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Big tobacco bullies the global south. Trade deals are their biggest weapon

The industry has a long history of using trade to force their products into new markets. This has led to at least a 5% increase in cigarette deaths

Cigarette packets often carry the warning to “protect children: don’t make them breathe your smoke”. In 2014, the Kenyan government attempted to do just that – banning the sale of single cigarettes, banning smoking in vehicles with a child and keeping the tobacco industry out of initiatives aimed at children and young people.

But as the Guardian reported last week, British American Tobacco, in an effort to keep Kenyans breathing their smoke, fought the regulations on the grounds that they “constitute an unjustifiable barrier to international trade”.

In fact, big tobacco has a long history of using trade and investment rules to force their products on markets in the global south and attack laws and threaten lawmakers that attempt to control tobacco use.

Back in the 1980s, as cigarette consumption fell off in North America and western Europe, US trade officials worked aggressively to grant American companies access to markets in Asia, demanding not only the right to sell their products, but also the right to advertise, sponsor sports events and run free promotions. Smoking rates surged.

In the 1990s, World Trade Organisation agreements led to a liberalisation of the international tobacco trade, with countries reducing import tariffs on tobacco products. The impact, according to a joint study of the World Health Organisation and the World Bank, was a 5% increase in global cigarette consumption and accompanying mortality rates.

Big tobacco’s lawyers were quick to discover the value of “next generation” trade agreements. In the 1990s, Canada dropped a plain packaging initiative after US manufacturers threatened a suit using the first next-gen trade deal, the North American Free Trade Agreement (Nafta). A few years later, Philip Morris threatened Canada again after it prohibited terms such as “light” and “mild” cigarettes. Philip Morris argued it would be owed millions in compensation for damage to its brand identity.

Philip Morris was able to credibly wield this threat because of the extraordinary powers that Nafta grants international corporations: the right to sue governments in private tribunals over regulations that affect their profits.

A toxic combination of far-reaching and poorly defined “rights” for investors, eye-watering legal costs, and tribunals composed of corporate lawyers with the power to set limitless awards against governments makes investment arbitration and the modern “trade” agreement a formidable weapon to intimidate regulators.

And what big tobacco learned in the global north it has been replicating in the global south, where threats carry greater force against poorer countries that may lack the resources to see down a legal challenge.

In 2010, Philip Morris launched a $25m claim against Uruguay after it introduced graphic warnings on cigarette packs. Though Uruguay successfully defended the measure, it still faced millions in legal costs. And Philip Morris effectively won, as Costa Rica and Paraguay held off introducing similar measures.

Such are the fears around big tobacco’s aggressive use of trade and investment rules that the US-negotiated Trans-Pacific Partnership trade deal featured a carve-out excluding big tobacco from investment protections – an explicit admission of the problem.

But this does not go far enough. The important thing to realise is that the problem goes beyond big tobacco. Big oil, big pharma and big mining follow the same playbook, launching investment arbitration cases to defend their business models from governments that would regulate to protect public health, the local environment or the climate.

Rather than target individual companies or sectors, we must push our governments to reform trade and investment rules that grant such extraordinary powers to corporations. That means removing special investor rights and investment courts from trade agreements. It means removing limits on the freedom of governments to protect public health, labour and human rights and the environment.

Of course, this is easier said than done. Robert Lighthizer, US trade representative, served as deputy in a Reagan administration that pressured countries to open their tobacco markets to US exporters in the 1980s.

Vice-President Mike Pence’s record includes opposing smoking regulation, taking huge campaign donations from big tobacco, and denying the causal link between smoking and lung cancer. The EU commission, meanwhile, has been criticized for its meetings with big tobacco while it was negotiating EU-US trade talks.

The good news is that from Brazil to India to Ecuador, countries are stepping away from outdated trade and investment rules. In the UK, the Labour party manifesto opposes parallel courts for multinationals and proposes to review the UK’s investment treaties.

But until we scrap the powers that we grant big tobacco and others to frustrate and bypass our laws, efforts around the world to protect public health will continue to go up in smoke.

Big Tobacco’s controversial, ailing crusade against plain packaging

THREE years ago, the government of Togo, which has a gross domestic product of $4 billion, received a letter from Philip Morris International, a tobacco giant which last year earned revenues of $74 billion. The country had been mulling bringing in plain packaging for cigarette boxes. It would risk “violating the Togolese constitution”, the firm’s subsidiary explained, “providing tobacco manufacturers the right to significant compensation.” It then outlined how plain packaging would violate binding global and regional agreements. Togo was in no position to anger its international partners, it suggested.

For health advocates, such tactics are the last refuge of firms they have long denounced. But tobacco companies will do what they can to protect their packaging. They detest warnings with repulsive images of decaying body parts. In 2010 Philip Morris sued Uruguay, claiming that big warnings on boxes violated a trade deal. Then two years later Australia became the first country to go further, banishing iconic trademarks from tobacco packs. Its law mandates that brand names—such as Marlboro, Winfield or Dunhill—appear in grey type against a background of Pantone 448C, a putrid green deemed the world’s ugliest colour by a market-research firm.


So tobacco firms sued—in Australian courts, before a UN tribunal and by supporting countries that challenged the rule before the World Trade Organisation (WTO) on the ground that banning trademarks represents an expropriation of intellectual property (IP). Less formally, they and allies have lobbied against warnings and plain packaging in places ranging from Namibia to New Zealand. It has all been surprisingly effective. Until very recently, Australia has been the only country to ban tobacco trademarks from cigarette packs.

