Table 1

TTCs’ local efforts to enter the Thai market: timeline of key events

1975–1979 (L)BAT proposed a licencing agreement with TTM for State Express 555, but the project was shelved in August 1979 after the prime minister, who was to be the signatory, lost his office.16 17
September 1978 (I)The cabinet proposed legal imports to solve foreign cigarette smuggling but disapproved imported cigarettes by private parties and allowed TTM to solely import foreign cigarettes and modernise the production to complete with international brands.10
March 1981 (J)BAT proposed a manufacturing company to TTM with 50% Thai government ownership (BAT would provide free shares and benefits to the government) with BAT returning all assets to the Thai government after 15 years.20
July 1981 (J)TTM’s board rejected BAT’s proposal.16 BAT believed TTM opposed foreign involvement because it was concerned that its inefficiencies would be uncovered and consumer preference would swing to foreign brands, causing further loss of business.30
August 1982 (L)The Deputy Secretary of the General Office of the Prime Minister and Chairman of the Milk Board approached BAT about TTM producing BAT’s State Express 555 brand under a licencing agreement and with technical assistance from BAT.14 17
BAT responded to the Deputy Secretary that it expected to secure this licencing deal by 1983.16 17
January 1983 (L)BAT approached TTM board members through surrogates to convince them of the benefits of 555 licenced manufacture.18
November 1983 (L)BAT regularly visited the new TTM Chairman (and also an Undersecretary in the Ministry of Finance) and managing director, believing they were open to foreign involvement.68
January 1984 (L)BAT offered 10 million 555 sticks to TTM to help it meet a market shortage due to a prolonged strike of TTM’s union and strengthen TTM’s negotiating position.69 BAT also offered technical support to improve manufacturing, including expertise in producing low-tar cigarettes.70
February 1984 (J)PM Chairman Hamish Maxwell had dinner in New York with the Thai Ambassador to the United Nations to discuss how the ambassador could help PM enter the Thai market.71 The president of PM Asia told Maxwell that PM was willing to export Marlboro to Thailand but that PM thought this option would not be possible and was willing to licence a PM trademark to TTM, proposing a joint brand with TTM which, if successful, would lead to legal imports of Marlboro and, if sales goals were met, move to licencing TTM to manufacture Marlboro.13 15
March 1984 (J)RJR submitted a proposal for licencing and joint venture with TTM to the Thai government.47
May 1984 (J)PM submitted a proposal to the Thai government for a joint brand21 followed by licencing TTM to manufacture Marlboro.15
June 1984 (J)BAT submitted a proposal to the Thai government for licencing and a joint venture with TTM.47
1984–1985 (J)PM connected with cabinet members, business executives and other influential Thais23–26 but was unable to open the Thai market. In 1985, PM spent $150 000 to sponsor Ambassadors of Opera in many Asian countries including Thailand to gain ‘PM high visibility’ and direct access to top-level government officials and other influential Thais.27 During PM’s 1985 board meeting, PM International Executive Vice President Richard Snyder emphasised PM’s success in approaching key policymakers:
‘As regards Thailand, we have had a number of corporate affairs successes this year, including sponsorship of “Ambassadors of Opera” in Bangkok, and acting as host for a day to the Queen during a recent visit to New York. We have met many prominent government members and our challenge is now to make the best use of these contacts to establish a business in Thailand’.28
December 1984 (I)The director general of the Excise Department recommended legal imports to the Ministry of Finance by appointing distributors independently of TTM to handle sales.72
The recommendation on legal imports was stalled due to currency devaluation in late 1984 as well as the government being under pressure to impose restrictions on the import of luxury goods.19
January 1985 (J)All TTC proposals for joint ventures were turned down because the Minister of Finance preferred state-owned business, joint-brand cigarettes contradicted the ‘Buy Thai’ campaign, and because TTM worker opposition to foreign investment in the domestic market.73 74
December 1986 (I)US delegates (led by Congressman Lester Wolff) came to Thailand and met with the Prime Minister to pressure Thailand to purchase US-made cigarettes and to enter into a bilateral trade agreement similar to those the USA had concluded with Japan, South Korea and Taiwan.75 76
