarett'es are the most identifiable causes of f ire-reJated deaths in the United States: In 11990, the Moakley Bill was signed into law reauthorizing the Technical Study Group (TSG) fort'hree y,ears to create a standard for measuring cigarette ignition prope'nsity. Ih 119931he TSG will report to Congress on its efforts to create a test tb measure cigarette ignition propensity as well as to examine the feasibility of producing and marketing a'Yire-safe" cigaretrte.. 2) Packaging/Matieria'Is'Bans: With the growth of'environrrlentallawareness in this courntry, the anti+ smoking forces could also seek to banicigarette packaging thatidoes not meet minimum recycled contentreqpirements; or ban certain packaging eiements„such as polypropylene oraluminum-paper laminate which are difficult to recycle or parts of'cig,arettes, such as fiiter TOW, which do not naturally biodbgrade when disposed of. "Fire-Safe" Cigarettes Issue: EFFORTS BY ANTISIvtOKING GROUPS TO MANDATE A' "FIRE SAF'Y-" CIGARETTE COULD DESTROY THE COMPETITIVENESS OF LEADING BRANDS AND INCREASE THE COST QF MANUFACTURlNG C'IGAR'E, I IES.. Strategy:. During the plan period, PM-USA will expand lcoallit ions among the fire prevention community, and public policy makers to diffwse support for"fiire-safe'"'Ibgislation at the state and federal level, as well as build public awareness of fire safety and.preventio'n. A number,offire professionals believe that cigarette-reJated fire's are just one symptom of a more serious problem in the Uhitied'States: the lack of public fire safiety educationiand awareness. This is demonstrated by the fact thati in all categories of fire; the U.S. has one of the worst fire records of'any industrialized nation, including Japan and Germany where the incidence of smoking is as much as twice as high as Uhe U.S. and yetthe incidence of fire in all categories is very'low. Careless srnoking,in the U.S. is also t'he!sixth leading cause of, fire after eloctricalidistribution; incendiary and suspicious fiires, appliances, heating equiprme'nt, other equipment and openrfilaime. Action Plan: 1992 -11994 1992-1994 • Work with National Conference of'Statla Legislators and other government associar tibns to oppose reso'lutionsi • Coo'rdinate lobbyingiactiwities o'n state bills with state fire; police and paramedic organi- zations and'unions. - Feature articles in PM,putblications highiight- ing,significant achievements of fire, police and paramedic professionals. • Sponsor fire-safety awareness prograrns with leading associations representing the fire community (smoke detector use, Exit Drills in t'he Home, Stop Drop and Roll), • Use experts to develop information on costs other causes ofifire and study combustibiiity' of foreign products. Long Term Goals • Develbp database of PM employees who serve as volunteer fire fighters in their communities.