[Ip-health] Bridges: Ukraine WTO Dispute Against Australia Cigarette Packaging Law

Daniella Allam dallam at ictsd.ch
Fri Mar 23 07:07:03 PDT 2012


Ukraine Launches WTO Challenge Against Australia Cigarette Packaging Law

An Australian law intended to make the packaging of cigarettes less
appealing to consumers is now facing a WTO challenge, with Ukraine formally
lodging a complaint at the global trade body last week.
434 <http://www.wto.org/english/news_e/news12_e/ds434rfc_13mar12_e.htm>)
The move follows heated discussions between WTO members in recent months
over the law’s conformity with multilateral trade rules.

The Australian law <http://www.comlaw.gov.au/Details/C2011A00148> - also
known as the Plain Packaging Act - requires that all cigarettes sold in
Australia be packaged with only one colour and shape and that a significant
portion of the packaging be used for health warnings. Though the bill was
approved last December, tobacco companies have until December 2012 to make
the necessary changes in their production.

The law has been defended by Australian officials as being necessary for
public health reasons, with Australian Trade Minister Craig Emerson
publicly claiming that “it’s not anti-trade; it’s anti-cancer.” According
to government data, smoking kills 15,000 Australians annually, along with
incurring about A$31 billion, or US$33 billion, in health and workplace
expenses each year.

In response to the WTO complaint, Canberra said it would participate in the
consultations “in a constructive manner.”

“Australia is prepared to defend any challenge that might result from the
consultations,” Emerson said, in a statement emailed to Bloomberg.

The WTO complaint is the latest in a series of legal challenges lodged
against Canberra over the cigarette packing law. Major tobacco companies,
including Philip Morris International, Japan Tobacco, British American
Tobacco, and Imperial Tobacco, have filed suits arguing that the plain
packaging legislation is unconstitutional; Australia’s high court is set to
hear the cases in April.

Philip Morris is also challenging the law under the 1993 Bilateral
Investment Treaty (BIT) between Australia and Hong Kong.

*Trademark violations?*


In its complaint, Ukraine claims that the law is inconsistent with the
WTO’s Agreements on Trade-Related Aspects of Intellectual Property Rights
(TRIPS), Technical Barriers to Trade (TBT), and the General Agreement on
Tariffs and Trade (GATT).


With regards to TRIPS, Kiev argues that the Australian measure violates the
WTO’s rules on intellectual property by restricting the usage of
trademarks, discriminating on the basis of nationality, and preventing the
lawful exploitation of patent rights.

This anti-tobacco legislation - which Australia plans to extend to cigars
and loose-leaf tobacco products - has already been under discussion at the
WTO TRIPS Council since June, where it sparked debate among members
regarding the balance between public health considerations and intellectual
property rights (See Bridges Weekly,
15  <http://ictsd.org/i/news/bridgesweekly/108710/>June<http://ictsd.org/i/news/bridgesweekly/108710/>
 2011 <http://ictsd.org/i/news/bridgesweekly/108710/>).

During the TRIPS discussions, a handful of developing country tobacco
producers, led by the Dominican Republic, have argued that the law would
negatively impact their domestic industries.

Meanwhile, a number of developed countries - backed by Brazil and Uruguay -
have countered by reaffirming that WTO members have the right to use TRIPS
flexibilities to protect public health (See Bridges Weekly,
7  <http://ictsd.org/i/news/bridgesweekly/127872/>March<http://ictsd.org/i/news/bridgesweekly/127872/>
 2012 <http://ictsd.org/i/news/bridgesweekly/127872/>).

*Kiev: Law ‘more trade restrictive’ than necessary*

Ukraine also argues that the Australian law breaches the WTO’s Technical
Barriers to Trade (TBT) Agreement by being more trade restrictive than
necessary to achieve Canberra’s stated public heath objective, along with
violating national treatment requirements set in that agreement.

In a submission to the WTO Committee on TBT last April, Australia had
argued that its measures for the restriction of advertising and promotion
of tobacco products and their packaging were consistent with its
obligations under the World Health Organization (WHO) Framework Convention
on Tobacco Control.

While compliance with a non-WTO agreement may not per se justify trade
barriers, the TBT agreement permits trade restrictions where they are
necessary to protect public health. Ukraine, however, argues that the
measure is more trade restrictive than necessary to achieve the
Convention’s objective.

Kiev’s consultation request comes only months after the US lost three cases
at the panel stage under the TBT Agreement, which similarly addressed
unnecessarily trade restrictive measures. These cases - regarding a ban for
flavoured cigarettes, country of origin meat labelling requirements, and a
dolphin-safe label for tuna products, respectively - are now at the appeals
stage, with final rulings from the WTO’s highest court expected within the
coming months.

Importantly, in two of the cases the panels found that a restriction of
lawful consumer information could hamper trade in an unnecessarily
restrictive and thus illegal manner. If upheld by the Appellate Body, these
panel rulings are thought to be interpreted in the disadvantage of
Australia. This is particularly true if the plain packaging requirement is
found to be too burdensome for producers in relation to the measure’s
potential to reduce smoking.

*Next steps*

Under WTO rules, the two countries will now have 60 days to reach a
mutually agreed solution; if consultations fail, Ukraine has the right to
request an expert panel to hear the case and issue a formal ruling.

ICTSD reporting; “Australia Targeted in WTO Complaint Over Ban on Tobacco
Logos,” BLOOMBERG, 13 March 2012; “Philip Morris challenges
‘unconstitutional’ plain packaging law in High Court,” THE AUSTRALIAN, 20
December 2011.

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