Presenter Disclosures

The following personal financial relationships with commercial interests relevant to this presentation existed during the past 12 months:

Hadii M. Mamudu, PhD, MPA

No relationships to disclose

Tobacco Industry, Regional Trade Agreements and Tobacco Control in

Sub-Saharan Africa

Mamudu HM, PhD, MPA; Crosbie E, MA; Veeranki SP, DrPH, MD

American Public Health Association Annual Meeting

Tuesday October 30, 2012

OverviewO BackgroundO Aims of the studyO Methods for this study

O Mixed-methodO Quantitative dataO Qualitative dataO Analysis

O Preliminary resultsO Discussion and conclusionO Future of this research

BackgroundO Globalization of tobacco

O Worldwide diffusion of tobacco useO >1.3 billion smokers worldwideO Increasing usage in low and middle-income countries

O 80% of worldwide usageO Influence of the tobacco industry

O Key facilitators for this globalizationO The natural expansion of tobacco industryO National policies (e.g., the United States)O Policies of international organizations (e.g., World

Bank and FAO in the past)O Trade liberalization

BackgroundO Trade liberalization agreement

O The General Agreement on Tariffs and Trade (GATT), 1947O World Trade Organization in 1994

O Regional trade agreements (RTAs)O Bilateral investment/trade treaties (BITs)

O >4,000 worldwide

O Purpose of trade agreementsO Remove trade barrier

O Tariffs and non-tariffsO Open (closed) markets to trade

O EffectsO Increase tobacco consumption (Chaloupka and

Laixuthai, 1996; Taylor et. al, 2000)

GoalsO To assess the impact of regional trade

agreements (RTAs) in Africa on cigarette salesO Economic Community of West African States

(ECOWAS)O Southern African Development Community

(SADC)

O To understand how tobacco industry used RTAs to expand operation and undermine tobacco control

MethodologyO Mixed-methods Approach

O Quantitative analysis of cigarette salesO Archival analysis of the tobacco industry activities

O Data sourcesO Quantitative

O Mostly unavailableO Index mundi

O Compilation of data from the U.S. Department of Agriculture

O Archival documentsO Tobacco industry documents

O Legacy online library

O AnalysisO Time series-analysis (trends)O Review and evaluation of documents

O About 500 documents

Preliminary ResultsO Regional Groupings: A Galaxy

Source: Yang and Gupta, 2005

Preliminary ResultsO Regional Groupings: A Galaxy

Source: McIntyre and Kalinga, 2005

Preliminary Results

O Source: UN Food and Agriculture Organization

Structure of African Regional Groupings

1960 1980 1990s

West Africa

1966: Customs Union of West African States (UDEAO )

1975: Economic Community of West African States (ECOWAS)

1993: Revised ECOWAS Treaty

1973: Economic Community of West Africa (CEAO)West African Monetary Union (UMOA)

1994: West African Economic and Monetary Union

Central Africa

1961: Bank of the Central African States (BEAC)1964: Economic and Customs Union of Central Africa (UDAEC)

1983: Economic Community of Central African States (ECCAS/CEEAC)

1994: Economic and Monetary Union of Central Africa (CEMAC)

Southern and Eastern Africa

1889, revised 1969: Southern African Customs Union (SACU)Common Monetary Area (CMA)1967: East African Community (EAC) I

1981: Preferential Trade Area1980: Southern African Development Coordination Conference (SADCC)1986: Intergovernmental Authority on Drought and Development (IGADD)

1992: Southern Africa Development Community (SADC)1993: Common Market of Eastern and Southern Africa (COMESA)1993: Cross Border Initiative (CBI)1996: Intergovernmental Authority on Drought and Development (IGADD)1999: East African Community (EAC) II

Preliminary Results

O Economic Community of West African States (ECOWAS)O Chapter 8, Article 35 of revised treaty, 1993

• Southern Africa Development Community (SADC)• Chapter 7, Article 21(3)(c) of revised treaty, 1992

• Trade liberalization in Africa

Preliminary ResultsO ECOWAS

1994

1995

1996

1997

1998

West Africa

1.1 1.4 1.5 1.6 1.7

South Africa

2.6 2.4 2.4 2.4 2.5

Benson & Hedges Sales (Growth – vol. in bn (tid/zbu50a99)

• SADC

Preliminary ResultsO Regional Integration in Africa: Role of

International Organizations

O UN Conference on Trade and Development (UNCTAD)O Initiative for economic development

O Economic Commission of AfricaO April 1998: Lagos Plan of Action

O An initiative of then OAU to promote economic development

O So, what is the TI role in this?

Preliminary ResultsO Tobacco Industry and RTAs in Africa

Regional Trading blocs are expected to be of vital and strategic importance and relevance to our business especially in relation to the proposed clusters in AMESCA . CORA has an important role to play in bringing in advice to the business and I hope you will keep this as one of your major commitments at the Opco level. After all you are the fountains of all political advice and counsel to the companies . You need to collaborate quite closely with [with] your Finance and Company Secretariat departments to determine the course of action in this area .

• February 5, 1996, Letter to BAT Managers in Africa (tid/umj44a99)

Please make a note as to the actual [viabilility] and seriousness of your trading bloc and how you think they will relate to the WTO . Make a note as to whether your country is a signatory of the trading bloc and indeed the WTO .

