Category Archives: Business

economy and business news

EU Mulls New Link Between Budget, Civic Rights

The EU’s justice commissioner is working on a proposal that could oblige member states such as Poland, which has clashed with Brussels over reforms to its courts, to pass tests on the independence of their judicial systems before receiving funding.

Vera Jourova said there was agreement within the executive European Commission to work on ideas to encourage strong judiciaries in planning for the new budget from 2021.

“One way could be to insist that independent justice systems are necessary for effective control of the use of EU funds,” she said. “I would like to propose that link.”

Seven-year budget plan

A Commission spokesman said on Monday the work by Jourova was part of broader preparations for a new, seven-year EU budget plan, due to be published in May, and was in line with policy outlines the EU executive has put forward since last year.

The remarks by Jourova, the Commission’s Czech member, come as the EU executive is challenging Poland, a major recipient of Union funds, to amend judicial reforms which Brussels says will hurt democracy and its oversight of EU trading rules.

Facing the prospect of filling a hole left in the budget by Britain’s exit from the EU, and irritated by Poland and other governments in the ex-communist east on a range of issues, some wealthy Western governments have pushed for a clearer link between getting subsidies and abiding by EU standards.

Warning for Poland

The German commissioner in charge of the budget, Guenther Oettinger, warned Poland this month that it could lose some of its 7 billion euros annual funding if it fails to heed Brussels’ complaints about undermining the rule of law.

More broadly, Jourova is also hoping for a review of EU policy on judicial standards in the second half of this year. EU officials say that might, for example, include regular reviews of the performance of national justice systems, along the lines of existing biennial reviews of government economic policies, which are meant to promote “convergence” toward EU-wide goals.

‘Cohesion’ policy

As a former national official handling the regional funding that is a key part of EU efforts to bring poor regions closer to the prosperity of others, Jourova stressed that she saw any new rules applying to all EU funding for all states, not just to so-called “cohesion” policy. She also said it should not be seen as a punitive measure but designed to encourage good practice.

She also said discussion on the proposals could be used to help simplify some of the hurdles to applying for EU funds.

Any Commission proposal seen as too radical by governments risk being killed off by member states. 

 

 

$1*/ mo hosting! Get going with us!

IMF: Global Economic Growth Getting Stronger, Risks Remain

The International Monetary Fund says the global economy grew at a faster than expected 3.7 percent pace in 2017 and will do better this year and next.

IMF Managing Director Christine Lagarde called predictions of strengthening growth “very welcome news.” She spoke Monday in Davos, Switzerland, at the annual World Economic Forum.

IMF experts say 120 nations, representing three-quarters of the global economy, saw growth last year. IMF experts said tax cuts in the United States will have a positive but “short term” impact on the economy.

Lagarde urged political and economic leaders to take advantage of good times to make reforms that will soften the impact of the next, inevitable, economic downturn.

She said there is “significant” uncertainty in the year ahead, where a long period of low interest rates may have inflated the value of stocks and other assets to unsustainable levels. She also says a rise in debt levels is a concern.

Growth must be more inclusive, she added. She also said more efforts to retrain people displaced by automation, create opportunities for young people and bring more women into the labor force will all help.

Lagarde is only one of many leaders expected to speak at the Davos gathering. U.S. President Donald Trump is scheduled to address fellow heads of state and others later this week, but White House officials say Washington’s current political impasse that has shut down many normal functions of government make that trip “not very likely.”

$1*/ mo hosting! Get going with us!

Solar Industry on Edge as Trump Weighs Tariffs on Panels

Some in the U.S. solar-power industry are hoping a decision this week by President Donald Trump doesn’t bring on an eclipse.

Companies that install solar-power systems for homeowners and utilities are bracing for Trump’s call on whether to slap tariffs on imported panels.

The solar business in the U.S. has boomed in recent years, driven by falling prices for panels, thanks in part to cheap imports. That has made solar power more competitive with electricity generated from coal and natural gas.

