Tobacco farmers are concerned they may be left out of Pacific trade deal

This crew helped Teddy Greathouse bring his 23 acres of tobacco in from the field last summer at a farm on KY 1689 near Switzer.
This crew helped Teddy Greathouse bring his 23 acres of tobacco in from the field last summer at a farm on KY 1689 near Switzer.

WASHINGTON — Southern tobacco farmers fear that they could lose a significant portion of their export business if health advocates win a battle to carve tobacco out of a major trade agreement that's being negotiated with eight countries on the Pacific Rim.

The American Medical Association and several other health groups insist that the Obama administration put public health priorities ahead of commercial interests.

But with the majority of their crop now being sold overseas, tobacco growers in North Carolina, Kentucky and across the Southeast view that pressure as an effort to eliminate their ability to make a living on a commodity that's sold legally in the United States and around the world.

President Barack Obama hopes that the proposed Trans-Pacific Partnership Agreement will help double exports eventually. The United States does more than $200 billion in trade with those countries: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam.

The goal is to boost trade by eliminating taxes and tariffs on exports and imports between the countries. The growers worry that they'll be left out of the special deal, making it more difficult for them to compete with developing nations that already sell tobacco more cheaply.

Negotiations are set to resume Thursday in Australia. Last week, Gov. Steve Beshear joined U.S. trade representatives and several of the partners' ambassadors at a Washington reception that promoted the global agreement.

In the last decade, Americans have reduced their smoking by more than a hundred billion cigarettes a year. The domestic decline in smokers has forced growers such as John Ashe to look overseas for new markets.

Ninety percent of the tobacco that Ashe grows is exported. He runs a farm in Reidsville, N.C., north of Greensboro, with 14 cows, 100 acres of soybeans and wheat, and 84 acres of tobacco. It's the tobacco that keeps him afloat, he said.

"Tobacco generates more income," said Ashe, who's 44. "I couldn't make it off 100 acres of wheat. I just couldn't make it off 100 acres of soybean. The equipment that I use for my tobacco farm, some of those things I can use to grow wheat and use to grow soybeans, use to grow hay for cows. I can't justify buying equipment off my bean crop and wheat crop in my area of the state."

It's not only tobacco growers who'd be affected by being left out of the trade deal. Erica Peterson, the executive vice president of the North Carolina Agribusiness Council, said tobacco farmers were a major economic engine in the state's $70 billion agribusiness industry.

"There is the fertilizer, the pesticide," she said. "There is the dealership that sells the truck to the farmer. ... Any of the employees they hire on the farm to payroll, secretary. All these folks are going to be impacted."

Responding to growers' worries, more than 50 U.S. senators and representatives — Republicans and Democrats — from the tobacco-growing states of Kentucky, North Carolina, South Carolina, Georgia, Virginia, Ohio and Tennessee signed letters last fall warning U.S. Trade Representative Ron Kirk of the dangerous consequences of cutting tobacco from the Pacific Rim agreement.

"At a time when Kentucky's unemployment rate hovers near 9.5 percent we urge you to consider the serious impact excluding tobacco will have on the commonwealth and the national economy," Senate Minority Leader Mitch McConnell, R-Ky., wrote in a letter to Kirk signed by the entire Kentucky delegation.

More than 80 percent of the tobacco that's grown in Kentucky is sold outside the United States. The U.S. Department of Agriculture estimates that Kentucky exported about $238 million worth of tobacco in 2010.

The same year, North Carolina exported $600 million worth. More than a third of the country's 662,400 tobacco workers work in North Carolina, according to the state's Department of Agriculture and Consumer Services.

Despite its worth to state economies, tobacco is one of the leading preventable causes of death worldwide. Each year, tobacco products kill nearly 6 million people, according to the World Health Organization in Geneva. Nearly 80 percent of the more than 1 billion smokers worldwide live in low- and middle-income countries, the international health organization said.

The United States and all eight of the Trans-Pacific Partnership countries recognize the dangers of tobacco use. Representatives from each country have signed a WHO public health treaty, known as the Framework Convention on Tobacco Control, that recognizes the role that "price and tax measures," such as tariffs, have in reducing tobacco consumption.

Health groups argue that farmers are only a sympathetic front in a well-funded campaign driven by giant multinational tobacco companies. Philip Morris International was one of several corporate sponsors of last Friday's trade reception. The Campaign for Tobacco-Free Kids criticized the tobacco giant for trying to influence trade leaders.

While the tobacco lobby's political influence has waned with American's changing smoking habits, the industry continues to spend millions in Washington. It has contributed $4.9 million to federal political campaigns in the past three years, according to the Center for Responsive Politics in Washington, which tracks campaign spending.

Including tobacco in the Pacific Rim agreement would weaken public health efforts by lowering tariffs on tobacco, said Jonathan Klein, the associate executive director of the American Academy of Pediatrics.

Colin McCluney, an education and advocacy fellow at the American Medical Student Association, said public health interests must be put ahead of economic interests.

"We want to make sure that the countries have the ability to implement the public health measures that allow them to curb the use of tobacco," he said.

Some of the countries involved in the negotiations already have trade deals. There are no tariffs on U.S. tobacco exports to Australia, for example, but New Zealand imposes a 5 percent tariff and Vietnam imposes a 30 percent tariff on American tobacco imports, according to the North Carolina Agribusiness Council.

Although it exports more tobacco than it imports, the United States imposes a 40 percent tax on the small amount of tobacco that's imported from Vietnam.

The growers hope to be part of a deal that eliminates all these tariffs.

Trade Ambassador Kirk, whose office represents the United States in the negotiations, described the issue as a "raging debate."

Asked about the controversy in Richmond, Va., during a business roundtable discussion earlier this month, Kirk said a decision had yet to be made.

"There are people who are fanatically opinionated on both sides," he said, according to a video of the event posted by the city of Richmond. "Our job is to follow U.S. law. Strike that balance. But on this one we'll sometime have to make a decision."

The eight countries involved in the Pacific Rim trade agreement purchase a small amount of U.S. tobacco compared with the amounts bought by Japan and China. But Will Snell, an agriculture economist at the University of Kentucky, said growers feared the impacts that the negotiations could have on future trade deals.

Ashe said he understood the health concerns, but he noted that tobacco is still sold legally in the United States and overseas. Therefore, he said, it should be treated like any other export.

"I just wanted to be treated fairly, that's all," he said. "We can't rule what a person does, in my mind. And in our situation now, we need to ship anything we can to anywhere else in the world. ... It's tougher than it was 10 years ago."