Such avenues may be closing. Although the WTO’s decision is still pending, firms lost their other suits against Australia. Last month arbitrators at the World Bank threw out the lawsuit against Uruguay. In May the European Court of Justice upheld a rule on big warnings and Britain’s High Court confirmed one for plain packaging. It seems likely that more governments will in future prioritise public health over IP. Canada, France and Ireland are already moving towards plain packs.

If so, ugly packaging could become the most damaging rule tobacco firms have faced in years. To date many laws have hurt firms in some ways but also, strangely, helped them in others. Bans on advertising lower their costs. Small competitors, unable to advertise, struggle to grow. High excise taxes can be another boon: when taxes are fixed and large, a big increase in the underlying price of a pack amounts to a relatively small rise in the pack’s total price. High prices have sustained tobacco firms, even as smoking rates decline. “They probably have the best pricing power of any industry,” says James Bushnell of Exane BNP Paribas, a broker.

But plain packaging clamps down on one of their last bits of advertising. The design of the box is where they must convey not only the name of the brand but abstract qualities, such as masculinity or the idea that a product is “premium”, and worth an extra outlay. If such traits are stripped from packs, consumers may choose cheaper brands. That is particularly worrisome in emerging markets, says Mr Bushnell, where standard packs would threaten the aspirational appeal of smoking. Other “sin” industries are worried. The International Trademark Association frets that governments might strip trademarks from junk food and liquor.

It may become pointless for cigarette firms to start legal proceedings. The Trans-Pacific Partnership (TPP), a pending free-trade agreement among 12 countries, shields governments from lawsuits over tobacco rules. It may unravel, but future pacts could have similar terms. Only America, where the right to free speech makes standard packs highly unlikely, may remain an anomaly (though it is a signatory to the TPP). In the past investors often viewed a new wave of rules on tobacco as a chance to buy tobacco stocks inexpensively, before they resumed their steady rise. This time may be different.

Is TPP a public health threat?

The Government should bar certain industries from exploiting the Trans-Pacific Partnership (TPP) lest they damage public health, health activists warned recently.

The historic free trade agreement is set to create a freer flow of commerce and win-win trade among its members by establishing a level playing field for all parties and investors.

Yet it might challenge the Government to implement measures to protect the public health when some industries, like tobacco and alcohol, take advantage of the TPP to expand their businesses, said Mary Sunta, a senior policy consultant of the Southeast Asia Tobacco Control Alliance.

She addressed the issue at a workshop on the impacts of TPP on public health held in Ha Noi yesterday.

“As far as I am concerned, there are seven chapters in the TPP vulnerable to any challengers of the tobacco industry,” Sunta said.

Those chapters include provisions regarding tariff removal, which could result in lower cigarette prices and a cigarette package without pictorial warnings.

“As a matter of fact, applying a higher tariff/tax on cigarettes and its selling prices is proven to be the most effective strategy to reduce the tobacco demand in the short-term,” Sunta said.

Statistics of the World Health Organisation (WHO) show that Viet Nam is ranked 15th in the world in terms of the number of smokers – about 40 per cent of men smoke.

About 72,800 people died of tobacco-caused diseases, equal to a loss of roughly US$78 million every year, according to the Tobacco Atlas.

TPP’s provisions are likely to cause a similar headache for the Government in another health-affected industry in Viet Nam that has shown remarkable growth in the last decade: the alcohol industry.

Member parties of the TPP committed to bring the tariffs of alcoholic beverages, from beer to wine and whiskies, down to zero over a 12-year span.

The TPP enactment is expected to open wide the door for foreign alcoholic beverage manufacturers, especially from the US, into the Vietnamese market, which has already been seeing a strong growth of demand averaging 10 per cent a year.

Efforts to force higher price tags on the beverages to reduce the alcohol consumption are deemed difficult for the Vietnamese Government due to the tariff removal commitment in the TPP, while criticism from other states and alcohol manufacturers might hurt Viet Nam in implementing other measures, like limiting advertisement and stamping health warnings on the products. Those measures are likely to be categorised as technical barriers to trade.

Dispute settlement

The TPP includes a legal mechanism to settle disputes between foreign investors and their host country, called the ISDS (Investor-State Dispute Settlement). Under the IDSD, foreign investors can legally challenge host state regulations outside that country’s courts.

The ISDS has been used several times since its introduction in international trade agreements, most notably by the tobacco industry.

Many countries like Thailand, Australia, Uruguay and Sri Lanka were sued by tobacco companies when they tried to pass a law on the cigarette packaging to raise public awareness of the dangers of smoking.

The ISDS is also available to claims by alcohol or asbestos producers.

“Asbestos was found to cause cancers since 2001. Any companies that import, distribute and use asbestos should be exempted from the IDSD provision,” said Tran Tuan from the Advocacy Network on Banning Asbestos Use in Viet Nam (VN-BAN).

Viet Nam is among the top 10 countries in the world using asbestos – a carcinogenic substance as categorised by the International Agency for Research on Cancer (IARC).

The historic TPP was signed on February 4, 2016 in Auckland by 12 states including Viet Nam, Brunei, Malaysia, Singapore, Chile, Peru, Canada, Japan, Australia, New Zealand, Mexico and the United States, after seven years of negotiations.

The trade agreement is awaiting ratification by each of its member countries before entering into force. Viet Nam expects to ratify the agreement late this year.

