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WTO Delays Ruling In High-Stakes Tobacco Packaging Battle

The World Trade Organization will not issue a ruling on whether Australia’s “plain packaging” tobacco law usurps foreign companies’ intellectual property rights until May, according to WTO documents circulated Tuesday, delaying a decision that was slated to arrive by the end of 2016.

A single WTO panel is weighing cases launched by the governments of Indonesia, Cuba, the Dominican Republic and Honduras asserting that Australian laws that ban all distinct branding from cigarette packages in favor of graphic warnings about the danger of the products. The case has teed up a high-stakes fight over the intersection of intellectual property rights and public health safeguards.

There is no precedent for such a law being challenged in Geneva, and the panel apparently needs more time to parse through the various legal issues at play.

“The panel wishes to advise that it now expects to issue its final report to the parties not before May 2017, in light of the complexity of the legal and factual issues that arise in this dispute,” the panel said in a statement circulated to the WTO.

Australia passed its packaging law in 2011 despite the protestations of numerous multinational corporations who viewed the measure as a direct threat to their use of trademarks and other branding mechanisms to promote their business. The four countries have said the law violates the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS, as well as the Agreement on Technical Barriers to Trade and the General Agreement on Tariffs and Trade.

At every step of the way, Australia has claimed that it has the right to curtail businesses’ trademarks in the name of public health. For the first time in the WTO’s history, the panel will have to grapple with how the TRIPS Agreement comports with a country’s right to pursue policy objectives that it deems necessary to safeguard the public’s welfare.

The legal battles over the plain packaging law began almost as soon as it went into effect, beginning with a case filed by Philip Morris Asia Ltd. under the Hong Kong-Australia bilateral investment treaty.

In that case, the panel handed a win to Australia, albeit on jurisdictional grounds, meaning that the WTO’s decision will likely be the first ruling to address the issue on the merits. Even when the decision does come down, the case will be far from settled as all parties will be entitled to a round of appeals.

Nevertheless, the case will continue to be closely watched not only by the litigants and others in the tobacco industry, but also by those companies selling products that could e subject to similar public health rules, such as alcoholic beverages or fatty and sugary foods.

–Editing by Katherine Rautenberg.

As world awaits WTO plain packaging decision, legislation spreads across the globe

The long-awaited decision of a World Trade Organisation panel on Australia’s decision to enforce standardised packaging on tobacco products has been ‘imminent’ for years. While the wait goes on, governments across multiple continents – including Africa, Asia and Europe – are introducing plain packaging legislation at an increasingly swift rate. While this suggests that the tobacco industry’s fight to hold back the spread of plain packaging is on the ropes, the anti-plain packaging lobby has not given up yet.

A major development in the last few months, which may have spurred on recent legislation announcements, was the World Bank dispute settlement body’s dismissal of a case brought by Philip Morris International against Uruguay’s implementation of enlarged label warnings on tobacco products. While this follows lawsuit losses against similar regulations in the UK, Norway and Australia, the Uruguay case has long been viewed as a test case, as it was the first time a tobacco group had taken on a country in an international court on this issue. The dismissal was therefore dubbed by commentators as “more than just a local triumph”, with one law lecturer suggesting it “may make it more difficult for tobacco companies to use lawsuits to produce a ‘chilling effect’ and so discourage countries from introducing tobacco control policies”.

In the months since that decision, a slew of national governments have announced or signed through plain packaging legislation. The push is now truly global. For instance, Gambia looks set to be the first African country to implement plain packaging, as the country seeks to maintain its award-winning anti-tobacco credentials. In Asia, both Malaysia and Thailand are well on their way to introducing a brand-free environment for tobacco, with pushes to introduce it in India and China too. Finally, following the European Court of Justice’s ruling in May that the new EU directive on tobacco products is valid, plain packaging laws came into effect in Hungary last month (with legislation that goes further than the current EU directive).

These recent developments follow similar moves in the last 12 months in Canada, New Zealand, Norway, and France. That’s not forgetting the UK following Australia’s lead by implementing its own standardised packaging laws in May (the same legislation in Ireland was delayed at the last minute). All told, the Canadian Cancer Society lists 14 countries where plain packaging is either now implemented or being formally considered (not including the aforementioned China, Gambia, India, Malaysia and Thailand).

