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Plain packaging laws at centre of world trade storm

13 May 2014

Australia’s breakthrough tobacco plain packaging laws have become the centre of the biggest trade dispute in the history of the World Trade Organisation as worried countries tussle over the protection of intellectual property rights and the ability of countries to take public health measures.

As at late last month, 35 countries had asked to join the dispute as third parties, including the United States, the European Union, China, India, Brazil and Japan.

In a major advance in the progress of the trade stoush, the WTO last week appointed a three-member panel to begin hearings on the dispute and finalise a report within six months.

The panel, to be chaired by former South African Trade Minister Alec Erwin and including international intellectual property expert Professor Francois Dessemonted and distinguished Barbados politician Dame Billie Miller, will investigate complaints from five countries – Ukraine, Indonesia, Cuba, the Dominican Republic and Honduras – that Australia’s plain packaging laws breach international trade obligations regarding the protection of intellectual property rights (in particular, trademarks) and are detrimental to their tobacco industries.

Among the arguments, Cuba has complained that the laws mean that its premium tobacco products, particularly cigars, cannot be differentiated from other products in the Australian market, while the Dominican Republican argued they were detrimental to fair competition in the marketplace, and were therefore inconsistent with Australia’s international trade obligations.

The dispute has attracted huge international attention because of its implications for the marketing of tobacco products and, more broadly, the capacity of countries to enact public health measures.

Tobacco companies and producer countries are particularly worried that if Australia’s plain packaging legislation stands, many other countries will follow suit, undermining the global market for their products.

So far, governments in Ireland and New Zealand have flagged their intention to introduce similar plain packaging legislation, while the British Government has indicated it will introduce plain packaging laws following a review.

Evidence about the effect of the measure so far is mixed. A University of Sydney study found there had been a jump of almost 80 per cent in calls to the national Quitline since the laws were introduced, but tobacco companies claim there has been no impact on the overall consumption of their products.

The Australian laws have the strong backing of the World Health Organisation.

The WTO dispute is not the first legal challenge the Australian Government has faced to the plain packaging laws.

In 2012 it successfully defended the plain packaging legislation when the High Court of Australia dismissed a challenge from the major tobacco companies, who had argued that the laws breached their intellectual property rights.

A spokesman for Trade Minister Andrew Robb told The Australian Financial Review that the Government would vigorously defend the plain packaging laws at the WTO.

“WTO members have a right to take measures to protect public health,” the spokesman said, adding that a number of countries including Brazil, Canada, New Zealand, Norway and Uruguay had expressed their support for Australia’s case.

If the dispute settlement panel rules that Australia’s plain packaging laws do breach WTO trade rules, the country will have 60 days to challenge the decision before it becomes formally adopted.

If there is an appeal, it has to be heard within 90 days by the WTO’s permanent seven-member Appellate Body, and the Dispute Settlement Body has to accept or reject the appeal decision within 30 days – and rejection is on possible by consensus.

Adrian Rollins 

Published: 13 May 2014