14.12.2007 – 12:00

JT International and the European Commission sign a 15-year Agreement to combat contraband and counterfeit cigarettes

Japan Tobacco International (JTI)
today announced the signing of a 15-year agreement with the European
Commission and 26 Member States of the EU defining their cooperation
to combat the illegal trade of cigarettes in the European territory.

"The fight against cigarette smuggling and counterfeiting is an
important business priority for JTI," said Pierre de Labouchere,
President and CEO of JT International.  "Combining the resources and
coordinating the efforts of both government and business is the only
solution," he explained.

In 2006, nearly 5 billion contraband cigarettes were seized in the
European Union and this represents only what has been reported.  The
figure for seizures of counterfeit cigarettes is estimated to be
about 65 percent of that total. The World Customs Organization (WCO)
estimates that Europe as a whole accounts for 75 percent of total
cigarettes seized in the world.  While a precise figure for
counterfeit cigarettes is difficult to establish, it is clear that
the production of fake cigarettes has increased dramatically over the
last three years.

"This massive, sophisticated global business penalizes our
legitimate customers and our consumers - who sometimes don't get what
they pay for - while depriving governments of legitimate revenues,"
continued Mr. de Labouchere.

The forward-looking agreement announced today builds upon and
confirms a number of JTI initiatives that have been implemented over
the years.  Under its terms, the company will maintain and expand its
current internal compliance programs that address the manufacture,
sale, distribution and storage of cigarettes; it will facilitate
investigations of reported breaches and suspicious transactions;
continue JTI's certification of contractors and customers while
ensuring transparent payment procedures for all transactions.

The agreement provides for clear processes around seizures and
close cooperation with the European Commission, the European
anti-fraud office (OLAF) and the law enforcement authorities of
Member States.

In the field of tracking & tracing (T&T), where tools & solutions
are rapidly emerging, JTI has taken a very methodical approach in
identifying an optimal solution that is beneficial to all concerned
parties.

The company's initial goals are to be in a position to label
master cases of cigarettes in a manner which will allow government
officials to easily obtain key information relating to the
manufacture, storage and sales of its products.  In a second phase,
JTI will extend markings to cartons - and if appropriate to packs. 
In the event products are diverted into the illegal market, a viable
T&T solution will enable JTI and governments to cooperate more
closely in getting to the source of such diversions and take
immediate corrective actions.

The  agreement calls for JT International to pay USD 400 million
over 15 years to the EC and participating Member States, which can be
used in additional support for anti-contraband and anti-counterfeit
initiatives to help address these problems over the European
territory.

In keeping with this spirit of cooperation, any future lawsuits
against JTI for civil claims arising out of alleged past conduct
related to illicit trade activity are excluded by the agreement.  All
parties believe that this is the best way to tackle a problem that
none of them can solve on its own.

On 18 April 2007, the JT Group acquired Gallaher Plc.  A stated
objective of JTI is to operate as one single company, and therefore a
framework and timetable have been agreed upon to include the former
Gallaher entities in the agreement.  General compliance obligations
will apply immediately.  Others like Tracking and Tracing (T&T) or
Know Your Customer (KYC) are to be introduced on realistic yet
aggressive time scales.

"Our joint objective was to establish an ongoing relationship of
meaningful cooperation to combat the illicit trade of cigarettes into
or through the European Union," commented Mr. de Labouchere.  "I am
pleased that in doing so, we have not limited ourselves to past or
present problems but more importantly we have established a solid
forward-looking partnership," he concluded.

JT International is a subsidiary of Japan Tobacco, Inc. (JT), the
world's third largest international manufacturer of tobacco products.
 JT's portfolio includes top cigarette brands such as Winston, Camel
and Mild Seven; as well as Benson & Hedges, Silk Cut, LD, Sobranie
and Glamour. The JT Group's total tobacco net sales (excluding taxes)
amount to USD 14.4 billion (US $1 = ¥118.05) in the fiscal year ended
March 31, 2007. With headquarters in Geneva, Switzerland, JTI has
23'000 employees and operations in 120 countries.

Documents pertaining to the Agreement and other related materials
are available on www.jti.com

Contact:

JTI Press Office
Joelle Jost
E-Mail: Jti.press.office@jti.com
Tel.: +41/22/703'02'91