A green-technology research firm estimates that tariffs could cost up to 88,000 U.S. jobs related to installing solar-power systems.

On the other side are two U.S. subsidiaries of foreign companies that argue the domestic manufacturing of solar cells and modules has been decimated by a flood of imports, mostly from Chinese companies with operations throughout Asia.

The four members of the U.S. International Trade Commission – two Republicans and two Democrats – unanimously ruled in October that imported panels are hurting American manufacturers, although they differed on exactly how the U.S. should respond. Trump has until Friday to act on the agency’s recommendations for tariffs of up to 35 percent.

Trump has wide leeway – he can reject the recommendations, accept them, or go beyond them and impose tougher tariffs. Congress has no authority to review or veto his action. Countries harmed by his decision could appeal to the World Trade Organization.

The trade case grew out of a complaint by Suniva Inc., a Georgia-based subsidiary of a Chinese company, which declared bankruptcy last April. Suniva was joined by SolarWorld Americas, the U.S. subsidiary of a German company. Both blame their difficulties on a surge of cheap imports, mostly from Asia. Suniva wants higher tariffs than those recommended by the trade commission.

The U.S. Commerce Department imposed stiff anti-dumping duties on imported panels made from Chinese solar cells in 2012. Tim Brightbill, SolarWorld Americas’ lawyer, said Chinese companies have gotten around those sanctions by assembling panels from modules produced in other Asian countries such as Malaysia and Vietnam. That makes the current trade case even more important, he said.

“It is a global case. It addresses the global import surge,” Brightbill said. “We need the strongest possible remedies from President Trump to maintain solar manufacturing here in the United States.”

A consultant for SolarWorld said tariffs on imports could create at least 12,000 jobs and up to 45,000 depending on capacity growth, and that installer jobs would also increase.

While U.S. solar manufacturing has shriveled, installations – from home rooftops to utility-scale operations – have boomed. Installations have soared more than tenfold since 2010, with the biggest jump coming in 2016, after prices for solar panels collapsed.

The Solar Energy Industries Association, a trade group for U.S. installers, says tariffs would drive up the cost of installing solar-power systems, leading to a drop in demand.

“We are selling energy that can be created by wind, by natural gas, by hydro, by coal, by nukes. When you raise the price of what we are selling, we can’t compete,” said Abigail Ross Hopper, the group’s president.

Jim Petersen, CEO of PetersenDean, a California company that installs solar rooftop panels mostly for residential customers, once favored tariffs on imported panels, which he found to be of inferior quality. He has changed his mind.

Petersen said tariffs could stunt his business by raising the cost of a job, which ranges from $6,000 to $60,000 or more. He said he might be forced to lay off up to 25 percent of his 3,200 installers.

“This is bad for American jobs, bad for the consumer,” he said.

In the New Mexico desert, Albuquerque-based Affordable Solar is working on a $45 million solar farm to help power a massive new data center for Facebook. The company’s president, Kevin Bassalleck, said tariffs would hurt homegrown companies that make racks, tracking systems and electronics that are part of a power system. He said jobs at those companies are hard to outsource.

“If you ever set foot in a solar module assembly factory, most of what you see are robots. There are very few people,” he said. “But if go out on to any one of our project sites like the Facebook project, you would see a small army of people working and installing things.”

U.S. Sen. Martin Heinrich, a New Mexico Democrat and advocate for renewable energy, says his state could lose more than 1,500 jobs by 2020 if tariffs are imposed, and tariffs won’t revive U.S. solar manufacturing.

“The jobs that have been lost because of cheaper solar cells have already been lost,” Heinrich said in an interview. “These tariffs are then going to take the very rapidly growing, successful, good jobs that we have built in manufacturing of the other equipment, in installing, and reduce those jobs to a fraction of what they should be.”

The conventional wisdom is that Trump will impose sanctions. Developers anticipating tariffs began flooding foreign manufacturers with orders last fall, driving up prices.

