The U.S. government is backing away from its support for tobacco exports, but it's a hard habit to break.

The exquisitely appointed anterooms leading to the secretary of State's office are a mix of 18th century antiques, crystal chandeliers, oil paintings of past envoys and carved moldings in the shape of tobacco leaves, blossoms and seed pods. It gives new meaning to the term tobacco lobby.

The country's major tobacco companies, working as a "tobacco heritage committee," helped finance the transformation of what was a '60s-modern reception area into seven elegant adjoining rooms, known collectively as the Treaty Room. Just inside one of the teal-and-cream colored rooms, a framed commemoration notes appreciatively "the generous contributions" of Philip Morris U.S.A., R.J. Reynolds Tobacco Co., United States Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Inc., the American Tobacco Co., and Liggett & Myers Tobacco Co.

"We find it most appropriate," the tobacco companies said in a 1986 State Department brochure unveiling the Treaty Room suite, "that agreements between the United States and other nations may be signed amidst decorative details and memorabilia of the commodity which has major significance and importance in the diplomatic, commercial and agricultural history of our country. ... Tobacco is intimately and historically associated with American diplomacy," the brochure noted.

Never was that truer than in the mid-'80s and early '90s, when Big Tobacco and the U.S. government joined forces to pry open markets that effectively had been closed to U.S. cigarettes. In that time, the Office of the U.S. Trade Representative invoked Section 301 provisions of the Trade Act - which allow the United States to combat unfair foreign trade practices - at least a half-dozen times against Japan, South Korea, Thailand, and Taiwan, ultimately succeeding in the removal of import restrictions affecting American tobacco.

The close working relationship overseas between Washington and Big Tobacco changed early in the Clinton administration, which snuffed out the aggressive promotion of tobacco by the USTR and formed an interagency task force, in late 1993, to formulate a more-coherent tobacco policy.

But five years later - despite some progress on the domestic front - U.S. policy on tobacco overseas is as clouded as ever.

Comprehensive tobacco legislation in Congress failed in the summer of 1998, after a successful lobbying campaign in which the industry spent $40 million in issue ads, according to a study by the Annenberg Public Policy Center at the University of Pennsylvania. And the November 1998 tobacco settlement with the states placed no restrictions on tobacco's overseas operations, where profits are booming even as sales at home decline.

The only laws prohibiting U.S. government assistance to tobacco overseas come in the form of annual amendments to the Agriculture and Commerce-State-Justice appropriations acts - subject to the will of Congress and whoever controls the White House. Even then, the restrictions allow for government assistance in certain international trade disputes, and no law prohibits the promotion of tobacco as a cash crop in overseas aid programs, which increase the supply of tobacco bought by the major purchasers - most of whom are American.

"Its hypocritical, to say the least," one economic officer said of the current tobacco policy.

The Agriculture Department has been prohibited since 1993, through appropriations amendments, from promoting the sale or export of tobacco products. Two years ago, as states were negotiating what ultimately became their $246 billion settlement with the tobacco industry, Congress expanded the ban on U.S. government aid to tobacco abroad through an amendment to the 1998 appropriations bill for the Commerce, State, and Justice departments, authored by Rep. Lloyd Doggett (D-Tex.).

"It bothers me that we want to stop American kids from smoking, yet we don't seem to have the same degree of concern about Asian or African kids," Sen. John McCain (R-Ariz.), a supporter of the measure, said at the time.

The Doggett amendment was originally intended to get the government out of the overseas tobacco business altogether. But the industry - which had contributed more than $30 million to Capitol Hill lawmakers and their national party committees from 1987 to 1996 - succeeded in getting an exception tagged onto the end.

"None of the funds provided by this Act shall be available to promote the sale or export of tobacco or tobacco products, or to seek the reduction or removal by any foreign country of restrictions on the marketing of tobacco or tobacco products, except for restrictions which are not applied equally to all tobacco or tobacco products of the same type," the Doggett amendment said.

That exception referred to instances where different restrictions on tobacco applied, based on country of origin, and created the opening for U.S. government intervention in cases where countries' policies were deemed discriminatory.

Equal Access to the World Market
"Given that tobacco use will be the leading global cause of premature death and preventable illness early in the 21st century, there is a need to distinguish between protectionist policies and legitimate health-based actions, so as not to undermine other countries' efforts to reduce the consumption of tobacco and tobacco products and improve the health of their citizens," said subsequent guidelines drawn up by officials from State, Commerce, Agriculture, Health and Human Services, Treasury, and the Office of the U.S. Trade Representative.