Plain tobacco packaging likely early next year


Here’s how cigarette packs could soon look – a standard package with gruesome warning image.

The packaging was revealed at a smokefree event on Wellington’s waterfront and could be rolled out early next year.

The prop design at the event is not the final design – the Government will now consult on plain packaging, including design for packs.

Associate Health Minister Peseta Sam Lotu-Iiga has released draft regulations and a consultation document which aims to standardise the look of cigarette packs.

“The design and appearance of cigarette packets are powerful marketing tools for vendors. The Government is proposing to use the standard brown-green packaging which is similar to what is used in Australia,” Mr Lotu-Iiga said.

“We’re proposing that mandatory health warnings will cover at least 75 per cent of the front of the packs and all tobacco imagery will be removed. Brand names will be allowed but regulations will standardise how and where the printing is.”

Plain packaging is likely to be in place early next year – but officials need better information before deciding if e-cigarettes can be made legal, Prime Minister John Key says.

Tax on tobacco will be significantly hiked and the Government will forge ahead with plain packaging, despite a legal risk backed by tobacco giants.

“Nothing kills you with greater predictability than smoking,” Mr Key said of the plain-packaging change.

“It will take some time before you actually see it on the shelves [plain packaging]. My expectation would be early next year.”

Certain tobacco researchers are urging the removal of restrictions on buying e-cigarettes containing nicotine.

Nicotine patches and gum can be bought, but nicotine e-cigarette liquid must be bought from overseas. Other countries, like the UK, allow the products to be sold in supermarkets and dairies.

However, there are fears young people could use the devices. Mr Key said he had received advice on the usefulness of e-cigarettes and vaping.

“The advice I’m getting so far is that there may be a role for e-cigarettes in terms of people transitioning away from smoking. But I think the health impacts are very unknown at this point. So there is some concern, at least by officials, that there may be long-term health impacts.

“We don’t have enough good data at this point to make a call on that. In the short term, people certainly are using them to transition. That might be a helpful way of weaning off cigarettes, but long-term we’ll need to get better advice and data.”

Maori Party co-leader Marama Fox told the smokefree gathering that politicians should lead by example and make the Parliamentary precinct smokefree.

That led to a crack from Labour MP Rino Tirikatene, who tweeted that the Maori Party and their “mates” National were “slowly turning Aotearoa into a kuia state”.

Labour leader Andrew Little said he needed better information before making a call on whether e-cigarettes should be made available. Plain packaging was supported by Labour.

New Zealand had been keeping an eye on the outcome of legal challenges against Australia’s plain packaging, one from tobacco firm Philip Morris and another from tobacco-producing countries via the World Trade Organisation (WTO).

Australia won the case against Philip Morris in December.

The WTO challenge is ongoing, but Mr Key has said he received advice late last year that the Government was on a “firm footing” to progress plain packaging because several other countries, including the UK and Ireland, had introduced it.

These countries did not face a challenge under the WTO.

The Trans Pacific Partnership (TPP), signed on February 4, also allows tobacco-control measures, so New Zealand could advance anti-smoking policies without risking a legal challenge.

A pack of 20 cigarettes will increase from about $20 now to around $30 in 2020 after hefty excise increases were announced as part of last week’s Budget.

The tax on tobacco will rise by 10 per cent on January 1 each year for the next four years.

That is expected to bring in an extra $425 million in tax over that period.

It will affect the about 15 per cent of adult New Zealanders who smoke each day – about 550,000 people.

That rate increases to 35 per cent for Maori, and 22 per cent for Pacific people.

The tax hikes are part of measures designed to make New Zealand smoke-free by 2025, a key goal of the Maori Party.

Asked if that was realistic, Mr Key said his confidence was increasing, as there was increasing momentum behind the smokefree movement.

The Australian TPP Experience – The Same but Different

Originally published by the Global Trade and Customs Journal

Volume 11, Issue 4, 2016 with permission of Kluwer Law International.

As in many of the other nations who are parties to the Trans-Pacific Partnership Agreement (TPP), the negotiations leading to agreement on the TPP and its subsequent announcement evinced some widely divergent views in Australia. These views ranged from the ‘fear and loathing’ position to the ‘welcome with open arms’ position between which is a large proportion of the population who have little idea on what the TPP means and generally do not care – as has been the case with all of Australia’s Free Trade Agreements (FTA). However, even within that largely disinterested group, there is an increasing level of concern in Australia with some elements of the TPP and the wider FTA agenda more generally which I will discuss in more detail below. The purpose of this article is to provide the briefest of summaries of the Australian FTA agenda generally, how the TPP fits into that agenda and how it will be endorsed and implemented in the Australian context, including how that implementation could be improved compared to what has happened with other Australian FTA.


In a number of instances, articles on trade and legal developments are written from an academic ‘distance’. In this case I thought it would be dishonest for me to do so. I am a director of the Export Council of Australia (ECA)1 with responsibility for Trade Policy as well as a director of the Food and Beverage Importers of Australia (FBIA)2 and both organizations have been active and vocal proponents of Australia’s Trade Policy and FTA agenda. In fact, in my ECA capacity I appeared in a number of TV and radiointerviews to discuss the TPP in which I was positive as to the opportunities arising from the TPP. I have expressed similar views in articles in the print media as well as in my own articles and in submissions and appeared before a number of Parliamentary Committees considering aspects of Australia’s FTA agenda. I am also a member of a number of consultative bodies established by government agencies to address legal, compliance and practical issues which touch on trade and our FTA agenda. This has brought me into contact with many from government responsible for negotiating the FTA who I respect and admire (and like!). Professionally, I act for a number ofclients who are importers, exporters and service providers in the supply chain who will benefit from the TPP.

