Tobacco Control Measures and the WTO s TRIPS Agreement: Recent Developments

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Lilian Pearson
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1 Workshop on Trade and Investment Issues WHO / FCTC Secretariat Geneva, 31 March 2014 Tobacco Control Measures and the WTO s TRIPS Agreement: Recent Developments Roger Kampf, WTO Secretariat 1 Measures Concerned / Objectives Australia s Plain Packaging Bill: Cigarette packaging of single colour Brand name in standard letters Health warnings (75% front, 90% back) Stated objectives: Reduce appeal of tobacco products Increase effectiveness of health warnings Reduce ability to mislead consumers about harmful effects of smoking Similar proposals in NZ, Ireland, UK EU Tobacco Directive (plain packaging may be introduced by member States) 2 1

2 4/2011 Australia notifies proposed Bill to TBT Cttee Since 6/ /2011 Regularly raised in TRIPS C. / TBT Cttee Australia s Bill becomes law Timeline: Selected Key Events 3/2012 First request for consultations by Ukraine 7/2012 NZ notifies proposed Bill to TBT Cttee 9/2012 First panel established (DS434, Ukraine) Since 12/2012 Ban of non-compliant products in Australia 1/2013 EU notifies draft directive to TBT Cttee Since 2013 TRIPS C. discusses projects:nz, EU, Ireland 12/2013 NZ introduces draft Bill to Parliament 3/2014 EU adopts revised tobacco directive 3 TRIPS Council Discussions General rule: WTO Members to notify laws and regulations (Art.63.2 TRIPS) Here - issues regarding draft legislation or projects are raised: Australia New Zealand EU Tobacco Directive (including health warnings covering 65% of front/back packages; standardized packaging requirements; ban on placing on the market of products with characterizing flavours/containing additives increasing toxic/addictive effect; ban on misleading labelling and slim packages) Ireland (announced plain packaging legislation) Proponents requested to suspend legislative initiatives, awaiting outcome of Australia DS cases 4 2

3 Positions Taken in TRIPS Council Against plain packaging and other measures: Ukraine, Honduras, Dominican Republic, Cuba, Indonesia Supporters include: El Salvador, Moldova, Nicaragua, Nigeria, Philippines, Zambia, Zimbabwe For plain packaging measures: Australia Supporters include: Canada, New Zealand, Norway, Uruguay Others point at systemic concerns that call for careful consideration (right to take measures and TRIPS consistency), including: China, Switzerland 5 Arguments Against Measures While recognizing right to take measures to protect public health: inconsistency with various TRIPS provisions (see next slide) Inconsistency with TBT (Art. 2.1, 2.2) Inconsistency with GATT 1994 (Art.I, III:4, IX:4) Measures not justified insufficient evidence: Unclear whether stated objectives would be achieved by measures and therefore whether those measures would be justified Unintended side effects: Price competition Increased counterfeiting and smuggling Economic and social impact (see slide on figures) Repercussions on other products (alcohol, food) No binding effect of FCTC Guidelines 6 3

4 In Particular: TRIPS Arguments TRIPS Article DS434 DS435 DS441 DS458 (consult.) DS (+ Paris Convention) (b) Arguments For Measures (1) Art.8.1 TRIPS: Right to take necessary measures to protect public health that are TRIPS consistent Confirmed by Doha Declaration: TRIPS does not and should not prevent Members from taking measures to protect public health TRIPS can and should be interpreted in a manner supportive of WTO Members right to protect public health Measures equally applied to all products regardless their origin no discrimination 8 4