Brightbill, the lawyer for SolarWorld Americas, sounded confident.

“This administration’s focus is on U.S. manufacturing and U.S. jobs and getting tough on China for the trade deficit,” he said, “so we think the administration’s goals are very well-aligned with saving U.S. solar manufacturing.”

$1*/ mo hosting! Get going with us!

Maldives Ex-Leader: Chinese Projects Akin to Land Grab

The exiled former leader of the Maldives said Monday that this year’s presidential election could be the last chance to extricate his country from increasing Chinese influence, which he described as a land grab in the guise of investments in island development.

 

Mohamed Nasheed told reporters in Sri Lanka’s capital that current President Yameen Abdul Gayoom has opened the doors to Chinese investment without any regard for procedure or transparency.

 

“A large emerging power is busy buying up the Maldives,” Nasheed said, explaining that he was referring to China.

 

China is “buying up our lands, buying up our key infrastructure and effectively buying up our sovereignty,” he said.

 

China considers Maldives to be key cog in the Indian Ocean in its “One Belt One Road” project along ancient trade routes through the Indian Ocean and Central Asia. The initiative is Chinese President Xi Jinping’s signature project and envisages building ports, railways and roads to expand trade in a vast arc of countries across Asia, Africa and Europe.

 

Nasheed is disqualified from contesting the presidency this year due to a prison sentence. He is now living in exile in Britain after going there for medical treatment while in prison.

 

Nasheed said he is awaiting a decision from the U.N. Human Rights Committee, which he hopes will ask the Maldivian government to allow him to run in the election. His trial on terrorism charges and 13-year prison sentence in 2015 drew widespread international criticism for an alleged lack of due process.

 

The U.N. working group on arbitrary detention said Nasheed’s sentencing was unlawful.

 

Nasheed became the archipelago state’s first democratically elected president 10 years ago, ending a 30-year autocratic rule. However, he resigned in 2012 after public protests for ordering the arrest of a senior judge.

 

He lost the 2013 presidential election to Gayoom.

 

Maldives’ democratic gains have largely diminished under Gayoom’s presidency, with all of his potential election opponents either jailed or in exile. Nasheed says the opposition parties are in discussion to field a common candidate if he is unable to run.

 

“President Yameen wants a coronation; not an election. We won’t let that happen,” he said.

 

There was no immediate comment from the government.

$1*/ mo hosting! Get going with us!

Australia, Canada Trade Blows over Wine

Australia has filed a formal complaint with the World Trade Organization that accuses Canada of placing “discriminatory” rules on the sales of imported wine.

Canada is Australia’s fourth-biggest wine market. Officials in Canberra say rules in Canada unfairly discriminate against overseas wine.

An official protest has been lodged with the World Trade Organization (WTO) against regulations in the Canadian province of British Columbia, where wine produced locally can be sold in grocery stores but imports must be sold in a “store within a store” with a separate cash register.

Canberra’s objection also targets policies in other provinces, including Ontario, Quebec and Nova Scotia, as well as federal practices in Canada, which could breach a WTO agreement. They mean higher prices for foreign wines, as well as other barriers to sale, according to the Australian complaint.

“Australia is seeing its market share and that market erode. That concerns me, it concerns wine exporters,” said Australian trade minister Steve Ciobo. “Potentially this could cost Australian jobs, so I want to make sure we are on the front foot about protecting Australia’s interests.”

Australia’s complaint to the WTO is similar to one made by the United States, which has accused Canada of placing unfair limits on the sale of imported wine.

In October, the U.S. said British Columbia was favoring local vineyards by giving their wine an exclusive retail outlet in grocery store shelves and cutting out U.S. competition.

A spokesman for Canada’s international trade minister said the federal government works to ensure its liquor policies “are consistent with our international trade commitments”.

Under WTO rules, Canada has 60 days to settle the dispute with Australia.

After that, Canberra could ask the WTO to adjudicate, which could result in Canada being forced to change its laws or risk trade sanctions.

