Three years after the Food and Drug Administration first proposed rules that would have curtailed most types of tobacco advertising and marketing, tobacco manufacturers in November agreed to a package of far less onerous cutbacks in a deal with state attorneys general.

The new advertising limits are also less severe than those contained in the Senate's McCain tobacco bill that collapsed last June. The ad restrictions are part of a $206-billion deal between the tobacco industry, 46 states, four territories, and the District of Columbia that will put an end to all state lawsuits against the industry. In return, tobacco makers will compensate the states over the next 25 years for public health costs attributed to smoking.

Under the Nov. 23 agreement, tobacco billboards will be banned but retailers may continue to display large signs. Point-of-sale advertising is not restricted as it was under the earlier proposals, nor is magazine advertising. The FDA rules and McCain bill would have reduced most advertising and labeling to a black-and-white "tombstone" format, a limitation not contained in the new pact.

Cartoon characters will be banned from advertising (but not cigarette packs), while human figures like the Marlboro Man will be allowed. Earlier proposals would have banned both cartoon and human characters.

The new deal keeps the ban on non-tobacco merchandise bearing tobacco brand names or logos. It also retains the ban on paid product placements in movies, television, and concerts. Product giveaways are also prohibited. Previous proposals had banned brand sponsorship of virtually all athletic and cultural events as well as teams and entries (e.g., race cars). The new rules prohibit sponsorship of youth-oriented concerts, sports events, and teams. But they do allow each manufacturer to sponsor one brand-name event per year, such as Virginia Slims tennis. Outdoor advertising will be permitted at the event if it promotes the manufacturer's sponsorship.

The rules will allow continued tobacco participation in NASCAR racing, one of the most popular and visible forms of tobacco brand marketing. Companies will be able to sponsor an unlimited number of athletic, social, and cultural events aimed at adults using their corporate name, provided the name is not the same as a tobacco brand.

It may take some time for the sponsorship provisions to take full effect. Tobacco makers will not be forced to "breach or terminate any sponsorship contract" that was in effect on Aug. 1, 1998.

Under the accord, tobacco manufacturers also agreed to fund a five-year antismoking advertising and education program worth $1.5 billion. Companies agreeing to the settlement were Philip Morris, RJR Nabisco Holdings, Brown & Williamson Tobacco, and Lorillard.

Joe Camel Trial. As a result of the new pact, on Jan. 27 the Federal Trade Commission dropped charges against RJR Nabisco Holdings alleging that its Joe Camel cartoon character was aimed at underage smokers. Targeting young smokers amounted to unfair advertising, the FTC had asserted.

The move brought to a halt an administrative trial begun last November. The FTC had pursued the trial even though the cigarette maker had scrapped the Joe Camel campaign in 1997.

The FTC complaint had sought to ban RJR from using Joe Camel in any future ads, to compel RJR to fund an antismoking education program aimed at young people, and to give the FTC data on RJR brand market share among underage smokers.

Once RJR signed the agreement with the states, however, the FTC saw no reason to pursue its charges of unfair advertising. "The relief we were seeking was contained in the settlement with the states," said Lee Peeler, associate director of the FTC's advertising practices division.