TOBACCO

The Uruguay Round agriculture agreement will establish disciplines in the areas of market access, export subsidies, internal support, and sanitary and phytosanitary measures. In addition, countries have made a number of commitments that will benefit U.S. agricultural exports. Highlights of these commitments for the U.S. tobacco industry, whose 1992 exports of raw tobacco totaled $1.5 billion and traditionally accounts for 40% of total domestic production, include the following:

Key Developments for U.S. Exports:

• EU Cuts Export Subsidies: The European Union will reduce the quantity and budgetary outlay for export subsidies from the current level. In the year 2000, the EU's maximum annual allowable quantity of subsidized tobacco will be 112,600 tons, 93,400 tons less than the quantity of subsidized exports in 1991-1992.
• EU Reduces Tariffs: The European Union will reduce its tariffs by 50% for cigars, 36% for cigarettes and other manufactured tobacco, and 20% for unmanufactured tobacco.
• Philippines Cuts Tariffs: The Philippines has agreed to reduce the tariff on Virginia and other tobacco, cigars and cigarettes from 50% to 45%.
• Japan Maintains Zero Duty Treatment for Cigarettes and Lowers Duty on Cigars: Japan will continue to apply a zero duty on cigarettes consistent with the current agreement between the United States and Japan. It will also reduce the duty on cigars from 20% to 16%.
• Hong Kong Binds Tariffs at Zero: Hong Kong will bind (as a formal GATT commitment) its tariffs at zero, the currently applied rate, for tobacco and products.
• South Africa Guarantees Access for Tobacco: South Africa will establish a tariff-rate quota for tobacco of 16,773 tons. It has committed to adjust the in-quota tariff rate if the quota does not fill.
• New Zealand Reduces Tariff for Cigarettes: New Zealand will reduce its tariff for cigarettes to 8.5%, a cut from the bound rate of 24% and the applied rate of 12.5%.

U.S. Commitments:

• Market Access: The United States will eliminate its tariffs on cigar wrapper and reduce by 55% its tariffs on cigar filler and binder tobacco, cigars, most cigarettes and homogenized tobacco. Tariffs on tobacco stems and refuse will be reduced by 20%, and tariffs on other unmanufactured tobacco and on smoking tobacco will be reduced by the minimum required 15%.

  (Note: This fact sheet is a summary of Uruguay Round highlights; it does not reflect all results.)

  June 1994

Last modified: Friday, November 18, 2005