 

 

 

 

$1*/ mo hosting! Get going with us!

Iran May Try to Loosen Revolutionary Guard’s Grip on Economy

Iran’s supreme leader has ordered the Revolutionary Guard to loosen its hold on the economy, the country’s defense minister says, raising the possibility that the paramilitary organization might privatize some of its vast holdings.

The comments this weekend by Defense Minister Gen. Amir Hatami appear to be a trial balloon to test the reaction of the idea, long pushed by Iran’s President Hassan Rouhani, a relative moderate. Protests over the country’s poor economy last month escalated into demonstrations directly challenging the government.

 

But whether the Guard would agree remains unclear, as the organization is estimated to hold around a third of the country’s entire economy.

 

Hatami, the first non-Guard-affiliated military officer to be made defense minister in nearly 25 years, made the comments in an interview published Saturday by the state-run IRAN newspaper. He said Supreme Leader Ayatollah Ali Khamenei ordered both the country’s regular military and the Guard to get out of businesses not directly affiliated to their work.

 

“Our success depends on market conditions,” the newspaper quoted Hatami as saying.

 

He did not name the companies that would be privatized. The Guard did not immediately acknowledge the supreme leader’s orders in their own publications, nor did Khamenei’s office.

 

The Guard formed out of Iran’s 1979 Islamic Revolution as a force meant to protect its political system, which is overseen by Shiite clerics. It operated parallel to the country’s regular armed forces, growing in prominence and power during the country’s long and ruinous war with Iraq in the 1980s. It runs Iran’s ballistic missile program, as well its own intelligence operations and expeditionary force.

 

In the aftermath of the 1980s war, authorities allowed the Guard to expand into private enterprise.

 

Today, it runs a massive construction company called Khatam al-Anbia, with 135,000 employees handling civil development, the oil industry and defense issues. Guard firms build roads, man ports, run telecommunication networks and even conduct laser eye surgery.

 

The exact scope of all its business holdings remains unclear, though analysts say they are sizeable. The Washington-based Foundation for Defense of Democracies, which long has been critical of Iran and the nuclear deal it struck with world powers, suggests the Guard controls “between 20 and 40 percent of the economy” of Iran through significant influence in at least 229 companies.

 

In his comments, Hatami specifically mentioned Khatam al-Anbia, but didn’t say whether that too would be considered by the supreme leader as necessary to privatize. The Guard and its supporters have criticized other business deals attempting to cut into their piece of the economy since the nuclear deal.

$1*/ mo hosting! Get going with us!

Saudis Urge Oil Production Cooperation Beyond 2018

Saudi Arabia’s energy minister urged global oil producing nations on Sunday to extend their cooperation beyond 2018, but said this might mean a new form of deal rather than continuing the same supply cuts that have boosted prices in recent months.

It was the first time that Saudi Arabia had publicly raised the possibility of a new form of coordination among oil producers after 2018. Their agreement on supply cuts, originally launched last January, is set to expire in December this year.

Cooperation ‘here to stay’

Khalid al-Falih, speaking to reporters ahead of a meeting later in the day of the joint ministerial committee, which oversees implementation of the cuts, said extending cooperation would convince the world that coordination among producers was “here to stay.”

“We shouldn’t limit our efforts to 2018, we need to be talking about a longer framework of cooperation,“ Falih said. ”I am talking about extending the framework that we started, which is the declaration of cooperation, beyond 2018.

“This doesn’t necessarily mean sticking barrel by barrel to the same limits or cuts, or production targets country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together.”

Falih said the global economy had strengthened while supply cuts, of which Saudi Arabia has shouldered by far the largest burden, had shrunk oil inventories around the world. As a result, the oil market will return to balance in 2018, he said.

$70 a barrel oil

Falih and energy ministers from the United Arab Emirates and Oman noted that the rise of the Brent oil price to three-year highs around $70 a barrel in recent weeks could cause an increase in supply of shale oil from the United States.

