Speakine Notes
    for Purdy Crawford
    Chairman and Chief Executive Officer
    IMASCO LIMITED
    "Executive Mess" Lunch at BA-T
    Mondav, Julv 4. 1994 .  . 
    Backo_Tound on the Plain Packaging Debate in Canada
    Plain packaging has been a plank in the platform of the anti-tobacco
    groups in recent years. It is seen as a means of taking the glamour
    away from cigarettes and breaking the link with sponsorships. The
    current Canadian Health Minister calls it "de-marketing".
    As the contraband tobacco market grew and associated societal
    problems worsened over the course of 1993, the federal government
    grudging began to lean towards an economic solution i.e. lower taxes.
    Sensing this, anti-tobacco groups seemed to intensify their efforts in
    late 1993 and the early weeks of 1994. Their thrust was to argue for
    alternatives to a tax reduction as high taxes had been their showpiece
    strategy for several years.
    The Canadian Cancer Society released a research paper in
    November 1993 (and re-released it in January 1994) which
    concluded that plain packaging would discourage young people
    from taking up smoking. A second group released a study
    entitled "Protecting Health and Revenue: An Action Plan to
    Control Contraband and Tax Exempt Tobacco" and several
    news conferences were held by other groups to denounce
    tobacco company sponsorships.
    Despite these efforts to slow the government down, political
    circumstances brought the issue to a head in February 1994. A
    recentiv elected federal government needed to find a workable solution
    to the smuggling, problem and the new premier in Quebec was even
    more anxious.
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    Quebec was hardest hit by tobacco smuggling and lobbying for a tax
    rollback on the pan of the retail trade was very aggressive. Not
    surprisingly the separatist opposition Parti Qudbdcois was "making ha)e'
    on the government's lack of success with the issue and the premier was
    trailing in the polls in an election year. So, as often happens in
    Canada. national unity became a very real factor in an otherwise
    unrelated debate.
    In February, the prime minister announced the tax rollback while
    emphasizing that the government was also sensitive to the concerns of
    anti-tobacco groups. He promised a series of tough new measures
    aimed at reducing tobacco consumption, including the consideration of
    plain packaging by the Parliamentary Health Committee.
    The anti-tobacco lobby knows a political opportunity when it sees one.
    Ken Kvie of the Canadian Cancer Society was quoted in the media:
    "...abs~lutely the best chance we've ever iiad to see the kind of
    meaningful steps needed to control tobacco use."
    The Hearin-os
    On March 24, the Chairman of the Standing Committee on
    Health called a news conference to announce a study and public
    hearings on the subject of plain packaging. The hearings were
    to begin in mid-April and the Committee's report was scheduled
    for late June.
    There was controversy right from the start. After giving a
    mandate to the Committee but before the hearings had got
    underwav, the Health Minister was quoted in the media as
    being committed to introducing plain packaging. This caused
    some oF the Committee members to wonder out loud if there
    was any point in embarking on the study- It also provides a
    clear indication of the kind of uphill battle the industry was
    facing - again disproportionately so because we were i~ the
    post-rollback environment.
    The controversy continued on the opening day of hearings. The
    verv firs: witness, a senior Health Canada official. said he
    personaBy favoured plain packaging but that there was
    insufficient evidence to go ahead at his time.
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    This very useful statement came as a pleasant surprise to the
    industry and it helped set the tone for the balance of the
    hearings. If the Committee's report was more balanced than
    initially expected, the fact that the Health Ministry conceded a
    lack oi evidence was certainly a factor.
    Apart from some initial good luck, the industry's approach to
    the plain packaging hearings has been comprehensive,
    systematic and well executed.
    The campaign was quarterbacked by the Canadian Tobacco
    Manufactures' Council (CIMC). Extra staffing was added on
    an interim basis there were special and extraordinary efforts
    made by employees of the member companies, ourselves
    includeL The strategy was to demonstrate two things: that
    plain packaging would not effect consumption or starting, and
    that plain packaging would have negative economic
    consequences. In my view, they did an excellent job.
    But we had to do more than convince ourselves and there was
    little hope in convincing the Committee which was predisposed
    towards supporting the Health Minister. CTMC
    communications were stepped up both internaRy and externally.
    An internal synopsis was prepared after each day of hearings.
    For broader distribution (politicians, media, industry
    stakeholders and supporters) there was a hard hitting summary
    called Plain Packaging Bulletin.
    In all there were 10 sessions of hearings with representations
    from various government departments, a number of anti-
    tobacco and health groups as well as the tobacco industry, its
    stakeholders and some commissioned experts.
    One brief that drew headlines and ruffled the feathers of economic
    nationalists was the position of Philip Morris and RJR. They jointly
    presented an opinion by Carla Hills which pointed out that trademarks
    and oth--- forms of intellectual property are protected under the North
    Amerimn Free Trade Agreement and the GATT. It created a public
    uproar. and perhaps could have been handled better. but there are
    some indications that the message got through.
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    What Was the Outcome
    It depends upon who you speak to or even which newspaper
    you read. I give you the headlines from two prominent
    newspapers reporting on the same story, on the same day.
    The Montreal Gazette:
    "MPs' panel supports plain packs for cigarettes."
    The Globe and Mail:
    "Plain ci2arette packaj!in2 rejected by House committee."
    In fact, three members of the eleven on the Committee dissented (the
    two Bloc Qudbdcois members and one of two Reform members)
    Here is what the majority of the Committee actually
    recommended:
    1. That the federal government establish the legislative
    firamework required to proceed with plain or generic
    packaging of ;obacco products;
    2 That the legislation be introduced when Health
    Canada concludes its current stua5, on the effecu qf
    plain packaging on tobacco consumption, if the
    results of that study support the available evidence
    that such packqgi~g will reduce consumption;
    3. That the federal government require that plain or
    generic packages be produced in a manner that
    minimizes the possibilhy of contraband products,
    and that the design incorporateprinting and
    packaging technologies that will make duplication
    as difficull as possible~
    The study referred to in the second recommendation is
    expected to be completed by early 1995 and it has obviously
    become very important. The CT~IC, through its president * * Rob
    Parker. will participate in planning the study and will push to
    have its design reviewed by qualified outside experts.
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    The difficulty is that it may not be possible to draw reliable
    conclusions irom such a study, irrespective of how it is designed.
    and we certainlv know what the Health Minister would like to
    do. Tbe risks a re very real!
    Conclusion
    Ultimately it will be the Cabinet that decides the fate of
    branded cigarette packaging in Canada. We knew that all along
    i.e. the Committee hearings were really only a skirmish along
    the way.
    A dilemma of the hearings process is that you necessarily tip
    your hand and there is evidence in the Committee report that
    the government will attempt to 'work around" legal and
    economic problems raised by the industry in any legislation that
    may come forward.
    However, the hearings were still very useful in developing
    industr), arguments, forging alliances with stakeholders etc. All
    of this was done in a professional way and these will be useful
    preparations for the bigger battle to come.
    On balance. we feel that the outcome was about as good as could have
    been expected- Looking ahead, we have to concern ourselves with the
    Province of Ontario which has given itself legislative authority to
    introduce plain packaging. At thefeder-al level, we have some time to
    get ready for the next round. Current thinking is that this should
    include providing the government with credible information to support
    a decision not to proceed. We may also put forward some ideas that
    are actionable by the govemment and stiH acceptable to the industry.
    An example might be an information campaign that wfll help ensure
    that the smoking decision is made only by adults, and only on a fully
    informed basis.
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    BAT Industries document for Legal Services: Health Canada 21 October 1999