VZCZCXRO5078
PP RUEHMA RUEHPA
DE RUEHDK #2887 3380803
ZNR UUUUU ZZH
P 040803Z DEC 06
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 7028
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/USDA FAS WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION
RUEHZK/ECOWAS COLLECTIVE

UNCLAS DAKAR 002887 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/TPP/ABT, OES/IHA, AF/W AND AF/EPS 
STATE PASS USTR/ENV 
USDOC FOR 4510/OA/PMICHELINI, AROBINSON-MORGAN/KBOYD 
USDOC FOR 3131/CS/ANESA/OIO/GLOOSE/GLITMAN/MSTAUNTON 
USDOC PASS DHYLTON/OCC 
 
E.O. 12958: N/A 
TAGS: EAGR BEXP ETRD EINV AMGT SG
SUBJECT:  PHILIP MORRIS INTERNATIONAL TO BUILD CIGARETTE PLANT IN 
SENEGAL 
 
REF: 05 STATE 50339 
 
¶1.  This is an action request for State Economic Bureau, Office of 
Trade Policy and Commerce, Office of Chief Counsel for International 
Commerce.  See paragraph 6. 
 
Summary 
------- 
¶2.  Per Reftel, Post seeks guidance on Tobacco company Philip Morris 
International's (PMI) request for a letter of support as they 
proceed with construction of a new USD 30 million cigarette 
manufacturing and distribution center in Senegal.  Once completed, 
PMI would be the second largest U.S. investor in Senegal.  PMI is 
concerned about the imposition of an increased import tax and may 
request additional USG assistance if they conclude this is an 
illegal, protectionist effort that only applies to PMI imports.  End 
Summary. 
 
¶3.  Tobacco company Philip Morris International (PMI) has announced 
plans to build a USD 30 million cigarette manufacturing and 
distribution plant in Senegal.  The plant, PMI's first manufacturing 
facility in Africa, would employ 400 workers.  PMI would export 
cigarettes produced in Senegal throughout the eight-country West 
Africa Economic Monetary Union (WAEMU) region.  To ensure that the 
construction of the plant proceeds as planned, PMI representatives 
have requested a letter of support from Ambassador Jacobs to express 
the U.S. Government's expectation that PMI will receive the GOS's 
full and unbiased cooperation as they proceed with construction. 
Until the completion of the plant, PMI will import its Marlboro 
brand of cigarettes from the U.S., which   until September 2006, 
were imported into Senegal by PMI's former Senegalese partner Mtoa 
Imperial. 
 
¶4.  PMI expects to begin production of its Marlboro brand of 
cigarettes in September 2007 at which time it will halt the 
importation of this brand.  According to PMI, Senegal's Investment 
Promotion Agency (APIX) has been instrumental in helping PMI 
identify a site and secure a construction permit in six months.  In 
Senegal's challenging investment climate, PMI considers this a 
record feat.  However, Senegal's Directorate of Customs suddenly 
imposed a 30 percent tax (officially called a "minimum import 
price") on the first container of cigarettes PMI imported into 
Senegal. 
 
¶5.  PMI believes that the 30 percent tax has been instigated by its 
former partner--now competitor, Mtoa Imperial Tobacco.  Mtoa is a 
Senegalese company and is the only local cigarette manufacturer. 
PMI is now the largest importer of tobacco products in Senegal with 
minor competition from local importers and, upon completion of the 
plant, will be Mtoa's biggest competitor.  PMI has agreed to pay the 
tax, with the caveat that that each of its competitors pay the same 
"minimum import price". 
 
¶6.  PMI also questions whether WTO procedures were properly observed 
since, according to PMI, the tax went into effect overnight.  PMI 
estimates that the additional tax will cost over USD 3 million 
through September 2007. 
 
Action Request 
-------------- 
¶7.  Post requests guidance on whether to send a letter from the 
Ambassador to appropriate GOS officials expressing U.S. Government 
support of PMI's investment in Senegal.  Post also requests guidance 
on whether to advocate on behalf of PMI regarding tax and other 
alleged unfair treatment, if requested. 
 
Jacobs