Consequently, it would not be unexpected to surmise that I am a fan of the TPP. Any agreement between twelve trading nations to create a new regional trade deal is more admirable and the TPP needs to be seen as ‘TPP1.0’ which both provides benefits and also sets a framework for a wider and more comprehensive agreement as well as keeping up the pressure to encourage other FTA. Yes, the TPP could be better and every FTA could be better, however it needs to be recognized that, like most commercial deals, no one party gets everything they want and every deal requires the art of diplomatic compromise. I think that the esteemed Peterson Institute for International Economics best summarizes the TPP when it describes it as ‘a notable accomplishment “and” a substantial positive response to slowing world tradegrowth and rising trade barriers and a major contribution towards a rules-based global economy’.3

That said, I am by no means blind to the shortfalls in the TPP and other FTAs. I have been actively engaged in work to improve their implementation and defend those whose use of the FTAs may not have been perfect and whoare facing compliance and enforcement action by the border agencies. I have also been an opponent of the increase in legislation and practices adopted here in our anti-dumping and countervailing regime which have the appearance of being biased towards Australian industry against the legitimate interests of overseas exporters, their Australian importers and Australian consumers who pay more than would otherwise be the case for goods subject to those Trade Remedies.However, all things considered I believe the positives of the TPP far outweigh any negatives both for now and into the future. It is certainly the high watermark of Australia’s FTA agenda to date.So, I would now wish to turn to the Australian TPP experience.


The Australian Federation has been in place for 115 years, for about half of which time Australia adopted a largely protectionist approach to trade policy.It has only been of relatively recent time that we have embraced a more open trade policy. That has significantly escalated in the last few years.

Current FTA

Putting to one side, the TPP and a very old and rusty form of limited Trade Agreement with Canada, Australia has FTA in place with:

• New Zealand (ANZCERTA).4
• Singapore (SAFTA).5
• Thailand (TAFTA).6
• United States (AUSFTA).7
• Chile (CAFTA).8
• Japan (JAEPA).9
• Korea (KAFTA).10
• China (ChAFTA).11
• The Pacific Islands (PACER).12
• The ASEAN Nations (in conjunction with New Zealand) (AANZFTA).13

FTA under Negotiation

Australia is currently in negotiations or reportedly soon to commence negotiations with the following parties for the following FTA:

• Indonesia (IA – CEPA).14
• India (AI – CECA).15
• The ASEAN nations and those who have FTA with the ASEAN nations, including New Zealand, India and China (RCEP).16
• The Pacific Islands (a revised and improved version of the current FTA) (PACER Plus).17
• The EU.18


As I indicated above, there were some diametrically opposed views on the TPP in Australia during the negotiations. I was witness to a number of polite public protests conducted by small groups during consultations undertaken by the Department of Foreign Affairs (DFAT) as our lead negotiating agency. There were more protests conducted during the negotiating round which took place in Melbourne, where the police and security presence far outweighed the numbers of protestors. The concerns of the interest groups raising the protests and other objections in Australia seemed to mirror those who objected elsewhere in the TPP nations, although they were nowhere as strident as in the US. I was in Washington DC in June 2015 along with an Australian- American Chamber of Commerce delegation to talk on trade issues at much the same time as the Trade Promotion Authority passed through Congress and I was somewhat surprised at the vehemence of opposition to the TPP and the prominence of those objections including posters in bus stops and flags draped over buildings. During the course of negotiations, most of the objections to the TPP seemed to focus on the following allegations:

• That Australia would not secure many benefits through the TPP as a relatively minor trading nation compared to the other nations. That reflected some ongoing unhappiness over the perceived lack of gains under the AUSFTA, especially from those in the Australian agricultural industry.
• That the sheer complexity of the deal would detract from the ability to secure any potential benefits.
• The suspicion that the negotiations were deliberately being conducted in secret without the release of negotiating text meaning that there was something to hide. Those concerns escalated when agreement on the TPP was announced without the release of the text.
• The alleged absence of useful and effective consultations.
• That Australia was further relinquishing sovereignty to the other negotiating nations and to their corporations. This was especially framed around fears on the inclusion of an Investor State Dispute Settlement (ISDS) provision and the view that the whole TPP was largely aimed at entrenching the rights of multinationals. The concern on an ISDS provision was driven by examples from overseas jurisdiction and the ‘plain packaging’ arbitration being conducted in Hong Kong against the Australian government by the tobacco industry pursuant to a venerable Investment Agreement after the tobacco industry had lost its legal challenge in our High Court.19
• That the US would overwhelm the Australian opposition to the US position on intellectual property, especially in the pharmaceutical arena with the effect that US Biologics would be granted a longer term of IP protection than that which would otherwise be afforded in Australia, causing an increase in healthcare costs.
• It would allow the unrestricted sale of Australian property and other assets to corporations in other TPP nations with the effect that Australia would ‘no longer be for Australians’.
• It would seriously undermine the position of Australian workers by allowing lesser-paid skilled workers in other TPP nations to more readily secure visas come to Australia.

Many of these arguments and concerns had been expressed in the context of other proposed FTA, most particularly during the political and legal debates over ChAFTA.

