Smoke and mirrors in trade disputes will harm public health

Author: Matthew Rimmer, ANU

The 2014 World Cancer Report, issued by the World Health Organisation (WHO), indicates that the number of new cancer cases has reached an all-time high. On the 19 May 2014, Dr Margaret Chan, the Director-General of the WHO, gave a stirring speech to the 67th Health Assembly on the heavy health burden associated with cancer. Chan was particularly interested in public health measures designed to combat the global tobacco epidemic.

Chan expressed her opposition to the use of investor-state dispute settlement clauses by Big Tobacco ‘to handcuff governments’, particularly in respect of lost profits following the introduction of cigarette packaging designed to reduce smoking. In a similar vein, former Australian Prime Minister Julia Gillard has warned that investor-state provisions give companies ‘a new place to take disputes — a tribunal that stands separate from and above domestic legal systems’. Philip Morris, an American tobacco and cigarette company, has challenged Uruguay’s graphic health warnings for tobacco products under an investment agreement between Uruguay and Switzerland,as well as Australia’s plain packaging of tobacco products under an investment agreement between Australia and Hong Kong.

There have been parallel problems in the field of access to medicines. Eli Lilly, an American pharmaceutical company, has challenged Canada’s Patent Laws under an investment clause of the North-American Free Trade Agreement.More generally, the United Nations Conference on Trade and Development has reported a sharp rise in Investor-State Dispute Settlement disputes.

Such disputes are not an isolated occurrence. Multinational tobacco companies have lobbied for the inclusion of investor-state dispute settlement in submissions to the United States Trade Representative for regional trade deals such as the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP). Big Tobacco also intends to use investment clauses as a means of delaying and frustrating the roll-out of the World Health Organization’s Framework Convention on Tobacco Control across the world.

Chan’s speech also alluded to the battle over Australia’s plain packaging of tobacco products in the World Trade Organization (WTO). Five countries — Ukraine, the DominicanRepublic, Honduras, Cuba, and Indonesia — have challenged Australia’s regime of plain packaging of tobacco products in the WTO. The complainants argue that the plain packaging of tobacco products violates the TRIPS Agreement 1994, which deals with trade-related aspects of intellectual property, as well as the GATT. The countries also allege that Australia has breached articles of the Agreement on Technical Barriers on Trade 1994. These arguments echo the position of the large multinational tobacco companies.

In response, Australia has maintained that the plain packaging of tobacco products is designed to address the global tobacco epidemic identified by the WHO, and to implement the WHO’s Framework Convention on Tobacco Control. Australia has also emphasised that plain packaging of tobacco products is consistent with its international trade obligations under the TRIPS Agreement 1994, the Agreement on Technical Barriers on Trade 1994, and the

The five complaints have progressed slowly. There is some concern that the complainants have been stalling and delaying the dispute. In May 2014, WTO Director General Roberto Azevêdo appointed three panellists to examine the dispute against an Australian public health measure requiring tobacco products to be sold in plain packaging in the country. A decision is expected in six months.

A number of leading experts recently highlighted the strength of Australia’s case in a submission and a presentation to the New Zealand Parliament. The submission observed that tobacco companies and their allies were prone to misrepresenting international trade law, 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.’ Australia’s position is  strongly supported by countries, such as Ireland and New Zealand, who are also implementing plain packaging of tobacco products.

Chan also expressed reservations about the public health impact of regional trade agreements, such as the TPP and the TTIP. Chan raised concerns about the impact of deals on public health issues,  such as access to affordable medicines, as well as tobacco control measures like graphic health warnings, and the plain packaging of tobacco products.She observed that regional trade agreements can have a chilling effect: ‘For bilateral and regional free trade agreements, as well as under World Trade Organization agreements, pressure can also come from fear that trade sanctions may be imposed by trading partners.’

Likewise, former New York Mayor Mike Bloomberg has also expressed his concerns that the TPP will promote the free trade in tobacco. Bloomberg has stated that ‘the Obama administration appears to be on the verge of bowing to pressure from a powerful special-interest group, the tobacco industry, in a move that would be a colossal public health mistake and potentially contribute to the deaths of tens of millions of people around the world.’

To conclude, Chan emphasised that ‘health is a smart investment’, and that public health must be prioritised over economic interests. She argued that trade agreements which allow corporations to challenge government policies introduced to protect public health concerns are fundamentally out of step with this reality. Chan looked forward to the development of strategies for a ‘tobacco end-game’ that could end tobacco use altogether.

Matthew Rimmer is an Australian Research Council Future Fellow, working on Intellectual Property and Climate Change. He is an Associate Professor at the ANU College of Law, the Australian National University, and an associated director of the Australian Centre for Intellectual Property in Agriculture.