But despite the tide appearing to turn, tobacco conglomerates are refusing to give up just yet. For example, Japan Tobacco International (JTI) recently commissioned research into the views that people hold of uniform packaging in Canada (following the Canadian government’s three-month consultation period about its possible implementation, which began in May). Some of the results were published in an op-ed in the Toronto Sun last week. They suggest low awareness of the consultation, with the results showing that “one in five Canadians had heard of the government’s intention to introduce plain packaging” and “only one in 10 understood what it was about”.

Of course, it is probable that a high proportion of citizens will be unaware of most government consultations – so those results are hardly a surprise. Additionally, plain packaging proponents will argue that this doesn’t have a bearing on the pros and cons of the regime itself. What it does show is, despite the repeated lawsuit losses, tobacco companies are refusing to give up the fight (and, as this very publication’s trip to the Dominican Republic in May demonstrates, cigar companies remain confident that the fight remains winnable).

Of course, this isn’t just a tobacco sector issue and trademark associations have long argued that plain packaging severely impairs the function of trademarks, makes counterfeiting easier and is in violation of international treaties. They have also warned that governments may decide to require plain packaging for other products or industries whose impact on public health is being scrutinised. On the latter, a ‘world first’ study released last week promotes the benefits of plain packaging on sugary products – suggesting that the predicted ‘domino effect’ could soon become reality.

Associations are therefore intent to keep fighting the spread of plain packaging. In June, for instance, INTA wrote to the Swedish government to register its opposition over the country’s decision to consider plain packaging for tobacco products.

The fight, then, goes on. However, as more countries line up to implement plain packaging regimes, it is getting harder to see how a comeback is possible – that is, unless the WTO panel delivers an upper-cut to Australia’s plain packaging regime early next year.

Govt sizes up Philip Morris WTO claim

Commerce staff deny opposing lawsuit


The Office of the Attorney General has prepared to indict Philip Morris in a tax evasion case but a World Trade Organisation ruling is giving pause. (Bangkok Post file photo)

The government is not sure whether a World Trade Organisation (WTO) ruling cited by tobacco giant Philip Morris will have any impact on a lawsuit it is set to file against the firm.

Philip Morris (Thailand) Limited (PMTL) is accused of making false declarations about the value of cigarettes it imported from the Philippines and depriving the government of an estimated 68 billion baht in tax revenue.

According to a probe by the Department of Special Investigation (DSI) launched in 2005, PMTL under-reported the value of its products when declaring them to the Customs Department between 2003 and 2007.

Philip Morris claims the WTO ruling stems from a trade dispute between Thailand and the Philippines.

The company says the world trade body issued a ruling against Thailand in 2010 which clearly stated Thailand had no grounds to reject the import price of cigarettes from the Philippines.

Deputy Prime Minister Wissanu Krea-ngam said Wednesday three issues arise over the ruling claims made by the tobacco giant.

First, he questioned whether the WTO really ruled against Thailand.

If Thailand really lost this dispute, it needs to consider whether it has something to do with Thailand’s legal action against the company, Mr Wissanu said.

The second is whether Thailand can still appeal against the ruling, and lastly what would happen if the country does not comply with the ruling, the deputy premier said.

If it is worth ignoring the ruling, the country can take that risk, he said.

Mr Wissanu said the Office of the Attorney-General (OAG) is due to indict the company on Nov 25, and he has informed the cabinet of current events.

The company rejected the government’s allegations.

“The media reports that resurfaced recently completely ignore the fact that PMTL’s import prices have already been reviewed by various Thai and international agencies having the expertise and authority to address customs matters, and all of them concluded that PMTL did nothing wrong,” Pongsathorn Ansusinha, director of PMTL’s Corporate Affairs department, said.

The company welcomed the government’s recent move to look at the dispute carefully before rushing to any decision, adding: “We believe that this is about Thailand’s significant interest in the area of international trade.”

Meanwhile, the Commerce Ministry dismissed media reports the ministry had urged the OAG not to indict the PMTL out of fear of a trade backlash.

