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Cigarette Co. Ends Colombia Imports

June 29, 1999

BOGOTA, Colombia (AP) _ Philip Morris announced Tuesday that it would stop shipping Marlboro cigarettes to Colombia, citing tariffs it called arbitrarily high.

The Colombian government, for its part, accused the tobacco giant of declaring a value for the popular cigarette brand one-fifth the value in the United States, the country of origin.

In a news release, Philip Morris Latin America Sales Corporation Sucursal Colombia said it could not import cigarettes from the United States while they continue to be subject to tariffs ``based on inflated values″ that Colombia’s customs agency began imposing in 1996.

The company said its decision would not affect other products it sells in this Andean nation.

Philip Morris said it had won 6 percent of the Colombian market since it began selling Marlboro cigarettes in 1991.

It claimed the tariffs set by the customs agency, or DIAN, were both illegal in Colombia and violated the GATT international trade agreement.

DIAN spokesman Henry Guarin said Philip Morris had quietly suspended imports a month ago to protest DIAN’s insistence on valuing a pack of Marlboro cigarettes at $1.27 while the company declared a value of 24 cents a pack.

``At the moment, they are negotiating that price with DIAN to see if they can reach a compromise,″ he said.

A Philip Morris spokewoman from the company’s headquarters in New York said no negotiation was occurring, however, adding that the Colombian tariff is set by law.

``At the Colombian import price of 24 cents per pack, if you add operational costs, applicable duties and high excise taxes, this has positioned Marlboro at about 96 cents a pack, the most expensive cigarette in the Colombian market,″ said Elizabeth Cho.

``At the higher valuation DIAN would impose, the local Philip Morris company could not compete.″

Even if Philip Morris halts the legal imports, however, Marlboro cigarettes are not apt to disappear from Colombia.

An estimated 70 percent of the Marlboro cigarettes sold in the country are contraband, said Guarin.

Importing contraband cigarettes, typically from the Caribbean island of Aruba, is a popular way for Colombian drug traffickers to launder money.

In a series of raids on June 10, Colombian authorities seized 130,000 packs of contraband Marlboro, according to DIAN.

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