5 tobacco firms to withdraw from deal
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.
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
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
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
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
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
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.