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    Altria Group Supportive of WHO Treaty

    Company more concerned with Congress considering FDA regulation of tobacco.

    By Alex Laracy

    NEW YORK -- With the United States signing the World Health Organization's global tobacco control treaty earlier this week, Altria Group Inc., the New York parent of Richmond, Va.'s Philip Morris USA, asserts that it is fully supportive of the signing and the treaty process as a whole, but the real issue is that Congress consider FDA regulation of tobacco products as soon as possible.

    "Just about everything in that treaty, from access restriction, to new health warnings, to regulation of terms like 'light' and 'ultra light, ' to anti-smuggling provisions, all of those things are in the treaty," Mark Berlind, legislative counsel of Altria Group Inc., told CS News. "All of those things would be part of FDA regulation."

    The treaty, called the Framework Convention on Tobacco Control (FCTC), embraces core elements of comprehensive tobacco control. It requires ratifying nations to eliminate all tobacco advertising, promotion and sponsorship, with a narrow exception for nations such as the United States whose constitutions may not allow a complete ban.

    Berlind said that once a country ratifies the treaty, it still has to pass legislation implementing the treaty.

    "Signing the treaty is not the same thing as ratifying it," said Berlind. "We don't have any objection to the Senate considering ratification of the treaty, but we hope that the ratification discussion does not slow down the FDA debate."

    While the signing of the treaty indicates that the United States is taking a step toward stricter tobacco regulations, Berlind insists it should not seriously affect tobacco advertising, noting that the Supreme Court ruled only two years ago that adults have a right to see tobacco advertising.

    "The FDA legislation that we're advocating would, among other things, take the advertising restrictions that are in the Master Settlement Agreement, and apply them on a nationwide basis to all manufacturers, even those that did not join the settlement," said Berlind. "Those restrictions already go pretty far in terms of what can be done under the First Amendment, and we don't think there's much more that could be done that would go beyond those restrictions."

    In other Altria news, the company said a cigarette-smuggling settlement with the European Union could reduce its 2004 earnings below expectations.

    The European Commission has accused U.S. tobacco giants of complicity in cigarette smuggling by intentionally oversupplying neighboring countries. Such smuggling is estimated to cost European governments $1 billion annually in lost taxes.

    Altria reached a draft agreement with the EU in April, worth $1 billion over a dozen years. The agreement provides for broad cooperation with European law enforcement agencies to help prevent contraband and counterfeit cigarettes.

    Altria said it expects the charges stemming from the smuggling accord to be about 11 cents per share. The charges are partly offset by a lower expected tax rate.

    The estimate includes an initial payment of $250 million and accruals for payments due on the first anniversary of the agreement.

    By Alex Laracy
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