Commerce Minister Apiradi Tantraporn said the ministry has a clear stance that legal procedures intended to protect the national interest must not be violated by other countries or overseas parties.

“The WTO has no authority to interfere in the judicial procedures of its members in a case of tax evasion,” Ms Apiradi added.

Also on Wednesday, the Action on Smoking and Health Foundation Thailand (Ash) urged the government to ignore concerns that legal action against the company would affect Thai and US trade.

Foundation executive director, Prakit Vathesatogkit, said even US state agencies have filed lawsuits against Philip Morris in several cases.

“If the firm is confident it is innocent, it should prove it in court,” he said.

WTO panel to hear oral arguments on Australia tobacco plain packaging case

Action on Smoking and Health

World Trade Organization panel to hear oral arguments on Australia tobacco plain packaging case from 28 to 30 October 2015

Tuesday 27 October 2015

Tomorrow a World Trade Organization (WTO) dispute settlement panel will begin to hear a second and final round of oral arguments in claims that Australia’s tobacco plain packaging infringes WTO agreements. The hearing will take place at WTO in Geneva from 28-30 October, 2015. An initial oral hearing took place 1-5 June 2015.

The outcome of this case is being watched worldwide by governments, health organizations and tobacco companies alike given the crucial nature of plain packaging as a tobacco control measure. Fiercely opposed by the tobacco industry, plain packaging is recommended by guidelines under the World Health Organization Framework Convention on Tobacco Control, the international tobacco control treaty.

Under plain packaging, health warnings would remain as would product names in a standard size and font, but tobacco company colours, logos and graphics on packages would be banned. The brand portion of package have the same colour (e.g. drab brown) for all brands. Tobacco packages would no longer be mini-billboards promoting tobacco.

Plain packaging was implemented in Australia in 2012, has been adopted in Ireland and the United Kingdom for implementation on 20 May 2016, and is under formal consideration in Norway, Sweden, Finland, Hungary, France, Canada, New Zealand, Singapore, Turkey and South Africa. [1]

There are four complainants that have each brought a claim to WTO: Honduras, Indonesia, Cuba and Dominican Republic. (Another initial complainant, Ukraine, has withdrawn its legal claim). At the October 28-30 hearing, it is only the four complainants as well as Australia that will be entitled to present oral argument.

Tobacco companies have admitted to paying legal costs for two of the current complainants: Philip Morris International for the Dominican Republic, British American Tobacco for Honduras as well as for the previous complainant Ukraine. [2] At WTO, only governments can initiate proceedings, which is why the tobacco industry is paying legal costs of certain countries.

There are 36 Third Parties that are participating in the proceeding, more than in any previous WTO case. The Third Parties were entitled to present their perspective at the June 1-5 hearing, but will not be able to do so at the October 28-30 hearing. The Third Parties are: Argentina, Brazil, Canada, Chile, China, Chinese Taipei, Ecuador, Egypt, European Union, Guatemala, India, Japan, Korea (Republic of), Malawi, Malaysia, Moldova, Mexico, New Zealand, Nicaragua, Nigeria, Norway, Oman, Panama, Peru, Philippines, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Trinidad and Tobago, Turkey, United States, Uruguay, Zambia, Zimbabwe.

The tobacco industry had previously brought a constitutional challenge in Australia to plain packaging, but this was dismissed by the High Court of Australia on August 15, 2012. [3]
Deborah Arnott, Chief Executive of health charity ASH said:

“The claim that Australia’s tobacco plain packaging infringes WTO agreements is ill founded and has little or no chance of success. The sooner all the legal challenges are settled the better. Then the example set by Australia, and followed by the UK and Ireland, will rapidly spread all round the world.”

ASH has been given permission to intervene in the legal challenge brought by tobacco companies to try to stop the introduction of standardised, plain packaging in the UK. The case is due to be heard from 10-17 December. [4]

The importance of plain packaging was recently emphasized by WHO Director General Dr Margaret Chan at the World Conference on Tobacco or Health [5]: “Despite industry’s best efforts to block plain packaging, the train has already left the station. The evidence base is strong, empirical, and comes from well-qualified, respected, and credible sources. I thank all the researchers who have contributed to this evidence base. We know that plain packaging works.”