U.S. Trade Policy and Cigarette Smoking in Asia

Abstract

During the 1980's and early 1990's, the cigarette markets in Japan, Taiwan, South Korea, and Thailand were opened to U.S. cigarettes through actions taken under Section 301 of the 1974 Trade Act and its subsequent amendments. Using pooled annual time-series data from ten Asian countries, the impact of the Section 301 agreements on the market share of U.S. cigarettes and on per capita cigarette consumption is examined. Estimates from fixed effects models indicate that the market share of U.S. cigarettes in Japan, Taiwan, South Korea, and Thailand increased dramatically after the agreements as consumers switched from the brands produced by domestic monopolies to the brands of U.S. cigarette producers. In addition, simulations based on the regression results indicate that per capita cigarette consumption in 1991 in the four affected countries was nearly ten percent higher than it would have been had the markets remained closed to U.S. cigarettes.