But both Falih and UAE minister Suhail al-Mazroui said they did not think the rise in prices would hurt global demand for oil.

Kuwait’s oil minister Bakheet al-Rashidi said any discussion among producers on the future of the agreement on supply cuts would not occur Sunday, but was expected to happen at a meeting in June. OPEC and other producers led by Russia are next scheduled to meet to discuss oil policy in June.

$1*/ mo hosting! Get going with us!

British Group Works to Preserve Afghanistan’s Arts & Crafts Heritage

Afghanistan’s arts and architecture were once the pride of Asia. However, more than four decades of war have left many of the country’s traditional crafts on the verge of extinction. Now a Britain-based organization, Turquoise Mountain, is working to preserve Afghan heritage in the capital’s still surviving commercial district, Murad Khani. VOA Deewa service’s Munaza Shaheed reports from a recent trip to Kabul.

$1*/ mo hosting! Get going with us!

FACT CHECK: Trump Disdained Jobless Rate, Now Loves It

Donald Trump, the presidential candidate, would not like the way Trump, the president, is crowing about today’s unemployment rate. He’d be calling the whole thing a “hoax.”

Trump raised a red flag about declining jobless numbers during his campaign, denying President Barack Obama any credit. Trump noted that the jobless rate masks the true employment picture by leaving out the millions who have given up looking for work.

But Trump is seeing red no more. The same stats he assailed in 2015 and 2016 now are his proof of “fantastic,” “terrific” economic progress, for which he wants the credit.

That disconnect is part of why Trump’s statements about the economy this past week, some accurate on their face, fall short of the whole truth.

Trump also made the far-fetched claim that the economy is better than it has ever been. And in a week consumed with the dustup over a government shutdown, Trump’s doctor stepped forward with a testament to the president’s health that other physicians found to be too rosy.

A look at some recent remarks away from the din of the budget battle:

Black unemployment

TRUMP: “Black unemployment is the best it’s ever been in recorded history. It’s been fantastic. And it’s the best number we’ve had with respect to black unemployment. We’ve never seen anything even close.” — remarks from Oval Office Tuesday.

THE FACTS: Yes, the black unemployment rate of 6.8 percent is the lowest on record. No, it’s not far and away superior to any time in the past. In 2000, it was within 1 point of today’s record for six months, and as low 7 percent.

As Trump was quick to note as a candidate, the unemployment rate only measures people without jobs who are searching for work. Like other demographic groups, fewer African-Americans are working or looking for work than in the past. Just 62.1 percent of blacks are employed or seeking a job, down from a peak of 66.4 percent in 1999.

The black unemployment rate would be much higher if the rate of black labor force participation was near its levels before the Great Recession.

During the campaign, Trump claimed that real unemployment then was a soaring 42 percent. It’s not quite clear, but he could have been referring to the percentage of the U.S. population without jobs — a figure that includes retirees, stay-at-home parents and students. At the time, he considered the official jobless rate a “phony set of numbers … one of the biggest hoaxes in modern politics.”

Women’s unemployment

TRUMP: “We’re making incredible progress. The women’s unemployment rate hit the lowest level that it’s been in 17 years. Well, that’s something. And women in the workforce reached a record high. … That’s really terrific, and especially since it’s on my watch.” — at women’s event Tuesday.

THE FACTS: Again — yes, but. The 4 percent jobless rate for women is at a 17-year low, just as it is for the overall population. But the labor force participation rate by women is lower today than in 2000. The proportion of women in the workforce is not at a record high.

Overall economy

TRUMP: “Our country is doing very well. Economically, we’ve never had anything like it.” — from Oval Office on Tuesday.

THE FACTS: Never say never. The U.S. economy had better employment stats during the 2000 tech boom, for one example. It’s enjoyed stock market surges before. It’s had blazing, double-digit annual growth, a far cry from the 3.2 percent achieved during the second and third quarters of 2017. That was the best six-month pace since 2014 — hardly the best ever.