Preliminary ResultsO Tobacco Industry and RTAs in Africa

Sothern Africa Development Community and Other Trading Blocs

I had a telephone conversation with Mr Richard Manning this morning following the [Worldawre]/ODA meeting held yesterday . The purpose of my inquiry is to get more information on the SADC and other trading blocs . We at BAT are seeking to understand the evolution and development of these blocs in order to be able to take advantage of their growth for our business in the Africa region .• March 1, 1996, Letter to Head of Africa Division of ODA (tid/gmj44a99)

Preliminary ResultsO Tobacco Industry and RTAs in Africa: Priority Regions

There is much hope that with the death of the cold war, ideological and super power rivalry and with the pressure from multilateral agencies, these trade blocs will be forced by circumstances to develop and enhance economic opportunities across borders. One certainty however is that two key elements will influence this trend: the WTO protocol which is staggered in timings and the ascendency of global brands and the power/influence of multinationals. In the end it may be a case of join them or perish and the prediction is that most countries will choose to join rather than perish. Survival at national level being almost impossible in the face of globalisation, most countries will most likely take refuge in trade blocs and in so doing unwittingly find themselves orchestrating globalisation and free trade. For us, the key therefore is to be ready to partake of this opportunity with our international brands - hence the essence of our Company plan vision stated at the outset.

• “Southern and West Africa”

• BAT report: Analysis of “Trading Blocs” (tid/mmb34a99)

Preliminary ResultsO Tobacco Industry and RTAs in Africa: Priority Regions

ECOWAS, with its 16 members from Francophone and Anglophone West Africa is now 23 years old yet seems to have made little if any progress in the area of trade and tariffs . Much seems to have been done in terms of easing travel and migration though . ECOWAS has the objective to establish a customs union among member states by the year 2005 . Again, like COMESA members of ECOWAS do ratify the treaty selectively and individually thus not providing the necessary critical mass that is currently needed . For example Ghana has ratified all the ECOWAS conventions and protocols except three.

• “Southern and West Africa” -- ECOWAS

• BAT report: Analysis of “Trading Blocs” (tid/mmb34a99)

Preliminary ResultsO Tobacco Industry and RTAs in Africa: Priority Regions

Looked at in comparison, it seems evident that SADC, ECOWAS, COMESA andUDEAC are the main trade blocs to plan around . SADC clearly seems to be the most organised, receives the most assistance and advice from the West and is therefore the one about which there will be most optimism. The realisation of SADC protocols in most sectors is timed to happen in the new millennium . There is hope that all the fourteen members will accede to the various protocols on schedule and that SADC will therefore be a reality . The major stumbling blocs seem to be the fear of South Africa's dominant role coupled with its non membership of the Lome convention and on the other hand Mugabe's quite obvious rivalry for leadership of SADC with Mandela. It can be predicted that this is likely to get worse not better once Thabo Mbeki succeeds Mandela.

• “Southern and West Africa” -- SADC

• BAT report: Analysis of “Trading Blocs” (tid/mmb34a99)

Preliminary ResultsO Tobacco Industry and RTAs in Africa: Priority Regions

With the slow emergence of the SADC and COMESA trading blocs, as well aspressure from GATT, a general lowering of tariffs will eventually prevail .However, since most countries fear South Africa dominance of the tradingcommunity, the development will be slow and without a clear blueprint and target for specific tariff reductions . We simply don't know if or when free trade areas or lower tariffs will become a reality. We can, however, avail ourselves of preferential tariffs within COMESA and a bilateral trade agreement between Zimbabwe and Malawi that allows duty free import of cigarettes . In addition, the Lome Convention will continue to offer export opportunities to the EU from Lome member countries (e .g., Zimbabwe) .

• BAT “Southern Africa Area: 1998-2000 Plan”

• BAT report (tid/nad65a99)

Preliminary ResultsO Tobacco Industry and RTAs in Africa: Key Strategies

Overall strategy in West Africa is to consolidate and defend the Group's strong market positions, and particularly to reverse competitor gains in the lower price segments in Nigeria. The contracts with Coralma across Francophone Africa are presenting increasing operational problems and are being reviewed .

• BATs 2000-2002 Plan: Consolidation of markets

• BAT report (tid/vbi23a99)

Preliminary ResultsO Tobacco Industry and RTAs in Africa: Key Strategies

“Factory Rationalisation: There is also an increasing momentum towards factory rationalisation. This is due partly to surplus capacity in some countries, partly to the opening-up of borders as groups of countries from free-trade areas, and partly to the ever-increasing need for greater cost competitiveness.” (BAT’s 1993 report; tid/gvqo8a99)

• Factory Rationalization: “closure of factories and supply the markets from elsewhere” (tid/qqo08a99)

“Africa: Trade barriers remain significant in Africa and there is a low probability that they will be reduced in the short term . With the closure of the Ibadan factory in Nigeria in 1995. There is now no more than one factory in each country.” (BAT’s 1996-1998 Company Plan; tid/zbu50a99)

DiscussionO Factors that limited the attempt to tease out effects

of RTAsO Inadequate and poor quality of dataO Galaxy of RTAs in Africa

O Still, trend analysis shows increase in cigarette sales

O RTAs facilitated activities of tobacco companies

O Possible explanations for how RTAs helped cigarette salesO Factory rationalizationO Consolidation of productionO Economies of scale through larger markets

Future ResearchDeterminants of Cigarette Sales (volume/per capita) <<Fixed-effect models>>

Consumption

Production

Exports Import

RTAs

openness index

GDP Per Capita

Political liberalization

t-1

Intercept

Adjusted R2

F

Acknowledgement Rafie Boghozian-Khoygani, MBA Research Data Manager College of Nursing East Tennessee State University

David M. KiokoCollege of Public HealthEast Tennessee State University

Yi He, DrPHDepartment of Biostatistics and EpidemiologyEast Tennessee State University

Yang Chen, MS Department of Biostatistics and EpidemiologyEast Tennessee State University

Preston Harness, BACollege of Public HealthEast Tennessee State University

THANK YOU!!