Certain measures concerning trademarks, geographical indications and other plain packaging requirements applicable to tobacco products and packaging under the WTO
Plain packaging and an alleged breach of TRIPS and TBT Agreements
Plain tobacco packaging, also known as generic, standardized or homogeneous packaging, refers to packaging that requires the removal of all branding (colors, imagery, corporate logos and trademarks), permitting manufacturers to print only the brand name in a mandated size, font and place on the pack, in addition to the health warnings and any other legally mandated information such as toxic constituents and tax-paid stamps. The appearance of all tobacco packs is standardized, including the color of the pack. Australia is the only country that currently mandates plain tobacco packaging, as a result of laws that were enacted in 2012. However, the issue steadily gains international attention as plain tobacco packaging is currently being introduced in France, New Zealand, the United Kingdom and Ireland and is being considered in Norway, India, Turkey, Canada, and the European Communities.
Passing the law, the Australian government claimed that plain packaging rules were implemented for the legitimate public purpose of protecting public health. The government maintained that plain packaging measures would help in reducing the appeal of tobacco products, while mandated graphic health warnings would educate consumers about the harmful effects of smoking. Australian Trade Minister Craig Emerson publicly claimed that «it’s not anti-trade; it’s anti-cancer». According to official estimates, smoking alone kills 15,000 Australians each year and costs AU$31 billion (about US$22 billion) in social and economic costs. The unanimous decision to uphold the tobacco control measures has been applauded by public health experts and civil society groups throughout the world, for the most part by the World Health Organization (WHO).
As a result of the emphasized regulations, Australia faced lawsuits within the WTO Dispute Settlement mechanism from the Ukraine (subsequently dropped), Indonesia, Cuba, Honduras, and the Dominican Republic. On April 2014, the WTO Dispute Settlement Body agreed to establish two panels in a dispute against Australia’s plain packaging for tobacco products, bringing the total to five. And it was agreed that a single panel will be appointed to study the five complaints.
Inherently, countries withstanding Australia’s legislation on plain packaging are claiming that Australia is breaching its international trade obligations regarding intellectual property rights, in particular trademarks, and geographical indications. They also are saying that the Australian legislation is injurious to their country’s tobacco industry. For instance, the Dominican Republic and Cuba have held the position that their premium tobacco products, such as cigars, can no longer be differentiated from other products under the Australian legislation.
In response to the WTO complaints, official Canberra said it would participate in the consultations «in a constructive manner».
The alleged violations asserted by complainants include:
|Allegedly violated agreement
||“By stripping all design elements from tobacco packaging and standardizing other packaging features, plain packaging measures undermine the basic features of trademarks and geographical indications (“GIs”) as protected under the TRIPS Agreement, thus breaching it”
||“Australian law breaches the WTO’s Technical Barriers to Trade Agreement by being more trade restrictive than necessary to achieve Canberra’s stated public heath objective, along with violating national treatment requirements set in that agreement”
Proposed solutions: intra- and intergovernmental measures
Taking into account obvious rising popularity of plain packaging around the world and several legal attempts already undertaken by certain Member States on legalization of such measures within their territories, and interests of other Member States wielding comparative advantage in the tobacco industry and experiencing trade reduction in the light of eventual outcomes of plain packaging practices (e.g., in Australia, tobacco market declined roughly to 3% as of April 2013 since the adoption of plain packaging law), it should be noted that negotiations are the primary source endeavoring to the attainment of consensus which implies proper balance between public health considerations and intellectual property rights. Therefore, we strongly recommend to raise and deliberately discuss the issue of plain packaging and its impacts on trade during the next Ministerial Conferences in the framework of Doha Round, as some Member States are mislead by the allegation that plain packaging “infringes WTO Agreements and some core principles of the organization”. Optimistically, possible solutions of such debates could be classified into 2 groups:
1) Intra-governmental solutions. In the case of investment treaties (e.g., bilateral agreements, BITs), governments can guard themselves to certain extent by clarifying or renegotiating the commitments in existing agreements and by including exceptions or clarifications for tobacco control measures or tobacco products in future agreements. This step can shield governments from legal challenges by the tobacco industry in bilateral investment treaties In this respect, the Australian government has changed its policies regarding investment treaties since the Philip Morris claim filed under the domain of a Hong Kong-Australia BIT. Furthermore, another constructive measure could be the evaluation of lawfulness of the implementation of tobacco control legislation from a trade perspective (for example, if a small country with negligible tobacco consumption rate will stiffen its tobacco control, this will prepare grounds for sound assumption of premeditated trade reduction). Therefore, it requires close collaboration between different governmental agencies such as trade and health ministries.
