[Ip-health] Bridges Weekly: Disputes Roundup: Public Health Cases Move Forward at WTO
thiru at keionline.org
thiru at keionline.org
Wed Apr 11 15:18:01 PDT 2012
Bridges Weekly Trade News Digest ? Volume 16 ? Number 14 ? 11th April 2012
Disputes Roundup: Public Health Cases Move Forward at WTO
The debate over how to balance public health concerns against
protectionism fears again featured at the WTO last week, with the
Appellate Body issuing its ruling in the Indonesia-US row over clove
cigarettes. Meanwhile, another dispute has also been launched against
Australia?s controversial cigarette packaging law, with Honduras
filing a request for consultations on Wednesday 4 April.
Appellate Body finds US anti-smoking law discriminatory against
Last Wednesday, the global trade body?s highest court confirmed that
the US ban of flavoured cigarettes illegally discriminates against
foreign products (DS406).
The Appellate Body ruling was a vindication for Indonesia, which had
argued that the US Family Smoking Prevention and Tobacco Control Act
from 2009 unfairly targets clove cigarettes imported from Indonesia
while menthol cigarettes - produced in the US and in direct
competition with the Indonesian cigarettes - are not banned.
The US legislation had prohibited cigarettes with fruit,
confectionery, or clove flavours, arguing that these encouraged young
people to smoke. While flavours such as toffee and strawberry were
banned, menthol flavoured cigarettes remained on the market.
?The United States is very disappointed with the outcome of this
dispute,? said Nkenge Harmon, a spokeswoman for the US Trade
Representative (USTR). ?The ban on cigarettes with flavours is part of
landmark US legislation to combat the public health crisis caused by
As the world?s top producer of clove cigarettes and main source for
clove cigarettes smoked in the US, Indonesia welcomed the decision.
?With this ruling, we expect other countries will not follow the US?
move,? Iman Pambagyo, director of the Ministry of Trade?s department
of international trade co-operation, said in a statement last Thursday.
Indonesia won the first round in this case last year, when a
three-person panel determined that clove and menthol flavoured
cigarettes were ?like products? within the meaning of the WTO?s
Technical Barriers to Trade (TBT) Agreement (see Bridges Weekly, 7
Since the US law banned cloves but not menthols, the panel concluded
that the US law was inconsistent with the TBT Agreement?s requirement
that imported products receive the same treatment as ?like? domestic
products, the so-called ?national treatment obligation.?
Different interpretations, same result
In its ruling last Wednesday, the Appellate Body ultimately agreed
with the panel?s September decision, albeit through different
interpretations of the TBT Agreement.
The Appellate Body said that ?likeness? should be determined by the
competitive relationship between the products, rather than the purpose
of the regulation at issue. Its interpretation of the TBT Agreement?s
national treatment requirement also differed from that of the panel.
If a measure makes a legitimate regulatory distinction, said the
Appellate Body, a resulting detrimental impact on imports does not
automatically mean these imports are accorded ?less favourable?
treatment than like domestic products.
Although these legal nuances did not change the outcome in this case,
they are important clarifications in the WTO rules governing the
restriction of trade for the purpose of furthering public policy
This case is one of three on-going TBT disputes against the US that
are currently at the WTO appellate stage. The two other disputes being
considered, US-Tuna II (DS381) and US-COOL (DS384), also involve
Washington?s regulation of consumer information in this context.
Last year?s panel ruling had drawn an outcry from advocacy groups,
which coloured the result as an attack on US public health regulation;
the result of the Appellate Body ruling drew similar criticism.
?The Obama administration and Congress must not bow to yet another
ruling from a so-called trade agreement tribunal demanding that the US
get rid of yet another important health or environmental policy,? said
Lori Wallach, director of Washington-based Public Citizen?s Global
Trade Watch, in a statement.
In response to the Appellate Body decision, the California Democrat
who sponsored the Act vowed that the clove cigarette ban would remain.
?The law made no distinction in where a cigarette is manufactured
because a cigarette - no matter where it is made - is addictive and
deadly,? Representative Henry Waxman said in a statement. ?I am
committed to working with the Administration to advance our shared
goal of ending the tobacco epidemic among our young people and
ensuring that the US ban on clove and candied-flavoured cigarettes
remains in place.?
The USTR is currently examining its options for compliance. If the
discriminatory ban remains, Indonesia could seek trade countermeasures
against the US, and retaliation could amount to US$16 million per year
because of lost trade, some analysts claim.
Honduras challenges Australian cigarette packaging law
Meanwhile, the controversy over Australia?s new plain packaging
requirements for cigarettes has now become the subject of a second WTO
dispute, with Honduras lodging a complaint at the global trade arbiter
last week (DS435). The challenge comes just weeks after Ukraine filed
its own request for consultations over the Canberra legislation (see
Bridges Weekly, 21 March 2012).
?The industry employs several hundred thousand people directly and
indirectly throughout the supply chain in Honduras,? Dacio Castillo,
Honduras? Ambassador to the WTO, said in an emailed statement to
Bridges. ?This translates into tens of millions of dollars for the
Canberra has given tobacco companies until December 2012 to comply
with its Plain Packaging Act, which requires that all cigarettes sold
in Australia be packaged with one colour and shape and that a
significant portion of the packaging be used for health warnings.
Australian officials have defended the law as necessary to protect
public health, with Australian Trade Minister Craig Emerson stating
that the requirement is ?not anti-trade; it?s anti-cancer.?
Although its written consultations request was not available as
Bridges went to press, Honduras argues that the Australian law is
inconsistent with WTO obligations to respect intellectual property
rights and is an unnecessarily restrictive technical barrier to trade.
As a state party to WHO Framework Convention on Tobacco Control,
Honduras ?is in favour of legitimate measures to reduce smoking
prevalence,? says Castillo.
However, ?Australia?s plain packaging requirements would defeat the
basic function of a trademark, which is to allow consumers to
distinguish between products of different companies,? he said.
Experts note that the decision also demonstrates a strengthened WTO
dispute settlement capacity on the part of Honduras. The small Central
American country has lodged three other dispute series at the global
trade arbiter since the WTO?s birth in 1995, and recently secured a
victory - together with three other complainants - against the
Dominican Republic over the latter?s safeguard duties on plastic bags
and tubular fabric (see Bridges Weekly 8 February 2012).
ICTSD reporting; ?WTO dents U.S. ban on clove cigarettes,? REUTERS, 4
April 2012; ?Indonesia wins tobacco dispute with US,? THE JAKARTA
POST, 9 April 2012.
Knowledge Ecology International (KEI)
thiru at keionline.org
Tel: +41 22 791 6727
Mobile: +41 76 508 0997
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