In passing a "Buy Out" bill making sweeping changes to corporate taxation by 78 votes to 15, the US Senate may have paved the way for a de facto ban on tobacco advertising in the US.
The bill will enable US manufacturers to avoid a tariff imposed on some US goods under a World Trade Organisation ruling. Tobacco farmers are just one of the groups that will receive a windfall - in their case, $12 billion - to compensate for tax-break losses.
But this will come at a cost: there is pressure in Washington to bring tobacco under the Food and Drug Administration's jurisdiction, effectively reclassifying it as a drug.
Since 1964, when a report from the US Surgeon General's office on smoking and health found a causal link between tobacco and lung cancer, among other diseases, the US government and the tobacco industry have waged a bitter war that has been played out in the nation's courtrooms.
Cigarette advertising and its role in recruiting new smokers has always played an important part in the battle between what politicians see as essential reforms to protect the nation's health, and what tobacco manufacturers (and, by extension, their ad agencies) see as a test of the government's will to uphold the First Amendment protection for commercial speech.
The government claimed a major victory in 1999 when, under the terms of the Master Settlement Agreement, the culmination of a 15-year battle, the tobacco industry agreed to a ban on cartoon characters in cigarette advertising, a reduction of brand-name sponsorship of events with a significant youth audience, a ban on youth access to free samples and the establishment of a Public Education Fund into which $1.45 billion was poured between 2002 and 2003.
In 1996, three years before the Master Settlement Agreement was ratified, the FDA attempted to bring tobacco production, sale and advertising under its control. Among its provisions for advertising were stipulations that: all outdoor advertising be banned within 1,000 yards of schools; all permitted tobacco advertising be black text on a white background, except in magazines, newspapers or other periodicals with adult readership of 85 per cent or more, and sponsorship of athletic, musical, social or other events be in name only.
The legislation was blocked, being deemed unconstitutional by a phalanx of legal experts and pressure groups. But eight years on, it has raised its head again: if tobacco is brought under the control of the FDA, the administration's provisions for advertising controls will remain essentially unchanged.
"In this country, the premier issue the advertising industry deals with in respect to the government is the protection of First Amendment rights for legal products to tell their stories to the public," Dick O'Brien, the American Association of Advertising Agencies' executive vice-president, says. Of key concern is the precedent this legislation will set. Advertising trade groups fear the proposed tobacco curbs could ultimately be applied to fast food, alcohol and violent TV programming.
The AAAA, together with the Association of National Advertisers and the American Advertising Federation, has sent a six-page letter to Judd Gregg, the chairman of the Senate committee on health, education, labour and pensions. The letter calls the proposed legislation "content-based censorship of advertising" and argues that it would allow individual states and local governments to impose their own restrictions, resulting in "a crazy quilt of inconsistent laws, making tobacco advertising virtually impossible".
Cigarette manufacturers have increased their advertising and promotional spending dramatically in recent years, despite declining sales. The annual report by the Federal Trade Commission on tobacco, which supplies figures several years old, put spending in 2001 at $11.22 billion in 2001, the most that has ever been spent on the product and a year-on-year rise of 17 per cent. Most of this spending was on promotional campaigns. Traditional media advertising has declined, with newspaper adspend down 38.7 per cent to $31.7 million and magazine adspend down 41.4 per cent to $17.9 million.
What will happen to the measure next is unclear. The bill goes next to a joint Senate-House of Representatives committee for further debate.
Most agency bodies expect the House to accept the Senate's version of the legislation, taking it one step away from being law. "If the law is passed, we will almost certainly contest it in the Supreme Court," O'Brien says.
The legislation is not without its supporters, though. Aside from a range of politicians and public-interest groups, which have hailed the Senate's decision as the culmination of a long battle, Philip Morris USA is an unlikely backer of the proposal.
Industry insiders say the tobacco manufacturer's stance is a mixture of a preference for dealing with one body, rather than 50 attorneys general across the states and a desire to stop tobacco ads while it has the larger part of the market, locking its brand share.
US TOBACCO LEGISLATION AT A GLANCE
1964: Surgeon General Luther L Terry issues landmark report declaring
smoking a health hazard
1966: Cigarette manufacturers required to include health warnings on all
1971: Federal ban on television and radio advertising comes into effect
1973: Arizona becomes the first state to restrict smoking in public
1984: Health warnings strengthened on cigarette packets
1988: In the first ever ruling against the tobacco industry, the Liggett
Group, the parent company of Liggett & Meyers, is found responsible in
the death of the smoker Rose Cipollone. The $400,000 damages
award is overturned by a federal court in 1990
1994: Six cigarette manufacturers testify before Congress that nicotine
is not addictive
1995: Tobacco ads removed from TV camera line of sight at sporting
1997: All major US tobacco manufacturers sign agreement that would
restrict tobacco advertising. Congress does not approve it
1999: The tobacco industry approves the 46-state Master Settlement
Agreement, totalling $206 billion to be paid by the industry
1999: Tobacco companies agree to remove all outdoor advertising
2004: FDA moves to control tobacco production and marketing; tobacco
advertisers will be bound by 1997 legislation if the proposal is