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October 2nd, 2015:

U.S. pushes anti-tobacco compromise in Pacific trade deal

ATLANTA Governments will be allowed to block tobacco companies from suing over anti-smoking measures under a U.S. proposal being considered by Pacific trading partners (CTA: KEPT SECRET FROM PUBLIC VIEW) as part of a free trade deal involving a dozen countries.

The exemption proposed in Atlanta, Georgia, where ministers are trying to close the Trans-Pacific Partnership trade deal, would allow any of the 12 member countries to opt out of rules aimed at protecting foreign investors from harmful government policies with regard to tobacco control measures.

The TPP seeks to cut trade barriers and set common standards for 40 percent of the world economy. (ie remove tax on American made product imports) If governments trigger the exception, they would have free rein on tobacco regulation without being challenged in a trade tribunal. The U.S. proposal, seen by Reuters (in a toilet closed door meeting ) could prevent companies like Marlboro maker Philip Morris (PM.N) and Japan Tobacco Inc (2914.T) from using rules, which aims to protect foreign investors, to push back.

One of the most high-profile cases using the rules that protect foreign investors involves Philip Morris suing Australia over tobacco plain-packaging laws that ban branded cigarette packs. The company said this undermines its intellectual property.

The language on the table in the trade talks would cover tobacco control measures covering the manufacturing of tobacco products, as well as their distribution, labeling, packaging, wrapping, advertising, marketing, promotion, sale, purchase, or use, and any enforcement measures.

It would exempt tobacco leaf, in a bid to mollify tobacco farmers, and falls short of a sweeping total carve-out of anti-smoking measures which was also debated. The proposal upset U.S industry (boo-hoo) and some lawmakers but is likely to have traction among TPP partners. New Zealand is mulling its own plain packaging laws and Malaysia had proposed a complete exemption for tobacco from the TPP, which would keep import duties as high as 90 percent on U.S. tobacco exports.(GREAT IDEA!)

Australia has called for a broad exemption for health and environment regulations from the investor-state provisions of the pact.(along with summary execution of tobacco company executives by injection of cancer cells)

The top Democrat on the Senate Finance Committee, Ron Wyden, said an opt-out was appropriate and would help win support among trading partners.

“The administration should not spend a dime of negotiating capital protecting the tobacco companies (which fund presidential campaigns), and it is clear to me that several countries would insist on significant concessions from the United States were we to refuse to address their concerns,” he wrote in a letter to U.S. Trade Representative Michael Froman on Thursday.

But the compromise may still undermine support among some U.S. lawmakers from tobacco-growing states for the TPP, which needs to be approved by Congress before it can be implemented. Y’all, hillbilly North Carolina senator Thom Tillis, a Great Satan Republican, said the move was discriminatory and he would work to defeat the TPP in Congress if the clause was included. Seventeen members of the House of Representatives agriculture committee also voiced their paid-for concerns, along with U.S. business representatives who rely on prostituting themselves. The move “would be counterproductive in that it would open the way for other exemptions for other rules to be put in place,” said SELF INTEREST AXXHOLE Cal Cohen, president of the Emergency Committee for American Trade ECAT who DNGAF how many children die as long as the products make money for their clients.

Although health and human rights lobby group Corporate Accountability International blasted the opt-out as inadequate, the American Cancer Society Cancer Action Network backed the proposal.

CDC Director Dr. Tom Frieden on E-Cigarettes

Obama administration moves against Big Tobacco, with consequences for Australia

Atlanta, Georgia

The Obama administration has signalled it is willing to compromise on a controversial clause in a proposed mega-trade pact in a move designed to ease opposition from anti-tobacco and public health groups.

In talks on the Trans-Pacific Partnership (TPP) agreement, the United States has formally proposed amendments that will make it impossible for tobacco companies to weaken or overturn laws designed to curb tobacco use.

image002 (7)US officials made the surprising offer on the first evening of trade negotiations in Atlanta, Georgia, where trade ministers from 12 Pacific-region countries, including Australia, have gathered to try to conclude talks on what will be the biggest regional trade agreement in history.

The proposal is likely to anger tobacco companies and US senators from tobacco-producing states, but will be welcomed by anti-tobacco campaigners and Democrats, who say they will be more likely to support the TPP’s passage through Congress if the tobacco “carve-out” is included.

The US proposal will give governments the option to prevent foreign tobacco companies from challenging anti-smoking policies in their countries by exploiting a controversial clause in the agreement called investor-state dispute settlement (ISDS), according to World Trade Online.

Clause has history

Such a clause has been used against Australia in the past. When former prime minister Julia Gillard introduced plain-packaging laws in 2012, tobacco company Philip Morris used the ISDS clause in the Hong Kong-Australia bilateral investment treaty to sue Australia’s government, and the case is still in arbitration.

