Big tobacco blows new smoke rings

A third front has opened up in their war on Australia’s cigarette packaging rules

By Latha Jishnu
Last Updated: Sunday 07 June 2015

imageTHE World Trade Organization (WTO) appears to be the last refuge of Big Tobacco. Losing their case filed in the Australian High Court against the country’s order that all cigarettes should be sold in plain packaging, that is, devoid of distinctive and colourful branding from December, the industry seems to have shifted its arena to the WTO.

The tobacco is going up in smoke over Australia’s stringent packaging laws which are aimed at discouraging people from smoking. So, instead of bright logos and brand names, cigarette manufacturers now have to settle for uniformly drab packaging under rules which even specify how large a font can be used in printing brand names. Companies also have to display gory images of the diseases that can be caused by cancer. Australia is not the first country to resort to such measures as a public health measure; Uruguay has even tougher rules.

But the tobacco industry, threatened by falling revenues and shrinking markets, has been quick to take these countries to arbitration under bilateral investment treaties or BITs (see "Going up in smoke in Uruguay, Australia"). Their case is that such rules violate their intellectual property rights by infringing trademarks. Philip Morris has been in the forefront of this war, followed by British American Tobacco and Imperial Tobacco.

Some of the tobacco companies have done some clever forum-shopping using a variety of stratagems to defeat such packaging laws. While mounting a legal challenge in the home country (as in Australia), Philip Morris, the makers of the well-known Marlboro brand, has also scouted around for the best BIT to sue Uruguay and Australia for compensation. BITs are such that private companies can sue sovereign government for putative lost profits unlike at WTO where only countries can challenge another. Even better, they can choose from a range of BITs signed by the offending country with other nations so that they can seek the one that least protects a nation’s regulatory space.

While Philip Morris picked a 1991 BIT signed between Uruguay and Switzerland—where its subsidiary Philip Morris International (PMI) is based—rather than the Uruguay-US BIT of 2005, in the case of Australia, it plumped for the Australia- Hong Kong BIT ratified in 1993 instead of the 2005 Australia- US Free Trade Agreement.

But if only countries can mount challenges at WTO how does Big Tobacco come into the picture in the case of the tobacco packaging disputes referred to the apex trade body? Three countries, citing violation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPs, on trademarks and geographical indications have taken Australia to WTO, the latest being the Honduras which on October 15 asked for the formation of a dispute settlement panel on Australia’s plain-packaging law. This request signals the end of informal consultations that the Central American country has been having with Australia since April this year.

Trade disputes start with a request for consultations and failing that are moved to the dispute settlement body. The other two countries which have challenged the Australian regulation are Ukraine and the Dominican Republic, neither of which has any significant trade with Australia, much less on cigarettes. Ukraine, reportedly, does not sell any of its tobacco products to Australia but to Europe. All of this has strengthened suspicion that the tobacco industry, which is fighting Australia’s packaging laws on several fronts is behind the moves at the WTO.

It was immediately after the Australian High Court dismissed the tobacco giants’ challenge on August 15 that momentum picked up at WTO.

It is certainly curious. An Australian news report had at the time quoted Trade Minister Craig Emerson as saying that it was “a remarkable coincidence”. According to Emerson, “Ukraine was engaged in informal talks with us up until the High Court win, and then went formal.”

But given that the WTO has exemptions under TRIPs for public health safeguards, Big Tobacco stands a better chance of winning its case under BITs. Investor-state disputes under such treaties make no such allowances and claims of expropriation are viewed more favourably by tribunals which interpret the term very broadly under commercial arbitration. Analysts point out that under international investment law, investors can claim compensation for lost profits even if there is no direct acquisition of property. Any government policy or rule that has a significant impact on an investment could prompt a tribunal to decide in favour of the investor.

In which case, WTO appears to be the choice of last resort. Like a well-armed warrior, the tobacco industry could be merely ensuring that it has a second string to its bow.

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  • It is not smoking tobacco

    It is not smoking tobacco that causes diseases but the habit of drinking not enough water. A tobacco smoker will need more water-intake than the ordinary man to compensate for energy loss and to restore the oxygen content that he exhausts. When one breathes, oxygen goes into the lungs where hemoglobin in the blood capillaries in the lung walls is sitting ready to receive it. Oxygen combines with hemoglobin to form oxy-globin which reaches every cell in human body when blood circulates from the heart. These cells receive this oxygen and release carbon dioxide. Hemoglobin has equal affinity to nicotine as it has to oxygen. When we smoke, nicotine vapour replaces oxygen considerably and combines with hemoglobin to form nico-globin which reaches everywhere just as oxygen reaches. Due to a considerable volume of ingoing oxygen been replaced by nicotine, there will naturally be a resultant downfall in the energy level of the body, which, drinking great quantities of water will supplement. Had man drank enough water, there would have been no problem from moderate smoking. But man normally is reluctant to drink water nowadays. If we question the afflicted, they will tell us that they drink only one or two glasses of water each day, where the problem begins. Why doesnÔÇÖt the government tell people to drink more water and never to drink iced water and coca cola which is the real villain? Since mankind discovered the uses of this plant, tobacco has been chewed, smoked and eaten as social ritual and as curative stimulant for gastric and digestive disorders. Bone and tissue remains unearthed in excavations from primitive sites of human habitation suggest that whatever diseases now are alleged to be associated with tobacco smoking never existed then. Where it was extremely cold, when it was gloomy, it was used to relieve mental stress, to heat the ice-cold interior of lungs and to give something for the impatient human hands to do. For centuries, this peaceful habit has been doing silent services as a social ritual and as an individual involvement, causing no particular harm on its own. When modern day parliamentarians began to fear that people will turn against them for corruption, bribery and misadministration, they devised this trick of enacting safe laws such as banning tobacco smoking, prohibiting sleeping in peaceful parks, lolling in groups along highways, sitting on culverts, etc, so that their national crimes would go unnoticed and people will think they are doing great things. Now Himachal administration fears that they are exposed in the liquor problem and many others. What other way is there to make more people angry and turn attention away from real problems so that people will think for a while that the government is doing great things for them? So they decided, let us ban tobacco. Man has the intelligence to decide what he shall drink and what he shall smoke. DonÔÇÖt interfere. Leave alone the ancient social practice of tobacco smoking.

    Posted by: Anonymous | 7 years ago | Reply
  • There are a few other

    There are a few other countries that I have been to that sell cigarettes in outrageous (and some gruesome) packaging as well. There are even pictures of babies still inside the womb to raise awareness on how smoking can cause miscarriages in pregnant moms. I think smokers are not deterred by those overrated pictures though, because most of my friends simply threw away the original packaging and store their cigarettes in their personal cases. I think a better approach would be to have messages embedded on the packaging instead. Such as words of encouragement and advises on the positive outcome you get if you were to quit smoking. Or alternatives like green smoke or e-cigarette alternatives.

    Posted by: Anonymous | 7 years ago | Reply