Effects of market liberalisation on smoking in Japan The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citation Honjo, K., and Ichiro Kawachi. 2000. 'Effects of market liberalisation on smoking in Japan.' Tobacco Control 9, 2: 193-200. https:// doi.org/10.1136/tc.9.2.193 Citable link http://nrs.harvard.edu/urn-3:HUL.InstRepos:41288319 Terms of Use This article was downloaded from Harvard University’s DASH repository, WARNING: This file should NOT have been available for downloading from Harvard University’s DASH repository. Tobacco Control 2000;9:193–200 193 EVects of market liberalisation on smoking in Japan Kaori Honjo, Ichiro Kawachi Abstract History of tobacco use in Japan Objective—To document the eVect of the Cigarette smoking did not become popular liberalisation of the Japanese tobacco among the Japanese general public until about market on Japanese smoking rates and on 10 years after second world war, lagging 20–30 3 Japanese tobacco industry practices. years behind its popularity in the US. Data source—Asahi Shimbun (major However, the first use of tobacco in Japanese daily newspaper) from 1980 to 1996. history dates from the 16th century, when Por- Study selection—Review of media cover- tuguese merchants brought tobacco to the age on the eVects of market liberalisation southern part of Japan. Smoking spread from south to north, along with the cultivation of following the imposition of the USA’s sec- tobacco leaf. Cigarette manufacturing began tion 301 trade sanction. around 1870 at the beginning of the Meiji era. Data synthesis—The opening of Japan’s At that time, a few large corporations gradually tobacco market to foreign cigarette made cigarette smoking popular among the companies stalled a decline in smoking general population.4 prevalence. Smoking rates among young The Meiji government created a government women increased significantly, and also monopoly over tobacco at the end of the 19th appear to be on the rise among century. A tax on tobacco was introduced for adolescents. Aggressive marketing and the first time in 1883. Then, in order to collect promotional activities by US and Japanese taxes more eYciently to fund the expansion of tobacco companies in response to trade armaments during a series of wars, the govern- liberalisation appear responsible for these ment made leaf production and procurement a adverse trends. Steep increases in sales state monopoly with the Tobacco Leaf through vending machines were also Monopoly Law in 1886. Since then, the possible contributors to the rising Japanese government has been directly smoking prevalence among adolescents. involved in promoting tobacco sales, with the 4 On the positive side, market liberalisation result that cigarette smoking became popular. indirectly promoted smoking control The Japanese government in the late 1890s eVorts in Japan, by causing an anti- created the Japan Public Monopoly Corpora- smoking movement to coalesce. tion (JPMC), which later became one of the Conclusion—Market liberalisation in largest tobacco companies in the world. In the early 1980s, the Japanese government began Japan played a significant role in increas- discussions on the privatisation of JPMC. ing smoking prevalence among young Although strongly opposed by the JPMC women and adolescents while helping to union, the retailers association, the farmers transform the issue of smoking in Japan association, and anti-smoking groups, the from a matter of individual choice to a Japanese government in 1985 converted JPMC public health problem. to Japan Tobacco, Inc (JT), a non- (Tobacco Control 2000;9:193–200) governmental corporation, in order to enhance Keywords: Japan; market liberalisation the corporation’s economic growth.5–10 Pres- sure for market liberalisation from the US gov- The high prevalence of cigarette smoking is ernment influenced this decision.10 Beginning one of the most serious health problems in in 1978, the US government requested the Japanese government to decrease the tariV on Department of Health Japan. The prevalence of cigarette smoking and Social Behavior, among adult Japanese males (age 20 years and US tobacco, and gradually pressured the Japa- Harvard School of older) was 57.5% in 1996, while that among nese government to open its market to US Public Health, Boston, 1 tobacco exports. The conversion of JPMC to Massachusetts, USA adult Japanese females was 14.2%. The preva- K Honjo lence of cigarette smoking among Japanese JT was partly motivated by the Japanese I Kawachi males is the highest among developed government’s belief that it was necessary to make JPMC competitive against the antici- countries.2 The overall smoking rate has Correspondence: Kaori pated intrusion of US tobacco. A plan to break Honjo, MPH, Department of declined significantly since its highest point in Health and Social Behavior, up JPMC into several corporations was resisted Harvard School of Public the 1960s, but has stalled in the late 1980s. by