World Trade Organisation gives Australia's plain tobacco packs the (draft) thumbs up

The World Trade Organisation (WTO) has reportedly backed Australia’s laws on plain tobacco packaging implemented from December 2012.

The apparent decision marks the end of the last of three cases brought against Australia’s plain packaging; it will almost certainly open the floodgates and see other nations implementing the measure.

However, the report quoted two unnamed sources and no details of the final decision, which will be formally available in July. It is also not clear which precise stage of the dispute we’re at. Depending on the accuracy of the media report, there may well be three of four more stages before the report is finalised, outlined here:

• first draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment. This report does not include findings and conclusions.

• interim report: the panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review.

• review: the period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides.

• final report: a final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides the disputed trade measure does break a WTO agreement or an obligation, it recommends the measure be made to conform with WTO rules. The panel may suggest how this could be done.

• ruling: the report becomes the ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report (and in some cases both sides do).

What is the WTO dispute?

Several minnow nations in global tobacco trade (Cuba, the Dominican Republic, Honduras) joined by a major tobacco grower and consumer, Indonesia, brought the case to the WTO. Ukraine had earlier been part of the action, but withdrew.

The applicants argued that Australia’s plain packs breach the WTO’s General Agreement on Tariffs and Trade, Agreement on Technical Barriers to Trade, and Agreement on Trade-related Aspects of Intellectual Property Rights, in that they are discriminatory, more trade restrictive than necessary, and unjustifiably infringe upon trademark rights. The WTO has been working on the dispute for the past five years.

The final decision will be open to appeal from July, which may excite the tobacco industry with the prospects of further delaying the will of other nations to introduce their own plain packaging legislation.

Nations, not companies, must bring disputes to the WTO. But British American Tobacco and Philip Morris have ploughed support into the case. The companies spent many millions fighting plain packs in Australia and the UK.

The long fight against plain packaging

The WTO case is the third failed attempt by Big Tobacco and its national supporters to wreck plain packaging using laws and treaties.

In October 2012, the full bench of Australia’s High Court upheld plain packaging law in a humiliating 6-1 judgement. But there was worse to come for the tobacco companies and their vast, deep pockets.

In June 2011, Philip Morris Asia took Australia to the Permanent Court of Arbitration in an investor-state dispute.

There were three arbitrators: Australia appointed Professor Don McRae of the University of Ottawa; Philip Morris Asia appointed Professor Gabrielle Kaufmann-Kohler; and the Permanent Court of Arbitration appointed Professor Dr Karl-Heinz Böckstiegel as the presiding arbitrator.

In the final judgement in May 2016 all three arbitrators – including the Philip Morris Asia appointed arbitrator – supported the Australian government’s law.

Today’s news should be three strikes and out for any legal fantasies that Big Tobacco has about legally strangling nations’ rights to legislate plain packaging.

But past form will almost guarantee these companies will continue to intimidate particularly small, impoverished nations. Big Tobacco will continue to launch domestic law cases against plain packaging where the costs of defending laws against wealthy transnationals may be daunting.

Big Tobacco has been implicated in bribery allegations, and tobacco companies may pay special attention to nations with high corruption indexes where nascent efforts to introduce plain packaging might be easily distracted.

Eyes on Australia

There has been immense international interest in what has happened in Australia with plain packs. Some 54 months after Australia implemented standardised plain tobacco packaging, here’s the state of play in 18 nations:

• six nations have legislated for and have implemented or will shortly be implementing plain packaging (Australia, France, UK, Norway, Ireland and Georgia)
• three nations have legislated but not yet implemented (Hungary, New Zealand, Slovenia)
• seven nations have legislation in early stages or under formal consideration (Belgium, Canada, Finland, Mauritius, Singapore, South Africa, Sweden, Uruguay)
• two nations have signs of early political momentum (Brazil, Chile). While Chile does not have what is officially described as plain packaging, it has graphic warnings that take up the front and back of packs.

Why is the WTO case important?

The essence of the WTO case is whether nations have a right to introduce laws intended to protect and promote the health of their citizens.

In all this, we need to reflect that there are many examples of governments introducing strong restrictions, bans or penalties on the sale or promotion of commercial products for cultural or health reasons.

Many nations, including Australia, severely restrict civilian access to firearms; asbestos products are banned in several nations; pharmaceutical products are subject to stringent formulation, dosage, access, packaging and sales controls, with direct-to-consumer advertising of prescribed products allowed in only two nations (the USA and New Zealand); several Islamic nations prohibit the sale of alcohol; food safety regulations have been accepted as the norm for many decades; many nations impose strict quarantine regulations on importing exotic animals, insects and biological material.

We have not seen, for example, firearms manufacturers lobbying nations to bring cases to the WTO or other global tribunals to force such nations to relax their gun control laws. This is because of the principle of nations being able to have sovereignty over their own internal laws and regulations.

Restrictions and regulations on tobacco packaging need to be seen against this background and against the exceptionally deadly and addictive status of tobacco – a product which sees two in three of its long-term users die prematurely.

In this, tobacco is unique among all consumer goods. It is one of the reasons why tobacco was also the subject of the world’s first global health treaty, the World Health Organisation’s Framework Convention on Tobacco Control, now ratified by 180 nations, representing 89% of the world’s population.

Take a giant global bow, Nicola Roxon, the former Labor health minister and attorney general who championed plain tobacco packaging in Australia during the Rudd and Gillard governments against trenchant opposition from the global tobacco industry.

Removing the emperor’s clothes: Australia and tobacco plain packaging by Simon Chapman and Becky Freeman, is freely available to download.