5 Arguments For Measures (2) Article 20 TRIPS: Special requirements justified Evidence: Impact of tobacco consumption on health (see figures next slide) Logical next step to earlier tobacco control measures Literature shows impact of plain packaging on smoking behaviour Increase in counterfeiting not expected as anti-counterfeiting markings continue to be permitted Recommended by Guidelines on Art. 11, 13 FCTC 9 Figures Used in TRIPS Council Debate Health and Economic Impact WHO: Tobacco consumption at origin of 30% of all cancers, 40% of chronic respiratory diseases, 10% of cardiovascular diseases 6 million deaths/year caused by (in)direct tobacco consumption By 2030: >80% of tobacco-related deaths in LMICs > US 500 billion annual drain on world economy Australia: > deaths/year > $ 31.5 billion costs/year 2.8 mio (16.3%) of 18+ year old daily smokers In LA/Caribbean: deaths to triple by 2020 (9.4% of total deaths) NZ: deaths/year Canada; deaths/year Social and Economic Impact Dominican Republic: Affects > jobs ( in manufacturing, in tobacco sector more generally), plus jobs indirectly depending on tobacco industry Affects 10% of total exports worth USD 520 million in 2012 Leading exporter of cigars in volume terms (49% global trade) USD 2.8 bn cumulative investment in this sector Zimbabwe: > tobacco growers, of which 82% small-scale farmers > families plus 5.67 mio dependents rely on tobacco farming Nicaragua: direct jobs and indirect jobs Exports worth USD 185 million 10 5

6 DS Cases: State of Play Complaining Parties Third Parties / Members Joining Consultations DS 434: Ukraine Consultations requested: Panel first requested: Panel established: DS 435: Honduras Consultations requested: Panel first requested: Panel established: DS467: Indonesia Consultations requested: Panel first requested: Panel established: DS 441: Dominican Republic Consultations requested: Panel first requested: DS458: Cuba Consultations requested: Including 22 Members reserving third party rights in three panels: Brazil, Canada, China, Cuba, EU, 34 Guatemala, India, Japan, Korea, Malaysia, Mexico, NZ, Nicaragua, Nigeria, Norway, Oman, Philippines, Chinese Taipei, Thailand, Turkey, US, (25) Uruguay 12 Including 10 Members joining both consultations: Brazil; Canada; EU; Guatemala; Honduras; NZ; Nicaragua; 11 Norway; Ukraine; Uruguay 11 Useful Sources (1) TRIPS Council minutes: IP/C/M/66 ( ) IP/C/M/67 ( ) IP/C/M/69 ( ) IP/C/M/72 ( ) IP/C/M/73 ( ) IP/C/M/74 ( ) IP/C/M/75 ( ) Communications to TRIPS Council: IP/C/W/565 (Dom. Rep.) IP/C/W/567 (Moldova) Notifications by Australia: IP/N/1/AUS/O/2-4 (Tobacco Plain Packaging Act and Regulations 2011; Tobacco Plain Packaging Amendment Regulation 2012) IP/N/1/AUS/T/7 (Trade Marks Amendment Act 2011) 12 6

7 Useful Sources (2) Requests for DS consultations / panel establishment: WT/DS434/1 and 11 (Ukraine) WT/DS435/1 and 16 (Honduras) WT/DS441/1 and 15 (Dominican Republic) WT/DS458/1 (Cuba) WT/DS467/1 and 15 (Indonesia) DS Body minutes: WT/DSB/M/321 (1 st request to establish panel, Ukraine) WT/DSB/M/322 (2 nd request to establish panel, Ukraine) WT/DSB/M/325 (1 st request to establish panel, Honduras) WT/DSB/M/337 (2 nd request to establish panel, Honduras) WT/DSB/M/327 (1 st request to establish panel, Dom.Rep.) 13 Conclusions Next steps in DS procedures Cases for which panel has been established: Ukraine, Honduras, Indonesia Case for which first request to establish panel has been made: Dominican Republic Case in consultation: Cuba Systemic concerns raised: Security and predictability of DS mechanism Resources 14 7

List of tables. I. World Trade Developments

List of tables. I. World Trade Developments List of tables I. World Trade Developments 1. Overview Table I.1 Growth in the volume of world merchandise exports and production, 2010-2014 39 Table I.2 Growth in the volume of world merchandise trade