NOTE FOR NTR B BRAMUFY (RECE.)- 23 jUN 1992
FRO%f. MR G A READ
Subiect: Consequences for non-92rticipation of
Canada in the R&D Cost Sharine
Agreement.
Follov6ing our discussions regarding the
possibility that Canada may not enter into the
proposed Cost Sharing Agreement, I have attempted
to collect information that may
providt some insight into the background to the
problem as well as sumrriarise some of
the ccnsequences for their non-participation. A
copy of the R&D Cost Sharing
Agreenient is included for information (encl. 1).
Background
A :.-view of the files has identified a
communication entitled 'Document Retention
P,,iicyl dated the 7th March 1990 (encl. 2).
Although this may not be the definitive
document, I have established that it is the
communication used by A L Heard at a
R--search Policy Group meeting for which I have
the views of the Canadians
ex--ressed at the time.
Taerc appeared to be two problems, the first
relates specifically to Dr Pat Dunn,
who seems to have resented the fact that as an
associated company they were being
dictated to as regards document retention policy.
The second more serious point
fFa-tes to item 4 of the attached document that in
essence instructs Canada to
d.-stroy all Southampton R&D documents and related
information after 5 years.
This position was partially resolved by
Southampton recommending that it held
arz~-iival records ofall R&D reports which could
be provided to Canada ifneeded
e.--r the 5 year period. This partly resolved the
position, although concerns were
expressed by Canada that this was in effect an
unwritten agreement that relied on
Southampton as the instigator of the report and
any future Head of Research,
arizitrarily deciding to keep records ofreports as
specified in item 5 ofthe attached
note.
A -s apparent that this became a long running bone
of contention between Canada
and A L Heard which was never Uly resolved and
appears to have been
resurrected by the recent despatch ofthe latest
Cost Sharing Agreement by
Iniustries.
2 Funding Considerations
IT-- Canada currently support two areas ofR&D
activity, 'formula funding'ofthe
Southampton.~.AC programme and funding for the SRG
programme. 71e
Scuthampton CAC programme supports 10 man years'of
effort following
recrganisation of the FRC and BTC. Canada's
contribution for a full years cost
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based cn the turnover formula would be EIOD,426
(11.7%). In the case of the SRG
progr-,.=ne, each of the participating companies
(excluding Brazil) pay an equal
share of the costs which for 1992 are V
1,000/company.
A me=ng has been arranged between R&D and Legal
Department, for mid July, to
review aspects of the SRG prograrnme in respect of
satisfying future Group needs
and indirectly some of the regulatory and
biological work carried out at
South=pton for the Group. One potential outcome
ofthis meeting is a
reco=-.mdation that the SRG funded programme is
increased significantly. The
loss oA-'1TL under this scenario would increase
BATCo's possible exposure.
3. Legalupects
It is my understanding that all of the CAC
companies have been 5ent R&D Cost
Sharing Agreements and it is anticipated that the
document will be signed by all
comp-L-iies including Canada, according to a
recent conversation with Peter Clarke.
As a =arter of interest he clarified the legal
position for me in respect of SRG
acti%i4-!`S should Canada choose not to sign the
Cost Sharing Agreement, my
conc= being that BAT may have been obliged to pass
smoking and health
infor=2,rion to Canada irrespective of any
agreernent. It is forthe Board ofITL to
sads4,-;tsclf that it has discharged its Duty
ofCarc in respcct ofsmoking and health
issues =id BAT does not have a responsibility,
other than a moral one, to pass
infor--=-on to Canada outside of an agreement.
4. Scientific Considerations
(a) Ba:k2round
Fismi-ically ITL have been strong supporters of
Southampton R&D and have
pa:--cipated fully in all programme developments,
progress monitoring and
re-.-,'ew. Traditionally they have had a policy
ofreciprocal information
ex:hange. Their interests have centred around
biological, regulatory and
=c;dng and health matters, with a particular
interest in prograrnmes aimed at
prc,riding information on, and the means to modify
'other noxa'. 'Other noxa! is
a c-,Ilective terms coined by the Froggat
Committee for a class of gas phase
smcke components. ITL have largely adopted the
policy of responding to the
r=mmcndations of the Independent Scientific
Commission on Smoking
(F.-.ggat), and the equivalent bodies in Canada
and Germany, in setting their
R&D objectives. ITL have used the Southampton
fundamental R&D
pr,-gramme as support for this approach in
discussions with the Canadian
Gevernment, and as a consequence programme changes
following the
re-c-ganisation of Group R&D over the years have
left them in an embarrassing
pes.:ion with the Government in trying to present
a consistent position.
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(b) 1TL's Scientific Streneths and Wo-knesses
(i) IM have had a long standing interest in
smoking behaviour including
monitoring and duplication. 11eir smoking
behaviour studies have been
integrated into their consumer studies.
(ii) 17L's senior R&D staffhave a good
comprehension of smoking and health
issues at least within the context of the Canadian
market but are not strong
~n terms of being able to make scientific
judgements in this area,
(iii) Strong in terms ofproduct development but
potentially limited by the
soccialised nature of the Canadian Virginia
products.
(iv) :-11- have made a contribution to process
improvements in the areas of
GLT optimisation, re-drying of tobaccos, blend
analysis and the use of
7 =onstituted tobacco.
On balar.-- it is my opinion there are mutual
benefits to be gained from a continued
R&D re!azonship between Canada and the Group and
Southampton in particular in
view of cur common interest in Virginia products.
In conclusion ifthe identified problems are the
basis of the difficulties between BAT
and ITL it shoWd be possible to resolve these
matters by appropriate negotiation.
a4-1
G A Read
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BAT Industries document for Province of British
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