TRADE TALK: News from NATO - November/December 2007

NATO NEWS: Federal Tobacco Legislative Outcomes Uncertain

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By Thomas A. Briant, Executive Director, National Association of Tobacco Outlets

The current status of both the State Children’s Health Insurance Program (SCHIP) legislation that would raise the federal cigarette and tobacco taxes to punitive levels and the Food and Drug Administration bill that would regulate tobacco products can be summed up in one word: uncertain.

SCHIP Update

While the U.S. Senate and the U.S. House passed the SCHIP legislation that included virtually all of the provisions of the initial Senate bill, President Bush followed through on his promise and vetoed the legislation on October 3. The compromise version of the SCHIP bill as passed by the Senate and House would have increased cigarette and tobacco taxes as shown in the chart below.

Then, in his weekly Saturday radio address on October 6, the president stated that he is willing to work with Congress to seek a compromise on the SCHIP program. The Democratic leadership in the House responded by scheduling a vote to attempt an override of the the president’s veto. The attempt, however, failed to return enough votes to override a president’s veto. (The margin was narrow; 273 representatives voted for the measure and 156 voted against. An override would have necessitated at least 286 votes.)

In the meantime, Congress sent to President Bush and he signed a continuing resolution to keep the federal government operating. A continuing resolution was needed because Congress has not passed any of the 12 major funding bills to authorize expenditures for all branches of the federal government. This continuing resolution includes funding at the current level for the SCHIP program without any cigarette or tobacco tax increases.

While debate on SCHIP continues, Congress has the authority to extend the SCHIP program at the current funding level for a year or two at the present funding levels, which would not expand eligibility nor include a cigarette and tobacco tax increase.

NATO is monitoring the SCHIP legislation on a daily basis and will continue to take action to oppose the punitive cigarette and tobacco tax increases in the SCHIP legislation. In fact, NATO could be working on this issue well into the fall if negotiations between Congress and the Bush administration do not result in a compromise agreement on the extension of the SCHIP program.

FDA Update

Unlike the SCHIP legislation, the bill to grant regulatory authority to the U.S. Food and Drug Administration (FDA) over cigarettes and smokeless tobacco products has not passed either the full Senate or the full House. While the Senate Health, Education, Labor and Pensions Committee has passed the bill, the proposal to give the FDA broad authority to impose numerous regulations and restrictions on the retail sale of cigarettes and smokeless tobacco products has not been brought up on the Senate floor for a vote.

On October 3, the House Energy and Commerce Committee’s Subcommittee on Health held a hearing on the FDA legislation. NATO President Andrew Kerstein submitted a letter to each member of the House Subcommittee on Health alerting the representatives to several concerns that NATO has with particular retail provisions in the legislation. Currently, the FDA legislation would regulate cigarettes and smokeless tobacco products. The NATO letter requested an amendment to require that Congress authorize the FDA to extend any regulations to cigars, little cigars, pipe tobacco, and roll-your-own tobacco.

Also, since the FDA legislation would ban all in-store color tobacco advertising, the NATO letter submitted by Andrew Kerstein indicated to the committee members that, under the First Amendment of the U.S. Constitution, free speech protections are afforded to advertising, which is designated as “commercial speech” by the courts. This means that a ban on advertising should not be a part of the FDA regulations and that the ban on color advertising should be removed from the legislation because tobacco advertising constitutes “commercial speech”.

NATO will continue to monitor the FDA legislation because the bill contains retail regulations that need to be carefully considered by the members of Congress.

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If you want help to protect your business, you need to belong to NATO. To join, visit the NATO web site at www.natocentral.org and complete and send in the membership application form that you will find under the “Join NATO” button. •

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