Responding to the tobacco industry’s claims that plain packaging breaches international trade and investment law

Tuesday 20 May, 2014
by Mark Davison, Jonathan Liberman, and Andrew Mitchell

Last week, we appeared before the Health Committee of the New Zealand Parliament, which is examining the Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill. The Bill would require tobacco products to be sold in plain packaging (promotional elements removed, and large graphic health warnings required), as has been mandatory in Australia since December 2012.

We spoke to our written submission to the Committee, in which we set out why we believe that plain packaging, as proposed in the Bill:

  • would not breach New Zealand's obligations under WTO law, specifically the General Agreement on Tariffs and Trade, the Agreement on Technical Barriers to Trade, and the TRIPS Agreement; and
  • would not breach New Zealand's obligations under international investment law, including not to expropriate property without providing compensation, and to afford investors fair and equitable treatment.

These matters have become important because, along with a scaremongering campaign about the effects that plain packaging will purportedly have on illicit tobacco trade, the tobacco industry's major line of attack in its fight against plain packaging is that it breaches international trade and investment law. These claims are prominent in the written submissions provided to the Committee by the multinational tobacco companies, British American Tobacco, Imperial Tobacco, Japan Tobacco, and Philip Morris.

As we said to the Committee, the importance of public health, and the right of states to take measures aimed at protecting it, are recognised across the international trade and investment regimes. For example, the WTO's Appellate Body has held in EC-Asbestos and Brazil Tyres that the protection of public health is ‘both vital and important in the highest degree'. WTO panels and the Appellate Body have made it clear that: WTO Members are entitled to establish their own policy objectives; some measures work in concert with others; and the effects of some measures cannot be determined until some time in the future.

In our view, the multinational tobacco companies' submissions individually and collectively fundamentally mischaracterise the relevant legal issues, including by:

  • greatly overstating the constraints that international trade and investment agreements impose on governments' autonomy to regulate in the public interest in general and for public health in particular, by
    • mischaracterising obligations, and relatedly
    • understating the regulatory space and flexibilities in the agreements, mischaracterising complementary aspects of a comprehensive approach as ‘alternative measures', and understating the deference that international tribunals show to governments regulating bona fide in the public interest; and
  • misrepresenting the content of the WHO Framework Convention on Tobacco Control, its guidelines and its Punta del Este Declaration on the Implementation of the WHO Framework Convention on Tobacco Control, and the legal significance and weight of these instruments.

Because these mischaracterisations are being repeated all over the world, in relation to not only plain packaging, but also graphic health warnings and other tobacco control measures, we thought it would be useful to share some further observations.

1. The importance of public health is a principle that underpins the TRIPS Agreement

It is true that, as the tobacco industry says, the TRIPS Agreement does not contain a public health ‘exception'. But it doesn't need one to provide regulatory space for public health. The Agreement is underpinned by the principle expressed in Article 8.1 that:

Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.

The fact that this principle ends with the words ‘provided that such measures are consistent with the provisions of this Agreement' does not, as the tobacco industry suggests, render it meaningless, and make public health subservient to obligations with which it purportedly clashes. On the contrary, it emphasizes the flexibilities that are found throughout the Agreement, which are to be interpreted and applied in light of the importance of public health.

2. The Doha Declaration on TRIPS and Public Health is relevant to tobacco control

In the November 2001 Doha Declaration on the TRIPS Agreement and Public Health, the WTO's Ministerial Conference agreed ‘that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health'. It affirmed that ‘the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all'.

While the Declaration was negotiated and adopted in the context of access to medicines, it is clearly expressed to apply to public health more broadly. Defeating the tobacco industry's claim that the Doha Declaration is irrelevant to tobacco control in general, and plain packaging in particular, is the Punta del Este Declaration on the Implementation of the WHO Framework Convention on Tobacco Control, adopted by the Conference of the Parties to the WHO FCTC at its fourth session in Punta del Este, Uruguay in November 2010. The Punta del Este Declaration specifically recalls key provisions of the Doha Declaration.

3. The Punta del Este Declaration supports the adoption and implementation of tobacco control measures

The Punta del Este Declaration was adopted in support of the host country of the COP, Uruguay, which was, and still is more than three-and-a-half years later, facing litigation by Philip Morris against its tobacco packaging and labelling laws under a bilateral investment treaty.