The responses to these concerns were predictable yet also legitimate. Many of us pointed to the fact that there had, in fact, been extensive consultation on the TPP, that the absence of the negotiating text was consistent with past practice, that an ISDS provision was a legitimate concession to secure the TPP but would be carefully negotiated, that we would ‘hold the line’ on IP protection for Biologics and, importantly, that any decision to depart from negotiations would be a disaster for the remainder of our FTA agenda so that not being in the TPP would be far worse than being in a reasonable although modest TPP.


There was a degree of surprise when the final announcement on agreement on the TPP was made. There had been significant speculation that the deal would be struck and announced after the Ministerial meeting in Maui and the failure to reach agreement there was seen as a sign that the deal could not be done in any circumstances. The subsequent meeting was seen as adesperate measure by the opponents of the TPP and others held no optimism that it could be successful. In some ways, the announcement of a deal having been clinched blind – sided a number of parties – which could explain why the media resorted to dragging me in for comment.

The public announcement of the TPP and its ‘highlights’ received responses from Australian interests which followed their previous positions. The absence of a completed text attracted some adverse comment and fed into the conspiracy theories which swirled around the deal and was supported by the lengthy delay between announcement of ChAFTA and the eventual release of its text. My response to that particular conspiracy theory came from many years of legal practice – that given the last minute negotiations, the text was probably covered in hand – written amendments, yellow sticky notes and emoticons and it would take some time to reduce to proper and correct form.

In sweeping and general terms though, the positive outcomes for Australia significantly outweighed the allegedly negative outcomes and focussed on the following aspects:

• The mere completion of the TPP was cause for celebration as it included many of our major trading partners with whom we had FTAs and delivered improvements in our existing deals with those partners.
• The elimination of more than 98% of tariffs among the twelve countries to the TPP.20
• The elimination of USD 9 billion of Australia’s dutiable exports to TPP countries including USD 4.3 billion on Australian agricultural exports.21
• That it improved outcomes with countries with which Australia already had FTA.
• That it effectively delivered FTA with Mexico and Peru (with whom we did not have any deals) and significant new outcomes in our deal with Canada.
• The TPP was, in itself, an achievement and also set a framework for future improvements, such as the admission of other nations, potentially including South Korea and China.
• The regional nature of the deal would deliver real benefits in cumulation of work across the region and was not merely about the US. For example, significant outcomes had been negotiated to accelerate commitments to Australia by Japan and Korea under our JAEPA and KAFTA.
• The completion of the deal would place pressure on other nations outside of the deal to accelerate their own deals and further improve the trading environment.
• While some of the improvements in market access issues may have appeared to be relatively minor they were, in reality, significant. For example, our sugar industry did not get the significant increase in benefits for which it had hoped but ultimately the TPP delivered a doubling in market access which brought us up to and equal to the rights of any other country including Brazil.
• The concession on the ISDS was subject to valid limits and a rigorous regime which should assist against abuse or the types of ‘compensation’ actions which concerned many parties. Particularly there was a specific ‘carve out’ which protected against ‘tobacco litigation’.
• The inclusion of a provision to advance the interests of Small and Medium Sized Enterprises (SME) for the first time in an FTA.
• Significant advances in the chapters aiming to protect against the adverse competition effects of State – Owned Enterprises and on e-commerce which supported many contemporary trade initiatives.
• New opportunities for the energy and resources sector including in oil and gas exploration and the export of Mining Equipment, Technologies and Services.
• Enhancement of the markets for services exports across the TPP countries.
• Introducing consistency and reducing regulations across the countries.
• Significant new commitments on government procurement and environmental protection.
• Improved transparency on customs procedures and new measures to address non-tariff barriers which become so much more important as duty rates are reduced.

The recent release of a review of the TPP by the World Bank has led to some adverse comment especially in the headline comment that it would ‘only’ deliver a 0.7% improvement to Australia’s GDP by 2030.22 However, even then, there are some recognized limits to that review and it also discloses more significant benefits to other participants which, of themselves are invaluable to the region. In any event, “only” a 0.7% increase is still significant. Ultimately, being in the TPP is a superior outcome than being outside the TPP and the advantages will only increase over time.


Unlike some other TPP countries, the Australian Parliament does not need to ratify the TPP itself. However, there is still a process which does involvepublic and Parliamentary scrutiny:

• Following signing in New Zealand on 4 February 2016, the TPP has been submitted to the Joint Standing Committee on Treaties (JSCOT) for review together with a National Interest Analysis.23 JSCOT only reviews and does not ‘pass’ the TPP but its views and recommendations will be watched carefully as a positive report will assist the approval process.
• The TPP will no doubt be subject to review by other Parliamentary Committees in particular those in the Senate dealing with defence, economics and law.
• Legislation and regulation needed to implement the TPP will need to be passed by Parliament. Usually this includes changes to tariff rates and documentary requirements for the claim of preference under an FTA, the increase in investment thresholds before approval is required and, potentially, changes to our migration regime.

This process does permit extensive scrutiny and comment by interested parties and the public more widely. It also allows for extensive political engagement and pressure as that legislation needed to pass Parliament needs to pass both Houses of Parliament and where the government of the day may not control the Senate (our upper house of Parliament). This often requires some sort of political ‘deal’ to ensure the legislation is passed as was the case with our recent ChAFTA where controversy over the labour market provisions required passage of changes to our migration regime to ‘protect’ local skilled employment.

