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Comment by the Japanese Society for Tobacco Control on the acquisition of the English tobacco firm Gallaher Group by Japan Tobacco Inc.

To the attention of Minister of Finance of Japan Director-General of the Financial Bureau of the Ministry of Finance of Japan Japan Tobacco Inc.’s President http://www.mof.go.jp/mof/meisho.htm Tokyo, December 19, 2006 Manabu Sakuta Board chairman of the Japanese Society for Tobacco Control http://www.nosmoke55.jp/ Comment by the Japanese Society for Tobacco Control on the acquisition of the English tobacco firm Gallaher Group by Japan Tobacco Inc.

１） On December 15th, Japan Tobacco Inc. (JT) officially made public its agreement to acquire the English tobacco firm Gallaher Group by common consent. The total sum of the acquisition, inclusive of net interest-bearing debt, amounts to US$ 14.7 billion (2.253 trillion Yen). With the markets of developed countries slackening because of increasing health consciousness and taxation, JT’s president Kimura Hiroshi stated that “[we] plan to strenghten our position in emerging markets of remarkable growth like Russia” and that “[we] aim at winning our way to the world market”. ２） The Minister of Finance Koji Omi, in the press conference following the cabinet meeting of the 15th of the month, with regard to the acqusition in question, in light of JT’s president report, showed his willingness to comply stating that “I want to respect the managerial judgement”. ３） Whereas foreign tobacco firms gradually become impoverished, the strategy of pursuing profit through globalization in Russia, Europe, developing countries, backed up by JT’s capital and the collateral that the country owns half of JT’s stock, results in sprinkling poison conducive of nicotine addiction especially among the youth of peoples all over the world. This is a shame for Japan and as the Japanese Society for Tobacco Control we strongly oppose it. ４） In consequence of the Framework Convention on Tobacco Control, the tobacco industry is expected to shrink and possibly be extinguished. To avoid losses, the country should urgently release its stake in JT and accelerate its complete privatization. ５） Every year, the diseases ascribable to tobacco bring damage to the Japanese people for an amount ranging from 5.6 to 7.1 trillion Yen. In addition to that, the over 2 trillion Yen needed for JT’s acquisition will be allotted as compensation for the loss suffered by the Japanese people. ６） The Japanese Society for Tobacco Control proposes to use 2.5 trillion Yen for the following purposes: １． Reparation / compensation of medical treatment for the victims of tobacco-related diseases. Every year, the over 110,000 people who fall victim of active and passive smoking should be compensated. ２． Fire fighting and cleaning. Smoking is the cause of many disasters and the expenses for fire fighting and cleaning butts and packs amount to 0.2 trillion Yen. These expenses should not be sustained by non-smokers and local governments. ３． Switching costs of farmers. Many tobacco growers were abandoned by JT and are ceasing tobacco cultivation. JT should make itself responsible for that. ４． Compensation for the removal of cigarette vending machines. Many of the retailers that lease vending machines are small subsistence businesses. At the removal of vending machines, they should be refunded.