The economy added about 170,000 new jobs a month during Trump’s first year. That was slightly below the average of 185,000 in Obama’s last year.

Trump checkup

DR. RONNY JACKSON, White House physician, on his examination of Trump: “I think he’ll remain fit for duty for the remainder of this term and even for the remainder of another term if he’s elected. … His cardiac health is excellent.” — White House briefing Tuesday.

THE FACTS: Physicians not connected with the White House have widely questioned that prediction of seven more years of healthy living and that conclusion about his heart. Cardiac functioning was indeed normal in the tests, according to the readings that were released. But Trump is borderline obese and largely sedentary, with a “bad” cholesterol reading above the norm despite taking medication for it. He’ll be 72 in June. It’s doubtful that most men that age with similar histories and findings would get such a glowing report from their doctors.

Trump has some things in his favor: “incredible genes, I just assume,” said his doctor, and no history of tobacco or alcohol use.

But “by virtue of his age and his gender and the fact he has high cholesterol and that he is in the overweight-borderline obese category, he is at a higher risk for cardiovascular disease,” said Dr. Ranit Mishori, a primary care physician and professor of family medicine at Georgetown University. “The physician was saying, yes he’s in excellent health — but yes he does have risk factors for cardiovascular disease. Which is why the comment he will remain healthy for the remainder of his term makes little sense to me. How you can make that kind of assessment from a one-point-in-time examination? Just from those four factors he is at a higher risk.”

Trump’s LDL, the bad cholesterol, registered at 143, a number his doctor wants below 120.

Jackson also said Trump has nonclinical coronary atherosclerosis, commonly known as hardening of the arteries from plaque, which is a combination of calcium and cholesterol.

That’s common in people older than 65 and can be a silent contributor to coronary heart disease. Jackson’s conclusion was based on a coronary calcium score of 133, which Mishori called “a little bit concerning” because it could show mild coronary artery disease, although how to interpret these scores isn’t clear-cut. Jackson said he consulted a variety of cardiologists about that calcium score and the consensus was reassuring.

Abortion viewpoints

TRUMP: “Americans are more and more pro-life. You see that all the time. In fact, only 12 percent of Americans support abortion on demand at any time.” — remarks Friday to opponents of abortion rights.

THE FACTS: Neither side of the abortion debate is scoring breakaway support in public opinion research. Gallup said in conjunction with its poll in June: “The dispersion of abortion views today, with the largest segment of Americans favoring the middle position, is broadly similar to what Gallup has found in four decades of measurement.” In short, half said abortion should be “legal only under certain circumstances,” identical to a year earlier, while 29 percent said it should be legal in all circumstances. The smallest proportion, 18 percent, said it should always be illegal.

Americans’ positions on abortion are sufficiently nuanced that both sides of the debate can find polling that supports their point of view. Polling responses on abortion are also highly sensitive to how the questions are asked.

But in the main, the public is not clamoring for abortion to be banned or to be allowed in all cases.

Trump’s claim that only 12 percent support abortion “on demand” may come from a Marist poll sponsored by the Knights of Columbus, which opposes abortion rights. In that poll, 12 percent said abortion should be “available to a woman any time during her entire pregnancy.”

Most polls have found that a distinct minority, though more than 12 percent, think the procedure should be legal in all cases. The percentage was 25 percent in an AP-NORC poll, 21 percent in a Quinnipiac poll, both done in December.

$1*/ mo hosting! Get going with us!

Anti-smoking Plan May Kill Cigarettes — and Save Big Tobacco

Imagine if cigarettes were no longer addictive and smoking itself became almost obsolete; only a tiny segment of Americans still lit up. That’s the goal of an unprecedented anti-smoking plan being carefully fashioned by U.S. health officials.

But the proposal from the Food and Drug Administration could have another unexpected effect: opening the door for companies to sell a new generation of alternative tobacco products, allowing the industry to survive — even thrive — for generations to come.