Now that the process has started and hearings have started at JSCOT, we are beginning to get a better view of the compromises which which may be required in Australia to secure public and political approval for the ratification of the TPP. I have already drafted submissions for the ECA and the FBIA and representatives of the service providers in the supply chain will be makingsubmissions. I look forward to that process including appearing in person before many Parliamentary committees of inquiry. There is no set time frame for this Australian process but I would anticipate about six months.

Of course, we then need to await the ratifications of the other TPP parties which may prove to be the more difficult task. The delay and uncertainty can also have the ‘knock on’ effect that those in the supply chain may not take the time to prepare for the TPP until late in the international process which would trigger commencement of the TPP. The busy Australian FTA agenda with a number of deals likely to be completed in the first half of 2016 may well turn attention (and preparation) away from the TPP.


From the perspective of the ECA, the FBIA and those in the supply chain (including my clients), the implementation of FTA often poses the most problems, especially at commencement. The recent commencement of the ChAFTA has created all manner of practical issues as information was not available on practical border issues until shortly before commencement and there has been evidence of differences of opinion on rules of origin andcertificates of origin. This has not been assisted by comments from the Australian border agencies that they expect a higher level of strict compliance with the ChAFTA and border legislation requirements than may be reasonable to expect, especially in the short term when compared to the actual provisions of the ChAFTA which suggest a more ‘forgiving’ approach to compliance with ChAFTA. Which is why I would reiterate, again, what Ihave included in submissions on other FTA that there be comprehensive engagement on TPP implementation as early as possible to allow for those in the supply chain to properly prepare for implementation matched with asympathetic approach to compliance which does not penalize or prosecute inadvertent breaches of border law.

In fact, I would strongly recommend a moratorium on penalties for inadvertent breach of the law for a six-month period as we had with the AUSFTA.We live in interesting times and I seriously hope that the potential FTA ‘fatigue’ and lack of resources to agencies in implementing the TPP do not detract from its significant benefits.

Time for a Tobacco Act, says MCTC

Council chief Cheah says Putrajaya must have the political will to control tobacco use.

PETALING JAYA: The Malaysian Council for Tobacco Control (MCTC) has alleged that the government lacks the political will to control tobacco use to ensure that young Malaysians don’t develop the smoking habit.

Speaking to FMT, MTMC President Molly Cheah said she hoped Putrajaya would use the time allocated under the Trans-Pacific Partnership Agreement (TPPA) to finally come up with a Tobacco Act.

Countries committed to signing the TPPA are given two years to amend existing laws or enact new ones before the agreement comes into effect.

“Malaysia is backward compared to other countries who are signing on to the TPPA,” she said. “It still doesn’t have a proper act in place to control the use of tobacco.”

Instead, she said, the government seemed content to control tobacco use through what she called an “archaic” provision of the Food Act 1983.

However, Cheah commended the Ministry of Health for planning to implement a rule requiring plain packaging of tobacco products, saying the measure had shown positive results in other countries.

“We are fully supporting the move and hope that the government will implement plain packaging as soon as possible as it’s shown to be a very effective means to control the use of tobacco.”

She dismissed the notion that the move would have repercussions on intellectual property rights, noting that Australia, one of the TPP partners, was already successful in implementing it.

Malaysia Gov’t plans to introduce plain packaging for tobacco

PETALING JAYA: The Health Ministry plans to introduce generic packaging for tobacco products with the aim of reducing brand recognition and ultimately reducing overall consumption, Malay Mail Online reported today.

According to the report, the Health Ministry’s director for the disease control division Dr Chong Chee Keong, said plain packaging would greatly impact the prevalence of smoking among new and light smokers.

Chong said there were plans to introduce the plain packaging using standardised colours and fonts in stages but that no specific date had been set as yet.

When asked if the Trans-Pacific Partnership Agreement (TPPA) would affect the plan, Chong said the treaty had yet to be tested.

In 2012, Australia became the first nation to mandate plain packaging for cigarettes, in a bid to reduce smoking rates among its citizens.

Other nations that adopted the move later were France and Britain, much to the unhappiness of big tobacco firms including Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International.

These firms have since launched legal challenges against such laws, arguing the move had impinged on their trademark intellectual property.

In Australia, four tobacco firms including Philip Morris lost their legal challenges against the law.

Exclusive: Legal fight looms for government over plain tobacco packaging

British American Tobacco has confirmed to ONE News that it will explore “all possible legal avenues” to fight the legislation, which will be debated later this year after a delay due to legal action against Australia’s government by another tobacco company.

However, Prime Minister John Key says he is not worried about the impending legal fight.

The case against Australia, brought by Philip Morris, failed, but there is still a World Trade Organisation case pending.

Both British American Tobacco and Philip Morris say forcing them to adopt plain packaging on their products breaches copyright.

ONE News also understands that the government is waiting for the Trans Pacific Partnership Agreement to be ratified, because it contains a clause that allows the government to make any changes to public health law it pleases without fear of reprisals like this.

Neither of the companies would comment on the issue, but they claim there is no evidence plain packaging reduces smoking rates, and say the government should be cracking down on home-grown tobacco instead.

The government is working towards the goal of New Zealand being smokefree by 2025.

The War on Tobacco Makes It Into the TPP Free Trade Deal

This month, the United States and 11 other countries signed the Trans-Pacific Partnership (TPP), a regional trade deal that is the centerpiece of U.S. international economic policy and President Obama’s pivot toward Asia.

Now the deal goes to Congress for approval, where opposition is rising. One hot topic in the congressional debate isn’t about what the TPP includes, but what it excludes.