JPMC11 and the government adopted a plan Health, 677 Huntington One possible reason for this stagnation was the Avenue, Boston MA 02115, to keep tobacco a domestic monopoly. USA; opening of the Japanese market to foreign khonjo@h sph.harvard.edu tobacco companies in 1987. We examine the Received 22 September 1999 eVect of the liberalisation of the Japanese Market liberalisation and in revised form 1 February 2000. Accepted tobacco market on the Japanese tobacco The decline of the US domestic market was a 10 February 2000 industry and on Japanese society. critical factor in the eVorts of US manufacturers 194 Honjo, Kawachi Table 1 Brief summary of market liberalisation process in Japan 25 1978 First US government request for Japan to decrease tariV on US tobacco 1982 TariV on imported tobacco reduced from 90% to 20% 20 1985 Conversion from Japan Public Monopoly Corporation (JPMC) to Japan Tobacco Inc (JT) 15 Monopoly in sales and distribution ended Budgetary ratio concept in advertising abolished in favour of restriction in the total volume of radio, televison, and print advertising. 10 1987 TariV on US tobacco abolished Market share (%) 5 to open foreign markets. With the rise of the anti-tobacco movement following the 1964 0 surgeon general’s report, tobacco consumption 12–17 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 per capita in the US declined steadily. The Year US tobacco industry, which needed to seek Figure 1 Market share: imported cigarettes as percentage new markets for its future business, targeted of all cigarettes sold in Japan 1982 to 1996. the Asian market after exploring Latin America in the 1960s.16 18 19 Japan, potentially a lucrative promotion activities, which had been already market for US tobacco companies, was allowed with few restrictions in Japan (table 12 16 18 targeted as the entry point to the Asian 1). market.16 During this period, the US government faced a serious trade imbalance, EVects of market liberalisation on US especially with Japan.20 Against this backdrop, tobacco industry the US government cooperated with the US US cigarette exports increased significantly in 1987, reversing a gradual decline in the early Cigarette Export Association (USCEA), 25 26 (representing Philip Morris, RJ Reynolds, and 1980s. Japan became the leading country to Brown and Williams, and a subsidiary of Brit- which US cigarettes were exported. As a ish America Tobacco), which pressured the proportion of total US exports, US cigarettes exported to Japan increased from 16% in 1986 Japanese government via the US Trade Repre- 27 sentative to remove impediments to US to 32% in 1987. The volume and sales of tobacco exports.12 16–18 imported cigarettes in Japan in 1987 were Tobacco, in fact, was one of the symbolic approximately 2.5 times those in 1986: 11.9 billion pieces and 165.7 billion yen in 1986, products that generated trade disputes compared with 30.3 billion pieces and 368.0 between Japan and the US, in the same way as billion yen in 1987.28 Ninety four per cent of beef and oranges have done. In Japan, major cigarettes imported into Japan in 1987 were newspapers often carried “tobacco” in their US products.27 Imported cigarettes as a headlines of their coverage of negotiations with percentage of all cigarettes sold in Japan also the US Trade Representative and used the increased precipitately, from 3.9% in 198621 to issue to exemplify the bullying tactics of the US 9.8% in 1987, and reached 22.3% by 19961 government. On the other hand, in the US, (fig 1). tobacco was one of the symbols used to Three major reforms operated the Japanese illustrate the closed nature of the Japanese market: lowering prices by abolishing the tariV, market; the US media rarely carried articles expanding sales networks, and eliminating that questioned the government’s attempts to restrictions on advertising and promotion.12 open the Japanese market. At that point The high tariV (90%) was regarded as one of tobacco trade was addressed solely as an the most significant obstacles preventing US economic and political issue, not as a health cigarettes from penetrating the Japanese issue. market. The average price of a pack of The volume of US tobacco exported to imported cigarettes in Japan was 100 yen Japan increased from the end of the 1970s and higher than that of domestic cigarettes in 1980 significantly expanded in the 1980s because of owing to this high tariV and an ad valorem sales the US government’s sustained eVort to open tax—for example, a pack of Lark cigarettes cost the Japanese market; however, the market 290 yen, while a pack of Mild Seven cost 180 share of foreign cigarettes in Japan was still yen.29 30 Responding to intense pressure from small: 3.9% in 1986.21 The USCEA, frustrated the US government, the Japanese government with the slow expansion of sales in Japan, con- reduced the tariV on imported cigarettes from tinued to criticise what it perceived as Japan’s 90% to 20% by 1982.