2) Inter-governmental solutions. First of all it should be noted that Member States misinterpreting the clauses of relevant treaties described below are undermining the very concept of such agreements. For that reason, it would be rewarding to clarify relevant points of these accords dealing directly with public health argument (see below) during motions of Ministerial Conferences, dedicated to the plain packaging. Moreover, concern has also been expressed by the tobacco industry that plain packaging would increase the sales of counterfeit cigarettes. According to Roy Ramm, former commander of Specialist Operations at New Scotland Yard and founding member of The Common Sense Alliance, a think tank supported by British American Tobacco, it would be “disastrous if the government, by introducing plain-packaging legislation, [removed] the simplest mechanism for the ordinary consumer to tell whether their cigarettes are counterfeit or not”. Other arguments against plain packaging include its effect on smuggling, its effect on shops and retailers, and its possible illegality. To avoid this, it may be beneficial for states to apply some specific procedures proving the genuineness of imported products (in this case, cigarettes) as labeling, special marking, etc, as well as indicating country of origin on the packages. Extensive negotiations on the mentioned potential policies should be carried out with major tobacco and tobacco production exporting countries (such as China, India, Indonesia, Zimbabwe, Swaziland, Malawi, Pakistan, Turkey, Dominican Republic, and so forth), as well as countries eager to legally enforce plain packaging on the national level in the future (for the list of countries, see above). As a result, the potential loss of exporting countries will be moderately compensated, and the states implementing the plain packaging would somewhat enjoy the liberty of doing so.
Major obstacles and challenges for implementation: negation and understatement
Notwithstanding the fact that claimant countries are stiffening their stance on the argument that the plain packaging act violates the TRIPS and TBT Agreements at once, it should be noted that these “breaches” are justified by certain opportunities and flexibilities provided by the aforementioned agreements. To our mind, states fundamentally mischaracterize the relevant legal issues, significantly overstating the constraints that international trade agreements impose on governments’ sovereignty to regulate in the public interest in general and for public health in particular by understating the room for regulations and flexibilities in the agreements, which is probably the key obstacle in further progression.
First and foremost, the breach of TRIMS agreement appears to be unreasonable due to the fact that discussed anti-tobacco legislation which Australia plans to extend to cigars and loose-leaf tobacco products has already been under discussion at the WTO TRIPS Council since June 2011. Even though it’s true that, as the tobacco industry says, the TRIPS Agreement does not contain a public health “exception”, 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. Hence, 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. Moreover, 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” (§5, clause D, ‘exhaustion’ of rights principle). Additionally, the Punta del Este Declaration clearly states 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. Coming to the infringement in TBT Agreement, it should be added that the TBT agreement also allows for trade restrictions where they are necessary to protect public health, stated in perambulatory clauses. Likewise, it is worth adding that states adopting plain packaging are merely implementing their duties under the WHO Framework Convention on Tobacco Control.
Moreover, the plain packaging act faced critical reaction from the tobacco industry which is another challenger of the implementation of alike measures, arguing that WTO law requires States to introduce “alternative measure”’ that would purportedly be less trade restrictive than plain packaging, such as education programmes and tax increases. But this is not how WTO law really 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”.
References & Footnotes
- Australia’s official page at the WTO web-site (https://www.wto.org/english/thewto_e/countries_e/australia_e.htm)
- Australia and the World Trade Organization, report of Joint Standing Committee on Treaties of Australian Parliament, 2001
- The Australian Market Access Conditions and their Compatibility with the World Trade Law, by Dr. Dominic Thielle
- Trade Policy Review Report by Australia, WTO, March 2011
- World Bank data on tariff rate, weighted mean (http://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS)
- Agreement on Trade-Related Aspects of Intellectual Property Rights, Annex 1C of the Marrakech Agreement Establishing the World Trade Organization
- Uruguay Round Agreement: Agreement on Technical Barriers to Trade
- Plain tobacco packaging (https://en.wikipedia.org/wiki/Plain_tobacco_packaging)
- Ukraine Launches WTO Challenge Against Australia Cigarette Packaging Law, Bridges News (vol.16, #11), International Center for Trade and Sustainable Development, 21 March 2012
- Responding to the Tobacco Industry’s Claims that Plain Packaging Breaches International Trade and Investment Law, by M. Davidson, J. Lieberman, and A. Mitchell, May 2014
- Concerns with Respect to Proposals for Plain Packaging of Tobacco Products in the United Kingdom and Ireland, statement by the EU at the TRIPS Council, February 2015
- WTO do Consider Five Australia Plain Packaging Disputes under One Panel, by C. Saez and W. New, Intellectual Property Watch, April 2014
- Australia Wins Intentional Legal Battle with Philip Morris over Plain Packaging, by D. Hurst, the Guardian, December 2015
- Tobacco cigarettes exports by country (http://www.worldstopexports.com/tobacco-cigarettes-exports-country/)
- Tobacco key facts and figures, the Department of Health of Australian Government
- Dispute DS434: Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, 13 March 2012
- Dispute DS332: Brazil – Measures Affecting Imports of Retreaded Tyres, 29 August 2008