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S P E C I A L Tobacco Under Attack

5 tobacco firms to withdraw from deal

Tobacco graphic April 8, 1998
Web posted at: 1:05 p.m. EDT (1705 GMT)

WASHINGTON (CNN) -- The five major tobacco companies are pulling out of an agreement reached with attorneys general in 40 states to enact federal legislation designed to raise the cigarette tax and curtail teen-age smoking, CNN has learned.

The tobacco firms decided to withdraw because they object to new stipulations to the legislation, which is currently being considered in Congress.

R.J. Reynolds plans to be the first to formally announce its withdrawal when company chairman Steven Goldstone speaks to reporters at 1 p.m. EDT. Afterward, the four other firms -- Philip Morris, Lorillard, Brown and Williamson and U.S. Tobacco, are expected to announce their own pullouts.

Tobacco under attack

  • Brief history of tobacco

  • Text: Tobacco settlement

  • Tobacco company internal documents

  • Critics of the original $368 billion settlement proposal consider it too lenient on the tobacco industry. But the tobacco industry and its supporters in Congress say a revised plan advancing in the Senate would bankrupt cigarette manufacturers.

    The bill, drafted by Sen. John McCain, R-Arizona, would force the industry to pay $516 billion over 25 years and would raise the price of cigarettes by $1.10 per pack over five years.

    McCain's bill was approved overwhelmingly by the Senate Commerce Committee last week.

    The tobacco companies are unwilling to accept McCain's bill and accuse the Clinton administration of walking away from "good faith" negotiations that led to last June's proposed settlement.

    It was unclear if the decision by the cigarette-makers to withdraw from the deal was permanent or part of an effort to pressure Congress to change the proposed legislation.


    President Clinton said Wednesday he hoped RJR and the other companies would reconsider. But, the president added, it was critical for Congress to act on the issue regardless of their position.

    "I've been working for two years on this and I don't intend to stop now," Clinton said in Chicago, where he was visiting a school to promote his education policy.

    "I think we've got an excellent chance of passing a good piece of legislation to dramatically reduce smoking by young people and save lives. I don't think there is very much in it for RJR or anybody else to walk away, so I hope they will reconsider that," Clinton said.

    The tobacco industry agreed in June 1997 with the attorneys general from 40 states to pay the settlement with the states, which had sued the companies for money spent on smoking-related illnesses.

    Correspondents Wolf Blitzer and John King contributed to this report.


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