The TPP is the first U.S. trade deal to exempt anti-smoking measures from the lawsuits that investors may bring under the agreement.

Tobacco companies, business groups and Republican lawmakers oppose this carve-out, arguing it undermines the investor-state dispute settlement (ISDS) system and will lead to health exceptions in future trade deals for other consumer goods such as alcohol and sugar.

Trade critics and Democrats welcome the carve-out for tobacco control measures but argue the need for that exception underscores the threat that investor-state disputes pose to other public health and environmental regulations, which aren’t carved out.

If protection for anti-smoking rules seems like small beer in the decision to approve a 12-country trade deal that took eight years to negotiate, that’s because it is. The U.S. cigarette industry long ago shifted most of its manufacturing (and the associated jobs) overseas, and agricultural tobacco production is not included in the TPP carve-out.

But if construed as an issue about ISDS generally, the stakes become higher. The margins for approving trade deals in Congress are razor thin.

To move the TPP closer to congressional passage, President Barack Obama’s administration need not reopen the trade talks to eliminate the carve-out for tobacco or extend it to other areas. But the White House must do a better job addressing the misperceptions that have arisen about the extraordinary nature of the tobacco carve-out and its implications for the potential threat that investment disputes may still pose for other health and environmental regulations.

Exceptions Are the Rule in Trade Agreements

Readers might understandably conclude from the controversy over the tobacco carve-out that exceptions are, well, exceptional in the TPP. The opposite is true.

At nearly 2,700 pages, the TPP may be the longest, most complex, and exception-filled trade agreement ever negotiated. There are exceptions to general principle (Art. 2.4.1), exceptions to exceptions (Art 2.4.7), explicit exclusions (Art. 9.11), implicit exclusions (Annex 15-A), grandfathering (Annex 18-B), optional undertakings (Art. 25.4.1), clarifications (Art. 13.2.3), caveats Art. 11.1), limiting rules of application (Art. 11.2.2-5), and, of course, carve-outs (Annex 17-D; Art. 16.9; Art. 9.7.6). Exceptions appear in nearly every chapter of the TPP, including its preamble.

The number of exceptions in U.S. trade agreements has increased over the last two decades and is a reason for the expanding length of these deals. For all the attention given to the 1994 North American Free Trade Agreement (NAFTA), it is fewer than 400 pages. This proliferation of exceptions is seen in European Union and Canadian trade deals, as well.

These changes reflect the expanding aims of trade liberalization. The traditional barriers to international commerce—tariffs and quotas—have declined dramatically over the last several decades.

As a result, governments seeking freer trade have shifted their focus to other areas like investment, services, procurement rules, regulatory cooperation and intellectual property.

But as governments have sought deeper cooperation, they have also tried to preserve space for existing legal commitments, retain regulatory independence and reassure trade-wary constituents.

Exceptions are the direct result of this careful balancing act.

In many cases, the exceptions reflect the particular subject matter excluded rather than any trade-specific concerns. Most trade deals exclude national security and tax rules. Some exclude firearms and munitions.

The TPP exempts from dispute settlement any matters related to the Treaty of Waitangi, a treaty between the U.K. and New Zealand’s Maori chiefs. Compulsory licenses, which often involve pharmaceutical patents, are the subject of a World Trade Organization declaration and exempted from the expropriation claims that investors may bring under the TPP.

Why Tobacco Is Different

The tobacco carve-out is similar to the other exceptions in the TPP. It reflects the particular status of tobacco in international law and established U.S. trade policy, and was negotiated and included at the insistence of TPP member countries.

Why should tobacco be different from any other product in U.S. trade?

To start, tobacco is the only legal consumer good that has a binding international treaty dedicated to its control and prevention. One hundred and eighty countries have ratified the Framework Convention on Tobacco Control (FCTC), making it one of the most widely subscribed treaties in the world.

This convention entered into force in 2005 and, like nearly all treaties concluded since that time, the U.S. Congress has yet to ratify it. The United States has signed the convention, however, and is fully compliant with its terms and participates in its meetings.

All 11 of the other TPP countries have ratified and are legally bound to adopt the measures prescribed by the convention. The tobacco control measures carved out in the TPP match the measures mandated in the FCTC and its implementation guidelines.

Tobacco is also the only legal consumer product with a binding U.S. executive order, signed in 2001 and still in force, prohibiting U.S. executive branch agencies from promoting its sale or export.

That order states that U.S. trade initiatives cannot be used to restrict governments’ tobacco marketing and advertising regulations, unless those regulations unfairly favor domestic tobacco products.

This executive order, issued pursuant to the president’s constitutional authority to conduct foreign affairs, operates with the full force of U.S. law.

The need to ensure that trade and investment disputes do not interfere with the tobacco control measures mandated in international law and protected in established U.S. trade policy arose with a recent shift in tobacco industry tactics.

In 2010, Philip Morris International, a Swiss corporation, began filing investment cases to block cigarette labeling and advertising laws. Cases were filed against Australia, Norway and Uruguay and threatened against poorer nations including Togo, Namibia and the Solomon Islands.

The cases generated millions of dollars in legal costs for defending governments and delayed implementation of public health laws. Uruguay would have had to drop its law had Michael Bloomberg, the former mayor of New York, not read about the case and funded its defense.

The Philip Morris lawsuits sparked widespread outcry. Tobacco use is one of the world’s leading causes of death, killing nearly twice as many people annually than HIV/AIDS, malaria and tuberculosis combined. Most of those deaths occur in poorer countries, where tobacco consumption is still growing.