The guidelines, dispatched to all diplomatic missions in February 1998 and again in February 1999, encouraged posts to assist and promote tobacco-control efforts in their host countries and repeated the prohibitions on promoting the sale or export of tobacco or tobacco products or seeking changes in national laws regarding tobacco. But - working from the tobacco industry-inserted exception - they also specified that "discriminatory"national laws, ones deemed protectionist, were fair game for attack.

"The U.S. government will continue to seek elimination of discriminatory trade practices and will strive to ensure that U.S. firms are accorded the same treatment in a foreign country as that country's own firms and firms from other countries," the guidelines said. "The overall objective of this policy is to ensure equal access to a shrinking global market for tobacco."

That conflict between trade and health and the lack of clarity about what constitutes discrimination in a global market that is expanding, not shrinking, are some of the worrying aspects of current U.S. policy for tobacco-control advocates.

"The most important thing about the Doggett amendment is that it tells people in the field that this product is not like other products and this industry is not like other industries and that special rules apply. That message, in and of itself, is very important," said John Bloom, a Washington, D.C.-based lawyer and tobacco policy consultant to health groups.

"The problem is once discrimination is raised, health issues are off the table," Bloom said. "Sometimes a policy that appears discriminatory is justified on health grounds." The guidelines also permit diplomatic posts to give the same "routine business facilitation services," such as providing country information, to tobacco companies as they do for other U.S. businesses. When in doubt, diplomats are encouraged to check back with Washington.

But in the two years since the Doggett amendment has been in effect, there have been only four queries, from missions in Pakistan, Romania, Peru, and Taiwan, a State Department official said. There is no monitoring of compliance, and it's not even clear how widely known is the new policy. (The State Department official said he hoped to incorporate the tobacco guidelines into future training sessions for government workers headed overseas.)

"They have been accustomed to a situation where promoting U.S. tobacco was considered a mission not a liability or restriction, so we're trying to turn around a big ship," said Doggett. "I'd be surprised if there weren't some assistance going on somewhere."

AID and the Tobacco Farmer
Malawi is an impoverished country in southern Africa and an example of what fell through the cracks in U.S. tobacco policy abroad.

One of the least economically developed countries in the world, Malawi had a long history of growing tobacco. But for years production of the country's most lucrative export was concentrated in the big estates of the country's elite. The approximately 2 million smallholder farms (less than 2 hectares/5 acres), which account for most of Malawi's agricultural land, were generally barred from growing and selling their own tobacco crops.

Restrictions on smallholder farms growing their own tobacco were lifted in the early 1990s. And after a new government was elected in 1994 - following Malawi's first democratic elections in 30 years - smallholder production of burley, the easiest and relatively cheapest type of tobacco to grow, took off.

But U.S. officials in Malawi were worried that a post-election economic crisis threatened the country's nascent democracy and urged, government documents show, that "significant steps be taken to increase incomes, especially in rural areas." So in 1995, the U.S. Agency for International Development began implementing a five-year plan, whose "Strategic Objective Number One: Increased agricultural incomes on a per capita basis" included the goal of increasing the share of burley tobacco produced by smallholder farms from zero in 1990 to 40 percent in the year 2000. Other goals included raising real per capita incomes for smallholder tobacco producers from $153 in 1991 to $278 by 2000 and increasing the percentage of women smallholder farmers cultivating burley tobacco to 45 percent by 2000.

USAID hired Agricultural Cooperative Development International, a nonprofit association headquartered in Washington, to implement the "Malawi 2000" plan, which it did through its subsidiary in Malawi, the Smallholder Agribusiness Development Project. SADP's goals were to improve smallholder returns on sales of their crops, to support greater self-sufficiency through improved business know-how, and to promote collective action through commercially sound farmer-owned associations.

In the summer of 1997 - as Doggett was introducing his first legislation to curb tobacco overseas - SADP was helping Malawi's 12 burley tobacco farmer associations and two coffee cooperatives form the National Smallholder Farmers' Association of Malawi (NASFAM). The same year, SADP organized the Smallholder Tobacco Transport Program to help farmers get their tobacco leaf from the field to the auction floor. At the end of the tobacco season in October 1997 - 23 days into the first Doggett ban - the amount of smallholder tobacco sold at auction was 31 percent higher than a year earlier, ACDI's 1997 annual report said. In its 1998 annual report, ACDI said that tobacco earnings for NASFAM members on the auction floor in late 1998 were 56 percent higher than in 1996.