The plan puts the FDA at the center of a long-standing debate over so-called “reduced-risk” products, such as e-cigarettes, and whether they should have a role in anti-smoking efforts, which have long focused exclusively on getting smokers to quit.

“This is the single most controversial — and frankly, divisive — issue I’ve seen in my 40 years studying tobacco control policy,” said Kenneth Warner, professor emeritus at University of Michigan’s school of public health.

The FDA plan is two-fold: drastically cut nicotine levels in cigarettes so that they are essentially non-addictive. For those who can’t or won’t quit, allow lower-risk products that deliver nicotine without the deadly effects of traditional cigarettes.

This month the government effort is poised to take off. The FDA is expected to soon begin what will likely be a years-long process to control nicotine in cigarettes. And next week, the agency will hold a public meeting on a closely watched cigarette alternative from Philip Morris International, which, if granted FDA clearance, could launch as early as February.

The product, called iQOS, is a pen-like device that heats Marlboro-branded tobacco but stops short of burning it, an approach that Philip Morris says reduces exposure to tar and other toxic byproducts of burning cigarettes. This is different from e-cigarettes, which don’t use tobacco at all but instead vaporize liquid usually containing nicotine.

For anti-smoking activists, these new products may mean surrendering hopes of a knockout blow to the industry. They say there is no safe tobacco product and the focus should be on getting people to quit. But others are more open to the idea of alternatives to get people away from cigarettes, the deadliest form of tobacco.

Tobacco companies have made claims about “safer” cigarettes since the 1950s, all later proven false. In some cases the introduction of these products, such as filtered and “low tar” cigarettes, propped up cigarette sales and kept millions of Americans smoking. Although the adult smoking rate has fallen to an all-time low of 15 percent, smoking remains the nation’s leading preventable cause of death and illness, responsible for about one in five U.S. deaths.

Anti-smoking groups also point to Big Tobacco’s history of manipulating public opinion and government efforts against smoking: In 2006, a federal judge ruled that Big Tobacco had lied and deceived the American public about the effects of smoking for more than 50 years. The industry defeated a 2010 proposal by the FDA to add graphic warning labels to cigarette packs. And FDA scrutiny of menthol-flavored cigarettes — used disproportionately by young people and minorities — has been bogged down since 2011, due to legal challenges.

“We’re not talking about an industry that is legitimately interested in saving lives here,” said Erika Sward of the American Lung Association.

But some industry observers say this time will be different.

“The environment has changed, the technology has changed, the companies have changed — that is the reality,” said Scott Ballin, a health policy consultant who previously worked for the American Heart Association.

Under a 2009 law, the FDA gained authority to regulate certain parts of the tobacco industry, including nicotine in cigarettes, though it cannot remove the ingredient completely. The same law allows the agency to scientifically review and permit sales of new tobacco products, including e-cigarettes. Little has happened so far. Last year, the agency said it would delay the deadline for manufacturers to submit their vapor-emitting products for review until 2022.

The FDA says it wants to continue to help people quit by supporting a variety of approaches, including new quit-smoking aids and opening opportunities for a variety of companies, including drugmakers, to help attack the problem. As part of this, the FDA sees an important role for alternative products — but in a world where cigarettes contain such a small amount of nicotine that they become unappealing even to lifelong smokers.

“We still have to provide an opportunity for adults who want to get access to satisfying levels of nicotine,” but without the hazards of burning tobacco, said FDA Commissioner Dr. Scott Gottlieb. He estimates the FDA plan could eventually prevent 8 million smoking-related deaths.

​’Smoke-free future’

Philip Morris International and its U.S. partner Altria will try to navigate the first steps of the new regulatory path next week.

At a two-day meeting before the FDA, company scientists will try and convince government experts that iQOS is less-harmful than cigarettes. If successful, iQOS could be advertised by Altria to U.S. consumers as a “reduced-risk” tobacco product, the first ever sanctioned by the FDA.

