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Smoke Screen

Someone's getting burned

By Bob Harris

AS PREDICTED here eight weeks ago, the big tobacco companies and their lobbyists have cobbled together a backroom deal to save their hides. And so the various state attorneys general can now return to their respective capitals and grandstand the agreement triumphantly.

Neville Chamberlain did the same thing once. Didn't help.

Yeah, the bad guys have to pour out $368 billion, and they give up billboards, vending machines, Joe Camel, and the Marlboro Man. Cigarette packs will now have scarier warning labels, smoking will be banned from many public places, and manufacturers will fund teen anti-smoking programs.

The headlines sound great, right? Read the fine print.

Annual tobacco-associated health costs are about $100 billion, but the companies will only be paying about $15 billion a year. We're settling for 15 cents on the dollar.

In exchange for the payout, class-action suits will be abolished, and individuals will be forbidden from seeking punitive damages. (That's arguably a violation of the Seventh Amendment guarantee of due process, but nobody cares.)

The best you might do is sue for actual losses, minus legal fees. Almost no one will, and the bad guys know that. The days of tobacco liability lawsuits are essentially over.

The tobacco companies won't pay the settlement; consumers will. The cost of cigarettes will simply rise to cover the expense. They'll lose a few smokers, but the loss will be covered by decreased marketing expenses as a result of the new restrictions.

End of story.

Philip Morris, RJR, and the rest are sprawling multinationals with major cash flow outside of cigarettes. Some stockbrokers consider RJR's Nabisco Foods division alone worth more than the parent corporation's total market cap. Once potential liability suits are removed from the equation, several tobacco analysts anticipate Philip Morris and RJR stocks will rise, possibly as high as 30 percent in the next year.

On Wall Street, crime pays.

The deal requires companies to pay penalties of up to $2 billion if teen smoking isn't curbed. So what? That's loose change to these guys--actually less than the income from addicting new smokers.

And if the bad guys demonstrate that they took "reasonably available measures," an appeal process already codified puts $1.5 billion back in their pockets.

A federal court has already ruled that the FDA can regulate nicotine as a drug. This agreement reinforces that, right? Wrong. Actually, the new deal forces the FDA to demonstrate that decreasing nicotine levels won't create "significant demand for contraband." The FDA simply has no way to do that. So the new agreement actually obliterates the earlier court ruling and prevents the FDA from regulating nicotine.

All five of the majors already make most of their tobacco money overseas, so they'll just accelerate their marketing into developing countries. By protecting the tobacco industry's profits here, the deal guarantees millions of future tobacco deaths in the Third World.

Finally, the GATT agreement gives the multinational tobacco firms the right to sue the U.S. government, simply by calling any new regulations in the agreement they don't like "unfair impediments to trade."

Which means that the few useful legal restrictions in the deal probably won't stick for long.

All isn't lost, however. The deal is really just a rough draft, because liability limitations must be passed into law by Congress. Significant public outcry can still stub out the deal.

Rest assured, however, that Speaker Newt will twist arms until they break trying to get this thing passed.

Why? For one, the two leading soft-money contributors to the GOP were--guess who?--Philip Morris and R.J. Reynolds.

For two, as this space also outlined two months back, the $300,000 bribe--er, loan, sorry--that former presidential candidate and current tobacco flack Bob Dole fronted Gingrich last April corresponds with a $300,000 payment from Dole's employer, tobacco lobbyist Verner, Liipfert, just six days earlier.

The fix is in.

It's a major scandal in the works that the corporate media have so far ignored. (Details are at http://www.goodthink. com/harris/bh.bailout.html.).

What's the alternative?

Simple: no deal.

Let the existing suits go forward. Let discovery proceed.

Let justice be done.

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From the June 25-July 2, 1997 issue of the Sonoma County Independent.

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