Case Study: The opening of markets in Japan, Taiwan, and South Korea:

US tobacco companies have used the might of their government and international institutions to successfully force products into Japan, South Korea, Taiwan and Thailand. Two years before American tobacco advertisements came to Taipei, Taiwan's capital city, 26 percent of boys and 15 percent of girls had tried smoking. Four years after the advertising blitz, those numbers grew to 48 and 20 percent respectively.

In 1985, the Office of the US Trade Representative (USTR) used a section within the 1974 Trade Act to threaten retaliatory sanctions against governments if their markets did not open to cigarette trade.

Previously, Japan had high tariffs and discriminatory distribution which kept American brands out, South Korea had a law that made it a crime to buy or sell foreign cigarettes, and Taiwan and Thailand remained tightly shut. Each of the governments justified its ban on imported cigarettes for public health reasons while at the same time manufacturing and selling cigarettes by state-controlled tobacco monopolies.

The USTR took one look at this situation and declared that health was simply a red herring and that the governments had unfair trade practices. What the USTR did not take into account was that the cigarettes produced by the state-controlled monopolies were expensive and poor quality. This combined with little or no advertising seemed to keep per capita consumption low and smoking limited to older men with money.

After a year of intense pressure, Japan was the first to sign, in 1986, an agreement allowing American-made cigarettes. Today imported brands make up 21 percent of the Japanese market and earn more than $7 billion in annual sales. Female smoking is at an all time high.

It took only six weeks to force the Taiwanese government to reduce its barriers on the import of beer, wine and cigarettes.

South Korea passed legislation banning tobacco ads a few months before the US made their case and defined "fair access" as including the right to advertise. In 1988, the Korean government agreed to open its doors to American brands by allowing cigarette signs and promotions at shops, tobacco ads in magazines and sponsorships. Within a year, US tobacco companies had 6 percent of the market.

The industry was not so successful in Thailand. Thai health officials were able to plead their case before the World Trade Organization (WTO). In 1990, the WTO concluded that Thailand's ban on imported cigarettes was a clear violation of Article XI of the General Agreement on Tariffs and Trade (GATT). However the panel, found that Thailand could restrict cigarette sales and advertising to both domestic and foreign brands. Thailand now has some of the strongest anti-smoking legislation in the world and imported cigarettes only hold 3 percent of the market.

The tobacco industry was the big winner in these battles. The National Bureau of Economic Research estimates that sales of American cigarettes were 600 percent higher in the targeted countries in 1991 than they would have been with out US intervention.