The Punta del Este Declaration should be read in its entirety. Its overall tenor is captured in its declaration of ‘[t]he firm commitment [of Parties] to prioritize the implementation of health measures designed to control tobacco consumption in their respective jurisdictions'. Another of the declarations made is:

That in the light of the provisions contained in Articles 7 and 8 of the TRIPS Agreement and in the Doha Declaration, Parties may adopt measures to protect public health, including regulating the exercise of intellectual property rights in accordance with national public health policies, provided that such measures are consistent with the TRIPS Agreement.

The inclusion of the words ‘provided that such measures are consistent with the TRIPS Agreement', drawing on Article 8.1 of TRIPS, is not, as the tobacco industry asserts, some kind of statement or resigned acknowledgment that tobacco control measures must give way to TRIPS' obligations with which they purportedly clash. On the contrary, the Declaration is a statement by the Parties to the WHO FCTC that TRIPS does not represent a barrier to the implementation of tobacco control measures. This can be discerned by reading the entire declaration, which includes:

  • The recognition ‘that measures to protect public health, including measures implementing the WHO FCTC and its guidelines fall within the power of sovereign States to regulate in the public interest, which includes public health'.
  • The declaration of ‘concern regarding actions taken by the tobacco industry that seek to subvert and undermine government policies on tobacco control'.
  • The declaration that ‘Parties have the right to define and implement national public health policies pursuant to compliance with conventions and commitments under WHO, particularly with the WHO FCTC'.

4. States that adopt plain packaging are implementing their obligations under the WHO FCTC

The tobacco industry tries to make much of the fact that plain packaging is not specifically mentioned in the text of the WHO FCTC, and to argue that States implementing plain packaging cannot be said to be doing so in implementation of their obligations or commitments under the treaty. The industry acknowledges that plain packaging is included in implementation guidelines on Articles 11 (packaging and labelling) and 13 (tobacco advertising, promotion and sponsorship), but it endeavours to portray these guidelines, adopted by consensus by the Conference of the Parties, as next to worthless.

In legal fact, the guidelines are important instruments that represent ‘subsequent agreement[s] between the parties regarding the interpretation of the treaty or the application of its provisions', which, according to the Vienna Convention on the Law of Treaties, ‘shall be taken into account' in its interpretation. They, together with the treaty's preamble, objective, guiding principles and general obligations, bear significantly on the interpretation of its obligations. These obligations include (Article 11.1(a)) to ‘adopt and implement ... effective measures to ensure that each unit packet and package of tobacco products and any outside packaging and labelling of such products also carry health warnings describing the harmful effects of tobacco use' and (Article 13.2) ‘to undertake a comprehensive ban ... on all tobacco advertising, promotion and sponsorship'. The term ‘tobacco advertising and promotion' is very broadly defined in the WHO FCTC as ‘any form of commercial communication, recommendation or action with the aim, effect or likely effect of promoting a tobacco product or tobacco use either directly or indirectly'.

5. Measures such as education programmes and tax increases are not ‘alternatives' to plain packaging.

The tobacco industry argues that WTO law requires States to introduce ‘alternative measures' that would purportedly be less trade restrictive than plain packaging, such as education programmes and tax increases. Leaving aside the question whether plain packaging is indeed trade restrictive, as that term is correctly understood, this falsely suggests that such measures can be characterised as genuine ‘alternatives' to plain packaging.

But this is not how WTO law works. The WTO's Appellate Body has recognized that some public policy challenges can be addressed only through the adoption and implementation of multiple, complementary measures. In the Brazil Tyres case, it said: ‘We recognize that certain complex public health or environmental problems may be tackled only with a comprehensive policy comprising a multiplicity of interacting measures.'

Mark Davison, Professor, Monash University Faculty of Law
Jonathan Liberman, Director, McCabe Centre for Law and Cancer
Andrew Mitchell, Professor, Melbourne Law School

The authors are all members of the Australian Department of Health's Expert Advisory Group on Plain Packaging of Tobacco Products. These are unpaid positions. The views expressed in this submission are the authors' own.

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