U.S. cigarette exports and cigar imports hit record highs in 1996.

PRINCETON, N.J.--(BUSINESS WIRE)--March 11, 1997--As the worldwide popularity of American-Blend cigarettes continues to grow, U.S. cigarette manufacturers exported an all-time record 243.90 billion cigarettes in calendar year 1996, up 5.5% from 1995. Simultaneously, the growing popularity of premium cigars in the U.S. market created a record number of imports at 324.2 million cigars, up 64.4% over 1995. The boost in large cigar imports, combined with other factors, lowered the total positive trade surplus generated by the tobacco industry by 10.0% from the record $5.88 billion recorded in 1995 to $5.30 billion in 1996. The trade surplus, or exports minus imports, generated by the U.S. tobacco industry stands in contrast with the overall record 1996 U.S. merchandise trade deficit of $166.60 billion, according to the recently released Tobacco Trade Barometer published by the Tobacco Merchants Association (TMA), a trade group that tracks the economic performance of the tobacco industry around the world.

The industry's year-end positive trade contribution accounted for 20.3% of the nation's overall agricultural trade surplus (exports minus the customs value of imports for consumption) of $26.88 billion in 1996. "The category of tobacco and tobacco products was the third largest contributor to the nation's agricultural trade surplus," TMA President Farrell Delman said, noting that the tobacco and tobacco products category surpassed the animals and animal products, cotton, and fruits and vegetables categories in its contribution to the overall agricultural trade surplus. The grains and feed category was the leading contributor to the nation's agricultural balance, followed by oilseed and oilseed products.

The decrease in the 1996 U.S. tobacco industry surplus can be attributed to three main factors stated Delman, listing them in their order of importance: an increase in leaf import value; an increase in tobacco product import value; and a decline in cigarette export value. Leaf imports increased in 1996 due to the replacement of the "Domestic Content" law, which was deemed an unlawful restriction on trade by the World Trade Organization, with the implementation of the Tariff Rate Quota (TRQ) system in September 1995. Large cigar imports lead the increase in tobacco product import value, while a strong U.S. dollar was the primary reason the value in cigarette exports declined 0.7% on a 5.5% increase in volume, Delman added.

The positive leaf tobacco trade balance was down more than $507.4 million, or 60.0%, to $337.8 million as more imported leaf was required to meet the needs of higher U.S. cigarette exports, especially given tight U.S. leaf supplies. Implementation of the TRQ system has allowed leaf import figures to once again approach those levels set before the "Domestic Content" law came into effect in January 1994.

Total imports of tobacco products in 1996 were valued at $279.4 million, up over $95.7 million, or 52.1%, due to a 100.8% growth in the value of large cigars to a record $186.7 million, accounting for 66.8% of total product import value. The top 5 countries exporting large cigars to the U.S. are: the Dominican Republic (45.6% of total large cigar imports); Honduras (30.4%); Nicaragua (5.6%); Jamaica (4.8%); and Mexico (4.5%).

U.S. CIGARETTE EXPORTS

Total exports of tobacco products in 1996 were valued at $5.24 billion. In 1996, U.S. cigarette manufacturers exported a record 243.90 billion cigarettes, up 12.80 billion pieces or 5.5% over 1995, the previous record year. The value of cigarette exports was $4.74 billion, down slightly from 1995's $4.77 billion. "During the past decade, the growth in, and share of, total exports represented by high-value products, like cigarettes, has continued to grow relative to the share of unmanufactured leaf exports, ensuring that high paying factory jobs remain in the U.S.," TMA President Delman said.

Japan ranked as the leading destination for U.S. cigarette exports with over 67.74 billion pieces, valued at $1.52 billion. The top ten destinations, which accounted for nearly 83.7 percent of all U.S. cigarette export shipments in 1995 were: Japan (27.8% of total); Belgium (25.3%); Russia (7.0%); Lebanon (4.8%); Cyprus (3.9%); Saudi Arabia (3.8%); Singapore (3.3%); Finland (2.7%); South Korea (2.6%); and Hong Kong (2.5%).

"Counting both leaf tobacco and cigarette exports, Japan continued to rank first as the largest market for U.S. tobacco," Delman said, adding that the tobacco trade surplus with Japan which has been growing contributes to the decline in the overall deficit with Japan the U.S. has been experiencing.

Founded in 1915, the TMA is a data management trade association supported by companies and organizations representing all sectors of the worldwide tobacco and allied industries including manufacturers, suppliers, farm groups, leaf dealers, tobacco product distributors, securities firms, and management consultants, among other industry sectors. The data for this study derives from data managed by the Foreign Trade Division of the U.S. Census Bureau in the U.S. Department of Commerce and the Economic Research Service of the U.S. Department of Agriculture.

CONTACT: Tobacco Merchants Association

James Vari

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