NASFAM is the only organization representing smallholders in Malawi and has nearly 40,000 farmers, who grow burley tobacco and other crops. (In all, according to U.S. agricultural reports, about 150,000 smallholder farmers in Malawi now grow burley tobacco.) The USAID contractor created a "comprehensive data storage-retrieval system for tobacco marketing," according to its 1998 annual report, and most of the field reports and publications generated by SADP/NASFAM have focused on tobacco farming and marketing.

USAID's programs slipped through the Doggett ban on government promotion of tobacco overseas simply because the agency's operations are funded by different legislation. But the contrast between the guidelines' intent and USAID's tobacco programs stirred controversy within the agency in Washington and in Malawi, where tobacco was viewed as a viable cash crop for the country's poor farmers.

Under pressure, USAID issued its own new policy on tobacco last March, saying the agency would halt its support for growing tobacco overseas by the end of 1999. "USAID will not support the growth of tobacco as a cash crop nor will it support agribusiness activities contributing to tobacco production, promotion, and use," said the memo from then-USAID administrator Brian Atwood. (Tobacco-control advocates wonder what would happen to that "policy" under a different White House.)

USAID's Africa bureau, in response to questions, said the Doggett ban did not "legally apply to USAID," though it had "made every effort to respect the intent of the legislative language related to the Doggett amendment." It added, in its statement, that the USAID mission in Malawi "accelerated its own efforts to disengage from assistance to tobacco production and succeeded in stopping all financial assistance before the end of calendar year 1998."

In February 1999, NASFAM - the USAID-created association of farmers - ran an ad in the Malawi newspaper, The Nation, calling for tender offers to transport association members' tobacco to auction.

And Emmet Murphy, Africa project coordinator at ACDI, the USAID contractor, said its Malawi operations are fully funded through October 2000, but that the approximately $5 million phase one ended in October 1998.

Given that USAID's new tobacco policy was drafted after the agency said it had stopped all assistance to Malawi's tobacco program, it was not clear what other countries had USAID tobacco programs. Agency officials did not answer that question, despite three queries.

The "Hungry Season" Grows
The legacy of USAID's program in Malawi is mixed. Production of burley, the second most popular type of tobacco, has increased - from 58 percent of all tobacco grown in 1990 to 80 percent by 1996, according to the U.S. Agriculture Department's Foreign Agricultural Service. Real per capita incomes for smallholder tobacco producers have also increased, from $153 in 1992 to $255 in 1997, according to AID's 1998 funding request to Congress. But prices for tobacco, which accounts for more than 70 percent of Malawi's foreign exchange earnings, have fluctuated wildly the last several years. The Malawi kwacha (43 kwacha equal $1) has been devalued nearly 50 percent since 1997, and the government had a 2 billion kwacha deficit last year, according to local news reports. The "hungry season," which refers to the period when there is not enough food for Malawians, used to be about three months but is now much longer, by some accounts twice as long, forcing the government to pay high import prices for maize, a staple of the country's diet. Malawi's agricultural woes have been exacerbated by drought and farmers defaulting on high-interest loans for agricultural inputs, such as fertilizer.

Frank Giarrizzo, an American who has worked in Malawi for 10 years and runs his own agricultural development program there that USAID has not funded, has been a vocal critic of AID's support for tobacco. He contends that farmers have converted land to tobacco they once used for growing maize and diverted precious, and costly, fertilizer from food crops to tobacco.

"The simple message I am trying to put across is that this is a donor-managed famine caused by an unholy alliance of the tobacco industry and the Africa Division of USAID," Giarrizzo said.

USAID insists its programs have helped, not worsened, the plight of Malawians. And, despite the five-year plan that called for a 40 percent increase in the number of smallholder tobacco farmers, an agency official said that AID's program never focused on tobacco, adding, "I don't think we told them to grow that (tobacco). That's what they wanted to grow."

