http://blogs.ft.com/beyond-brics/2013/07/03/big-tobacco-vs-little-uruguay/?
Big Tobacco vs Little Uruguay
Jul 3, 2013 8:01pm by Jude Webber
Philip Morris International, the makers of Marlboro, the world’s best-selling cigarette brand, has won the right to take its case against marketing restrictions and graphic health warnings in the South American country to the World Bank’s arbitration tribunal, ICSID.
A decision is still years away, but spokeswoman Julie Soderlund told beyondbrics the company believed Uruguay had violated a bilateral investment treaty with Switzerland, where Philip Morris is based. She welcomed the decision by ICSID to accept jurisdiction to hear the case, adding:
This will be the first time in this case that there will be independent assessment of these arbitrary and unnecessary regulations.
Philip Morris objects to being made to pull, under the rules introduced by Uruguay in 2009, different variants of the same brand from shop shelves. That meant that it could not sell, say, Marlboro gold alongside Marlboro Red, and ended up pulling 7 out of 12 cigarette varieties, it complains.
It also objects to having its branding crowded out on cigarette packets, which Uruguay has since 2009 required to be 80 per cent covered, front and back, by graphic health warnings (after, it says, this survey was conducted). Prior to that, the warnings covered 50 per cent, which Philip Morris did not contest. (See the evolution below).
Source: PMI
Even though the tobacco giant has won the right to proceed with its case, Uruguay is convinced that tough anti-smoking laws and the policies to which Philip Morris objects, implemented under by Tabaré Vázquez, the former president and an oncologist, are paying off.
Vázquez is widely tipped to return to power in elections next year, and has made clear that he is passionate about the anti-smoking cause. Only in May, he gave a conference at the Inter-American Development Bank on the subject. So expect no let-up there.
The government is due to hold a news conference later on Wednesday.
Uruguay is not the only country that Big Tobacco is taking to court. Philip Morris and others also object to Australia’s plain packaging rules for cigarette and Thailand’s move to implement health warnings covering 85 per cent of the packets.
But the Uruguay suit is an interesting test case in a country considered one of the best places in Latin America to invest. One to watch.