1987–1988 (J)US government pressure on Thailand to open its market caused the Thai Minister of Finance to announce a new TTM cigarette factory would be built in Chiang Mai as a joint venture with a foreign manufacturer.77 78
TTCs resubmitted joint venture proposals to the Thai government.79 80
To enhance the opportunity for this joint venture, TTCs hired politically influential local agents to help them connect with TTM and the government.29 BAT hired Des Kennedy of the White Group,81 who had a long-term business relationship with TTM.82 BAT also hired Verapaul Mudamura, a member of the Thai House of Representatives (who had a close connection with the Deputy Comptroller-General in the Ministry of Finance who was his co-owner of a small firm of tobacco dealers near Chiang Mai)83 84, as a consultant.81
According to BAT, PM appointed the family of a Deputy Prime Minister and RJR appointed a family of a private bank in Thailand (Thai Danu) whose Chairman was an ex-prime minister and whose son was a deputy prime minister.29 81
January 1988 (J)The cabinet authorised the Ministry of Finance and TTM to select a foreign company to build a cigarette plant with the condition that all its production be sold to TTM.85
Despite allowing a new cigarette factory to be built, the prime minister asked the Ministry of Public Health (MOPH) to launch a plan for tobacco control and the first National Tobacco Control Plan (drafted by Dr Hatai Chitanondh, deputy director general of the Department of Medical Services in the MOPH4) was approved by the cabinet in April 1988,4 81 85 including an advertising ban to protect Thailand from future TTC invasions.4
July 1988 (J)The joint venture for the new cigarette factory was delayed due to a general election and later shelved after the new prime minister and his new government came to power in July 1988, because they did not want to deal with the TTM union, who feared losing overtime.31 32
August 1988 (I)The Thai Excise Department recommended the Minister of Finance to allow imports of foreign cigarettes to safeguard Thailand’s Generalized System of Preferences privileges.86
March 1989 (I)The Minister of Finance and some cabinet members, including the deputy prime minister, announced their support to freely import and distribute foreign cigarettes. The Minister of Finance said, ‘Of course, we have tried to discourage smoking. But the fact is that people all around the world still smoke’.87 The deputy prime minister added, ‘Many people are smoking foreign brands. They are here and have a market share already’.87
Thai public health sector and TTM’s union opposed this announcement immediately, and the Ministry of Finance withdrew the market-opening proposal.88
April 1989 (I, T)The US Cigarette Export Association (USCEA), formed by three major US cigarette companies (PM, RJR and Brown & Williamson (which was part of BAT)) in 1981,33 filed a Section 301 petition against Thailand on unfair trade practices for foreign cigarettes to the US Trade Representatives (USTR), the US agency responsible for US bilateral and multilateral trade policy.33 34
USCEA and USTR have close relationships; for example, the head of the USTR (Clayton Yeutter), who helped the USCEA open markets in Japan, Taiwan, Korea and Thailand between 1985 and 1989 later became a director of BAT in 1993.33 89
May 1989 (I, T)The USTR initiated an investigation that the USCEA filed against Thailand for trade discrimination.34
July 1989 (I, T)The USTR initiated the first consultation with the Thai government in Bangkok.34
September 1989 (I, T)The USTR held a public hearing in Washington, but the two parties did not reach mutual agreement because Thailand viewed the dispute as a health and political issue, but the US viewed it as a trade action.34
December 1989 (I, T)The USTR referred the case to the GATT arbitration panel.34
October 1990 (I, T)GATT ruled that Thailand’s import ban violated GATT but that non-discriminatory tobacco control legislation was permissible as long as the laws applied to both domestic and foreign products.4 33
August 1991 (I, T)The Thai market opened to foreign cigarettes.33
  • BAT, British American Tobacco; GATT, General Agreement on Tariffs and Trade; I, legal imports: a policy that allows foreign tobacco companies to import their tobacco products to Thailand; J, joint ventures: a business arrangement between a foreign tobacco company and the TTM to invest in a new tobacco factory in Thailand; L, licencing agreements: an agreement granted to the TTM to produce foreign cigarette brands; PM, Philip Morris; RJR, RJ Reynolds; T, trade sanctions: a TTC’s international effort to open the Thai market via international trade organisations; TTC, transnational tobacco company; TTM, Thai Tobacco Monopoly.