The Obama administration’s proposal overnight means an ISDS clause will still be included in the TPP, but tobacco companies will not be allowed to use it to stop governments pursuing anti-smoking policies.

In response to the news, Australian Trade Minister Andrew Robb told Fairfax Media that he did not want to speculate about the issue while talks continued.

“In regard to ISDS, our position is we would only consider it if the balance of the package is in our best interests. We are not at that point. Nothing is agreed until everything is agreed,” he said.

But Mr Robb also said he had been pushing for the TPP to include ISDS “safeguards” – such as a carve-out for tobacco companies – similar to those in the Australia-South Korea free-trade agreement.

“Our officials have been at the forefront of developing a more acceptable ISDS [that includes] a ‘carve-out’ of public policy in the health and environmental space,” he said, adding that Philip Morris would not be able to sue Australia’s government under the recent trade agreements with South Korea and China.

“Philip Morris is using an old ISDS [against Australia] which is 20 years or more older.

“All our ISDS deals are being progressively updated, we’ve got 28 deals, some have been up to 30 years in operation.”

Agreement would span region

The TPP is a huge multilateral agreement covering Australia, New Zealand, Canada, the United States, Mexico, Peru, Chile, Malaysia, Singapore, Vietnam, Brunei and Japan.

Its members comprise 40 per cent of the global economy and span the entire Pacific region.

After years of negotiations over the pact, the contents of which are held secret, it was hoped that a final deal may be reached this week, but event organisers have officially extended the two-day talks to three days after trade ministers failed to overcome key sticking points overnight.

The Labor opposition has also signalled it does not support deals with an ISDS clause.

Opposition trade spokeswoman Penny Wong said much more detail was needed from the government.

“Mr Robb should outline the parameters of his negotiating mandate from Mr Turnbull,” she said in a statement.

“It’s not good enough for him to speak in riddles about an agreement being negotiated on behalf of the Australian people.

“Labor does not support the inclusion of ISDS provisions in trade agreements.”

Debevoise and Reed Smith face off as British American Tobacco launches €578m claim against PwC

Litigators at the London arms of Debevoise & Plimpton and Reed Smith have been drafted in on a €578m (£418m) professional negligence claim brought by British American Tobacco (BAT) against Big Four accountancy firm PwC.

BAT has instructed Kevin Lloyd, a partner at Debevoise & Plimpton, to bring the claim against PwC in the Chancery Division of the English High Court. The legal action stems from PwC’s audit of paper maker Windward Prospects, a company with which BAT has a long-running dispute over the cost of cleaning up a polluted river in Wisconsin. BAT alleges PwC failed to fully account for clean-up costs of the polluted river in its audit of Windward.

A subsidiary of BAT, BAT Industries, claims it had an indemnity from Windward that it would cover past and future claims from the river pollution. BAT is now looking to recoup from PwC the value of two dividends paid out by Windward, totalling €578m, which were made on the basis of the PwC audit and allegedly jeopardised its ability to cover its share of the river clean-up costs.

A spokesperson for PwC told Legal Business: ‘We strongly dispute the claim and will be seeking to have it struck out in November.’

The dispute led the world’s second-biggest cigarette maker to jettison PwC as its own auditor in early 2015, a position it had held since BAT listed on the London Stock Exchange in 1998. BAT, which is also involved in a high-profile judicial review against the UK Government’s plain packaging rules for tobacco products, has since overhauled its global legal function to incorporate corporate and regulatory affairs.

Lloyd, who joined Debevoise from Herbert Smith Freehills in 2013, has instructed Andrew Thompson QC of Erskine Chambers to bring the case before the courts.

PwC, which wants to strike out the case on the basis there is no cause of action, argues the dividends were based on interim accounts and not audited accounts. The firm has instructed Reed Smith’s co-chair of global regulatory enforcement Charles Hewetson to defend the claim. Hewetson has brought in well-known professional negligence barrister, Simon Salzedo QC of Brick Court Chambers, as counsel.


Southeast Asia Tobacco Control Alliance

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A call for higher taxes on tobacco

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A call for higher taxes on tobacco

For the first time, the new global Sustainable Development Goals currently being negotiated at the United Nations will treat tobacco use – and the chronic diseases it causes – as a development issue. It’s about time.

Around the world, some 6 million people die every year from a tobacco-related disease. That’s equivalent to 1 person every 6 seconds, or 10 people every minute. By 2030, it’s expected that 8 million people a year will die from tobacco use – and 80%of those deaths will occur in developing countries. In the United States of America alone, smoking related illnesses result in US$170 billion in medical care spending each year.