Because iQOS works with real tobacco, the company believes it will be more effective than e-cigarettes in getting smokers to switch.

Philip Morris already sells the product in about 30 countries, including Canada, Japan and the United Kingdom.

iQOS is part of an elaborate corporate makeover for Philip Morris, which last year rebranded its website with the slogan: “Designing a smoke-free future.” The cigarette giant says it has invested over $3 billion in iQOS and eventually plans to stop selling cigarettes worldwide — though it resists setting a deadline.

Philip Morris executives say they are offering millions of smokers a better, less-harmful product.

Matthew Myers of the Campaign for Tobacco-Free Kids still sees danger. He says FDA must strictly limit marketing of products like iQOS to adult smokers who are unable or unwilling to quit. Otherwise they may be used in combination with cigarettes or even picked up by nonsmokers or young people who might see the new devices as harmless enough to try.

“As a growing percentage of the world makes the decision that smoking is too dangerous and too risky, iQOS provides an alternative to quitting that keeps them in the market,” Myers says.

It’s unclear whether existing alternatives to cigarettes help smokers quit, a claim often made by e-cigarette supporters. Research from the Centers for Disease Control and Prevention suggests about 60 percent of adult e-cigarette users also smoke regular cigarettes.

The case for lower nicotine

Experts who study nicotine addiction say the FDA plan is grounded in the latest science.

Several recent studies have shown that when smokers switch to very low-nicotine cigarettes they smoke less and are more likely to try quitting. But they also seek nicotine from other sources, underscoring the need for alternatives. Without new options, smokers would likely seek regular-strength cigarettes on the black market.

Crucial to the FDA proposal is a simple fact: Nicotine is highly addictive, but not deadly. It’s the burning tobacco and other substances inhaled through smoking that cause cancer, heart disease and bronchitis.

“It’s hard to imagine that using nicotine and tobacco in a way that isn’t burned, in a non-combustible form, isn’t going to be much safer,” said Eric Donny, an addiction researcher at the University of Pittsburgh.

A study of 800 smokers by Donny and other researchers showed that when nicotine was limited to less than 1 milligram per gram of tobacco, users smoked fewer cigarettes. The study, funded by the FDA, was pivotal to showing that smokers won’t compensate by smoking more if nicotine intake is reduced enough. That was the case with “light” and “low-tar” cigarettes introduced in the 1960s and 1970s, when some smokers actually began smoking more cigarettes per day.

Still, many in the anti-smoking community say larger, longer studies are needed to predict how low-nicotine cigarettes would work in the real world.

Legal risks

Key to the FDA plan is the assumption that the two actions will happen at the same time: as regulators cut nicotine in conventional cigarettes, manufacturers will provide alternative products.

But that presumes that tobacco companies will willingly part with their flagship product, which remains enormously profitable.

Kenneth Warner, the public policy professor, said he would be “astonished” if industry cooperates on reducing nicotine levels.

“I don’t think they will. I think they will bring out all of their political guns against it and I’m quite certain they will sue to prevent it,” he said.

In that scenario, the FDA plan to make cigarettes less addictive could be stalled in court for years while companies begin launching FDA-sanctioned alternative products. Tobacco critics say that scenario would be the most profitable for industry.

“It’s like Coke, you can have regular Coke, Diet Coke, Coke Zero, we’ll sell you any Coke you like,” said Robin Koval, president of the Truth Initiative, which runs educational anti-tobacco campaigns.

But the FDA’s Gottlieb says the two parts of the plan must go together. “I’m not going to advance this in a piecemeal fashion,” he said.

When pressed about whether the industry will sue FDA over mandatory nicotine reductions, tobacco executives for Altria and other companies instead emphasized the long, complicated nature of the regulatory process.

“I’m not going to speculate about what may happen at the end of a multiyear process,” said Jose Murillo, an Altria vice president. “It will be science and evidence-based and we will be engaged at every step of the way.”

$1*/ mo hosting! Get going with us!