LOUISVILLE, Ky. - Tobacco advocates are seething over a new Canadian law they claim will snuff out sales of cigarettes packed with U.S. burley, and they are fighting back to protect their export sales.
They are asking U.S. trade officials to take their complaints to the World Trade Organization, hoping to pressure the Canadians into protecting burley from the tobacco crackdown. They also want to head off the spread of similar laws to other foreign markets that are crucial consumers of American leaf.
Export markets are "absolutely critical" to the tobacco industry, and a spread of similar laws to other countries "could have an absolutely devastating economic impact" on the sector, said Erica Peterson, executive vice-president of the North Carolina Agribusiness Council.
The Canadian law won final approval this month. It is meant to curtail youth smoking in part by banning the sale of tobacco scented with fruit and candy flavours. U.S. tobacco supporters complain that the law overreached to cover American burley, which is laced with flavours to smooth its harsh taste.
"This act is far broader than necessary to meet its laudable objective," several tobacco groups said in a written statement to the U.S. trade representative's office.
"As a result, it will unjustifiably reduce opportunities for U.S. exports of burley tobacco to Canada, and could significantly restrict global exports of burley tobacco if other countries follow Canada's lead."
Tobacco supporters say the law violates Canada's trade obligations and they want an aggressive challenge by U.S. trade officials. They're hoping the issue comes up at a WTO meeting in Geneva in early November.
The U.S. trade representative's office is aware of the issue, a spokeswoman said Friday.
Laura Dalby, a spokeswoman for Canada's Department of Foreign Affairs and International Trade, said Canada's trade obligations were considered as the law was debated. She said that Canada "is committed to respecting its international trade obligations in meeting its policy objectives."
The law doesn't ban tobacco types, she said, but is aimed at "certain appealing additives" in tobacco products. She said cigarettes with tobacco blends have been sold for decades in Canada and are expected to remain on store shelves. But she said tobacco manufacturers "may be required to reformulate" cigarettes and other products.
Christelle Legault, a spokeswoman for Canada's federal health department, said the new law "is about protecting youth from the marketing practices of the tobacco industry."
With the U.S. cigarette market shrinking, about 80 per cent of American burley is exported. Kentucky is the top U.S. producer of burley, a variety commonly blended with other types of tobacco to make cigarettes.
Cigarettes featuring a burley blend represent about 1 per cent of the smoking market north of the border. The broader issue for tobacco groups is whether the Canadian law spreads to other countries.
"We're hopeful this thing will be reversed," said Roger Quarles, a Kentucky burley grower and president of the Burley Tobacco Growers Co-operative Association in Lexington, Kentucky.
The U.S. tobacco groups have an ally in Canadian tobacco company Rothmans, Benson&Hedges Inc., which also contends the new law violates Canada's trade obligations. RBH, an affiliate of Philip Morris International, imports tobacco blends including burley to make its Rooftop and Carreras cigarettes. RBH President John Barnett said the company supports "all efforts" in opposing the provisions that effectively ban blended cigarettes.
Leaf advocates in regions where flue-cured tobacco is grown are also raising concerns. Flue-cured cigarettes account for most of the Canadian market and are not banned by the new law, tobacco supporters say. But flue-cured tobacco is a major ingredient in the blended cigarettes that are targeted, they said.