Those involved in USAID's Malawi program say it has begun focusing on other alternative cash crops, such as coffee, cotton, and chilies and spices - a contention supported by future plans outlined in ACDI's latest annual report. But a 1998 USDA report on Malawi noted: "The dominant crops are only two - maize as the food crop and tobacco as the cash crop." ACDI received a $3.5 million, two-year grant extension from USAID through October 2000 to try to make NASFAM sustainable and to persuade farmers to grow other cash crops, Murphy said. But he conceded that it would probably take years to convert tobacco farmers to other crops and that the choice was ultimately theirs.

Rep. Doggett called USAID's support for tobacco "outrageous."

"No directive from Congress should be necessary for AID to promote public health instead of tobacco-related death and disease," he said. "AID should long ago have ceased encouraging the production of any type of tobacco."

The Malawi example illustrates the need for comprehensive tobacco legislation, said Doggett. "This policy should not be dependent on the annual appropriations process and the changing tobacco policies of different administrations," he added.

The Battleground Shifts
Robert Kaplan, director of corporate affairs for Philip Morris International, said the Doggett amendment had had little effect on company operations. "To my knowledge it hasn't put a crimp in things." Philip Morris said in its latest annual report that in 1998 international tobacco income topped $5 billion for the first time, a 10 percent rise in income over the previous year.

Indeed, U.S. government action may be too little too late. The move toward globalization has put the real power in the hands of international bodies, such as the IMF and World Bank. "I don't think the (tobacco) companies need U.S. government pressure that much anymore," said Greg Connolly, director of tobacco control at Massachusetts' Health Department, one of the United States' leading tobacco-control advocates and an adviser to the World Health Organization. "The liberalization of world trade gives them a number of tools. The whole privatization issue is critical."

Thailand is a case in point.
Tobacco-control advocates have long argued that the entry into previously closed domestic markets by multinational tobacco companies, with their aggressive advertising and marketing campaigns and sophisticated denials of the health hazards of smoking, results in increased cigarette consumption.

A 1996 study of 10 Asian countries by a University of Illinois economist and a Thai public health professor is the most often-cited empirical evidence of that. Using a controlled study of country data, Frank Chaloupka of Chicago and Adit Laixuthai of Bangkok showed that cigarette consumption increased nearly 10 percent in those countries - Japan, Taiwan, South Korea, and Thailand - where trade sanctions were threatened under Section 301 of the U.S. Trade Act in order to abolish import restrictions on American cigarettes. "The opening of once closed Asian cigarette markets to U.S. cigarettes had a positive and significant impact on per capita cigarette consumption," the study said.

Of the four, only Thailand took its 301 battle with the United States to GATT, which ruled the import ban violated international trade but upheld the Thai government's right to use high excise taxes and advertising bans to restrict cigarette supplies. Thailand and the United States later agreed to allow U.S. cigarette imports, but subject to the same tough restrictions that applied to the state tobacco monopoly.

Now Thailand's tobacco control is again being challenged, this time by the IMF. As part of the fund's bailout following the Asian financial crisis, Thailand is being required to privatize state-owned monopolies, including tobacco.

In a Dec. 3 letter to Michel Camdessus, managing director of the International Monetary Fund, 17 members of Congress urged the fund to change its policy on privatizing state-run tobacco operations and keep them out of the hands of multinationals.

"Whatever the merits of privatization of other sectors of the economy, tobacco represents a grave public health menace that must be treated differently," the letter said. "The experience in opening Asian tobacco markets to foreign imports illustrates what is at stake."

In reply, the acting chief of IMF's public affairs division, Bruno Mauprivez, wrote that the fund did not believe that "privatization of state-owned tobacco companies, per se, is a major cause of increased tobacco consumption."

He said it should be left to individual governments to regulate cigarette consumption through taxes, advertising bans, and educational programs and suggested that "by divesting the government of the ownership of tobacco monopolies, its hands may be far freer to pursue such policies."

That line of reasoning is being considered by some in the World Health Organization, which last year listed eradicating smoking and malaria as its two main global objectives. However, most tobacco opponents scoff at the notion that Big Tobacco's sophisticated marketing engine won't steamroll local attempts at tobacco control.

"It's like riding a streetcar versus a Mercedes-Benz," Connolly said, "Philip Morris being the Mercedes-Benz."

Maud Beelman is director of the International Consortium of Investigative Journalists at the Center for Public Integrity, in Washington, D.C. Zoë Davidson was an ICIJ researcher.