Obama's smoking problem

Malaysia’s government is battling a smoking epidemic that threatens its young people — and it fears Barack Obama’s big Pacific trade deal will make the health crisis even worse.

When the president, a reformed smoker himself, landed in Kuala Lumpur this past weekend for his third stop in a weeklong Asia swing, he visited one of the other 12 Pacific Rim countries hoping to close the Trans-Pacific Partnership, a free-trade agreement that American and Asian businesses value at billions of dollars in sales into new markets.


Following Obama’s meeting with Malaysian Prime Minister Najib Razak, the two leaders addressed a room full of reporters, but it’s not clear whether any progress was made on the trade deal. Najib said Obama “fully understands our domestic sensitivities, and we will sit down and try to iron this out with the intention of trying to work out a deal in the near future.”

( PHOTOS: Obama's trip to East Asia)

However, one thing neither leader talked specifically about during the media event was a brewing tension surrounding the negotiations: the way Malaysia’s health officials fear the deal might sabotage their country’s efforts to fight its smoking problem.

Malaysia worries that it will suffer the fate that Uruguay, Australia and Thailand did in other trade deals: dragged into an expensive, yearslong international legal fight over its right to block cigarette companies from advertising.

When Malaysia’s trade negotiators have pushed a carve-out for tobacco in a section of the deal that would otherwise allow businesses to challenge whether a country’s laws and regulations meet its international trade obligations before an independent panel, the United States has balked and instead called for an approach that Malaysian officials think would leave their country exposed.

“The U.S. government’s proposal on tobacco does not go far enough. It is insufficient to protect the government’s sovereignty to do their utmost to protect public health,” said Mary Assunta, a senior policy adviser for the Southeast Asia Tobacco Control Alliance. “Tobacco companies should not interfere with this, nor challenge governments using the free-trade platform.”

( Also on POLITICO: Obama and the strong leader myth)

Smoking is a raging health problem in the Southeast Asian country of 30 million. Sixty percent of its 21-to-30-year-old population smokes, and nearly half the country’s men average more than 11 cigarettes per day — all of which is running up a $900 million annual health care tab for smoking-related illnesses.

Obama’s visit to the country gave anti-smoking groups a chance to raise visibility around the issue and solicit help from the U.S. president.

“Today, 80 percent of the world’s smokers reside in the developing world, where the tobacco industry is focusing their business, using any excuse including free-trade agreements to challenge legitimate government efforts to reduce tobacco use,” Molly Cheah, head of the influential Malaysian Council for Tobacco Control, wrote in an open letter to Obama.

Cheah urged Obama to make his visit “more significant” than the last time a U.S. president stopped in Malaysia — Lyndon B. Johnson, in 1966 — and “leave behind a legacy in tobacco control for the world.”

( Also on POLITICO: G-7 to impose sanctions on Russia)

The dust-up over tobacco has also drawn broader attention from public health advocates and U.S. lawmakers who say it’s a crystal-clear example of why the trade deal should not give businesses the right to challenge countries’ laws at all. It ranks among the top complaints of Democrats whose opposition already has halted Obama’s trade agenda from advancing in Congress this year.

“All Americans should be concerned with ‘investor-state’ provisions in TPP that allow foreign corporations to mount trade challenges that weaken or dismantle public health or consumer-protection laws,” Sen. Sherrod Brown (D-Ohio) said. “Nowhere is this threat clearer than with Big Tobacco and anti-smoking efforts, which is why TPP must explicitly prohibit trade challenges to anti-tobacco laws.”

Early in the deal’s negotiations, the United States was willing to give Malaysia something close to what it wanted, calling for a so-called safe harbor provision that protected anti-smoking rules. But under pressure from business groups and lawmakers, the Obama administration changed its mind in August.

In place of the earlier approach, U.S. Trade Representative Michael Froman has now offered a more nuanced tobacco proposal. It includes the standard trade deal language that allows countries to make rules to protect their citizens’ public health without running afoul of trade requirements, and it goes a step further by mentioning specifically that tobacco regulations are, in fact, covered under that regulation. Froman’s proposal also calls for countries’ health authorities to meet in case a challenge is filed against one participant’s tobacco laws.

“This proposal will, for the first time in a trade agreement, address specifically the public health issues surrounding tobacco” while avoiding the creation of “a precedent for excluding agricultural products,” Froman said in announcing the U.S. plan in August.

However, the U.S. proposal doesn’t block tobacco companies from making such challenges in the first place — driving Malaysia’s worries that one of those companies could potentially persuade an independent dispute panel to order the elimination of the government’s prohibition against advertising cigarettes, just as those policies appear to be stopping the growth in the country’s number of smokers.

The administration’s effort to find a middle ground hasn’t satisfied public health advocates in the United States either. Former New York City Mayor Michael Bloomberg panned it as a series of “weak half measures” and “a move that would be a colossal public health mistake and potentially contribute to the deaths of tens of millions of people around the world.”

The roster of critics also includes most of America’s state attorneys general.

Earlier this year, 45 AGs complained in a letter to Froman that his TPP proposal isn’t tough enough because it would allow businesses to force governments into an arbitration process — which “the tobacco industry uses as a tool to challenge and stymie legitimate measures.”

They pointed to a Canadian cigarette company’s challenge under the North American Free Trade Agreement to a spate of state laws that came in the wake of the 1998 massive settlement between states and America’s four largest tobacco manufacturers over Medicaid costs caused by smoking. Though an arbitration panel rejected the NAFTA challenge, the attorneys general wrote, it “consumed significant state and federal time and resources” to argue the case.

The tobacco industry, meanwhile, says it’s all much ado about nothing.

“This is a solution in search of a problem,” said Julie Soderlund, Philip Morris International’s vice president of communications.

“Science-based public health measures are already protected by trade and investment agreements,” she said. “To prevent access to justice for certain people and firms will not improve the international trading system, but is rather a double standard that undermines the rule of law itself.”

The broader U.S. business lobby has backed the tobacco industry’s stance, with a twist: They say that tobacco is already covered by trade agreements’ standard language that recognizes countries’ rights to protect human life and that carving out special rules for tobacco would open a Pandora’s box, triggering pushes for other vices, like alcohol, less-than-healthy foods, some medicines and more, to get special mention in this and future pacts, as well.

“Exclusions are unnecessary, and our current system works to protect consumers and address broader public health concerns,” said Tami Overby, the U.S. Chamber of Commerce’s vice president for Asia.

It’s not clear whether the tobacco issue came up when Obama met with Malaysian Prime Minister Najib Razak on Sunday — or how Malaysia, where the tobacco industry makes $2 billion annually in sales, will react if the United States won’t budge on the final deal.

Susan Liss, executive director of the U.S.-based Campaign for Tobacco Free Kids, who has traveled to the Pacific Rim deal’s negotiating rounds and is closely monitoring the talks, said: “I don’t think we know the answer to what the U.S. is going to do.”