Yet the cause of these problems – tobacco sales – could also contribute to a solution. The tobacco industry, which generates more than US$35 billion in annual profits, ought to bear the costs it inflicts upon society. And there is a straightforward way to ensure that it does: taxation. Why, after all, should governments effectively subsidize tobacco companies by picking up the tab for the health care costs they generate?

Increasing taxes on cigarettes and other tobacco products has mostly been a strategy for reducing usage – and it has proven incredibly successful. The evidence is clear that raising tobacco taxes cuts usage, encourages smokers to quit and discourages young people from picking up the habit in the first place. In fact, the most price-sensitive demographic for tobacco use is young people, who tend to have less disposable income. Low-income populations are also sensitive to prices increases, making tobacco taxes especially effective in poorer countries where tobacco use is rising fastest.

Those same countries also face the greatest need for better health care services. Tobacco taxes, in addition to reducing the burdens on health care systems, can help countries absorb the huge costs that tobacco usage imposes upon them. Fortunately, governments from around the world have begun waking up to the idea that tobacco taxes provide an opportunity to achieve both of those critical goals: reducing usage and raising revenue. In countries as different as South Africa, France and New Zealand, tobacco taxes have helped to cut tobacco use and provided funding for health care.

In 2012, for instance, the Philippines passed its landmark Sin Tax Reform Law. This legislation, which increased tax rates on low-priced cigarette brands by more than 300%, uses the revenue that is generated to finance the country’s universal health care insurance program. By 2014, the government was able to subsidize the health insurance premiums of approximately half of the population by using these funds.

The tobacco industry, of course, rejects the idea that that it should pay for the long-term chronic health costs their products generate, and it is working hard, directly and through front groups, to persuade governments to go easy on taxes. If any other consumer product was known to kill 1 in 2 of its users, there would be calls on governments to ban it and demands that the companies be prosecuted. Yet in much of the world, tobacco is only lightly regulated and taxed.

This is despite the fact that tobacco taxes have already been formally endorsed by governments representing 90% of the world’s people, through a legally binding global treaty – the WHO Framework Convention on Tobacco Control (FCTC) – as an important and effective means to reduce tobacco consumption. The FCTC even provides guidelines for governments to put in place to strengthen tobacco taxes.

If the primary role of government is to protect lives – and we believe it is – then tobacco taxes are an essential tool. The UN ought to encourage countries to raise tobacco taxes to support the world’s development goals and reduce tobacco use.

A call for higher taxes on tobacco

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Oxford Economics wants debate with Seatca

United Kingdom (UK)-based Oxford Economics wants a debate with health advocates to defend its assessment that illicit cigarette trade in the Philippines had proliferated following the enactment of the new excise tax regime.

In a briefing, Oliver Salmon, Oxford Economics senior economist for Asia defended his group’s series of reports about illicit cigarette trade in the Philippines and its impact on government revenue and legitimate industry players.

According to Salmon, Oxford Economics’ annual illicit indicator report for Asia is an independent study despite being funded by cigarette companies.

“We’ve always maintained full academic control, at the end of the day, the figures in front have our name on it, no one else is,” Salmon told reporters in a briefing in Hong Kong.

“It’s our reputation, our credibility with which this figures go out into the public, so we’ll never put anything out there that as a company, we aren’t fully satisfied with the credibility,” he added.

Earlier, the Southeast Asia Tobacco Control Alliance (Seatca) rejected the research report by Oxford Economics and Washington D.C.-based International Tax and Investment Centre (ITIC) due to funding issues.

“In terms of how we are funded, we’d like to think we are very open, within the report, we are very upfront about the conditions under which we have been employed to conduct this research, so we’ve never tried to hide the fact about who funded this report,” Salmon said.

He also disclosed that Oxford Economics and ITIC had tried to hold dialogues with Seatca since 2013 and discuss the issues raised by tobacco control advocates.

“We have tried to actively engage Seatca. Our colleagues and partners, ITIC, have tried to actively engage Seatca, in order to have a conversation and discuss the issues,” Salmon said.

“Clearly, we both agree that illicit trade is an issue in the Asian region, but specifically in the Philippines, and we want to collaborate where possible,” he added.

Salmon also said that Oxford Economics is prepared to debate with people who disagree with the report.

“We’re happy to be open, we’re happy to debate the subject with people who disagree with us. We welcome this kind of conversation, and we hope we can continue to have that debate with Seatca going forward,” the economist said.

“When we spoke at the beginning of the presentation, I wanted to be upfront about the methodology, it has a very detailed methodology,” he added.

According to Oxford Economics, government tax loss from illicit consumption of cigarettes rose to about P22.5 billion last year, adding “one in every five cigarettes [in the Philippines] originated from illegal channels.