Malaysia, a country in the TPP talks, demanded that tobacco be excluded from the deal entirely. The parties to the TPP settled instead on the tobacco carve-out. It enables TPP members that wish to adopt tobacco controls pursuant to the FCTC to do so without the looming threat of investment disputes. But the carve-out does not exclude tobacco farmers, who are not the target of the FCTC, from the benefits of the TPP.

Broader Implications

The Obama administration has done itself a disservice by not making the basis for the tobacco carve-out clearer. It has allowed cigarette companies to mobilize opposition by characterizing the carve-out as a campaign against ISDS that will eventually implicate products from other industries. It has also undermined the White House’s efforts to ease the public’s concerns with ISDS, which do not end with tobacco.

The TPP specifically respects the legitimacy of environmental, health and safety regulations and includes stricter limits on ISDS claims, but the value of these provisions are discounted by those citing the tobacco carve-out as proof the changes are not protective enough.

In the end, the TPP tobacco carve-out says a lot about the special role of tobacco in U.S. and international law, but less about investment disputes generally. It is an exception motivated by a unique combination: a widely subscribed treaty binding all other TPP countries, an executive order mandating U.S. trade policy, and a pattern of tobacco industry abuse in the face of a proven public health threat. It is a constellation of factors unlikely to reoccur in other health and environmental areas.

If the White House hopes to move the TPP toward congressional passage, it will need to make this argument much more forcefully. Otherwise, the TPP may have to wait to be part of the next president’s legacy, if it happens at all.

Thomas J. Bollyky is Senior Fellow for Global Health, Economics, and Development at the Council on Foreign Relations

35 Health Groups Urge Congress to Support TPP Provision Protecting Health Measures from Tobacco Industry Attacks

WASHINGTON, Feb. 3, 2016 /PRNewswire-USNewswire/ — As the United States and 11 other countries prepare to sign the Trans-Pacific Partnership (TPP) trade agreement later today, 35 leading public health and medical groups today urged Congress to support a TPP provision that protects life-saving tobacco control measures from tobacco industry legal attacks under the agreement.

Specifically, the TPP tobacco provision gives governments the option to exclude tobacco control measures from being challenged under the Investor-State Dispute Settlement (ISDS) process. Tobacco companies have used ISDS provisions in other trade and investment agreements to challenge tobacco control measures adopted by Australia and Uruguay and threatened to do so against other countries.

“The provision will protect the rights of current and future TPP participating nations to adopt public health measures that reduce tobacco use without fear of facing lengthy and expensive trade disputes initiated by tobacco companies. Our organizations consider this to be a historic and meaningful step forward for global trade and investment agreements that will help to protect public health and reduce the death and disease caused by tobacco products,” the health groups wrote in a letter to members of the U.S. House and Senate.

Participating countries are scheduled to sign the Trans-Pacific Partnership at 5:30 pm today in Auckland, New Zealand (11:30 am Thursday local time).

The letter states that the provision protecting tobacco control measures is necessary for several reasons:

  • Tobacco products are the only consumer products that kill when used as intended. Globally, tobacco kills about six million people each year and is projected to kill one billion people this century unless governments take strong action to prevent it. Tobacco use kills nearly 500,000 people in the U.S. each year.
  • Tobacco is subject to an international health treaty (the Framework Convention on Tobacco Control), which the U.S. has signed and 180 countries have ratified. The treaty obligates countries to implement effective measures to reduce tobacco use.
  • The tobacco industry has abused ISDS provisions in trade and investment agreements to challenge countries’ tobacco control efforts and to intimidate other countries from adopting such policies.

“The tobacco industry’s behavior is a real and direct threat to public health around the world and justifies the TPP tobacco control provision,” the health groups wrote.

The letter also points out that the TPP tobacco provision addresses the behavior of tobacco manufacturers and is not aimed at tobacco growers.

“The provision does not and is not intended to interfere with the livelihood of tobacco leaf growers. It is unfortunate that the tobacco industry and its allies use the age-old strategy of raising the alarm of the tobacco growers to protect the tobacco manufacturing industry interest in addicting new consumers. The fact is that tobacco growers stand to gain benefits under the TPP, such as tariff reductions, which those advocating for protection of the tobacco companies simply ignore,” the letter states.

Here is a full list of groups signing the letter:

Action on Smoking & Health
American Academy of Family Physicians
American Academy of Oral and Maxillofacial Pathology
American Academy of Oral Medicine
American Academy of Otolaryngology—Head and Neck Surgery
American Academy of Pediatrics
American Association for Respiratory Care
American Cancer Society Cancer Action Network
American College of Chest Physicians
American College of Physicians
American College of Preventive Medicine
American Congress of Obstetricians and Gynecologists
American Dental Hygienists’ Association
American Heart Association
American Lung Association
American Medical Association
American Psychological Association
American Public Health Association
American Society of Clinical Oncology
American Thoracic Society
Americans for Nonsmokers’ Rights
Association of Schools and Programs of Public Health
Association of State and Territorial Health Officials
Campaign for Tobacco-Free Kids
Community Anti-Drug Coalitions of America
March of Dimes
National African American Tobacco Prevention Network
National Association of County & City Health Officials
National Network of Public Health Institutes
Prevention Institute
Society for Cardiovascular Angiography and Interventions
Society for Public Health Education
Society for Research on Nicotine and Tobacco
The University of Texas MD Anderson Cancer Center
Trust for America’s Health