WTO panel puts Health ahead of Tobacco Industry profits

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Landmark case gives governments more discretion in health policies:

Statement of Laurent Huber, Executive Director, Action on Smoking & Health

In a long-awaited and welcome decision, today the World Trade Organization (WTO) found in favor of Australia’s regulations for plain – or standardized – packaging for tobacco products. Australia was the first country to implement the measure, which has already proven effective in reducing tobacco use. Several countries have since followed, with many more planning to join the movement.

The tobacco industry has long used litigation as a weapon against meaningful public health measures. Australia deserves credit for standing up to the barrage of lawsuits that followed its implementation of plain packaging, including a domestic constitutional challenge, a direct trade challenge under an investment agreement, and the WTO challenge launched by four countries on behalf of the industry (Ukraine, the original litigant, eventually dropped its challenge).

The WTO decision is not a surprise for the tobacco industry. Their litigation strategy is not focused on winning but on imposing economic penalties on countries that try to push the envelope on tobacco control, in the hopes that other governments will shy away, a strategy often called “regulatory chill.” Unfortunately, the tactic is all too often successful. Several countries delayed or ended plain packaging efforts as a result of the Australia case.

WTO decision

There is no ‘sweet spot’ for tobacco regulations that will allow for maximum industry profits while protecting public health. Tobacco kills its consumers, and more sales equals more deaths. Therefore every regulation that seeks to reduce the death toll will negatively impact the tobacco industry. The conflict of interest is irreconcilable, which makes tobacco products unique among consumer goods.

In addition to prioritizing health over profits, this WTO decision demonstrates the rights of governments to legislate in the public interest. International trade law has long been skewed in favor of corporate rights. Today the WTO panel demonstrated its understanding that governments have a duty to their citizens, not foreign investors.

Australia should never have had to litigate these trade cases. Corporate litigation rights are included in many trade agreements as a backstop for cases where domestic rule of law is weak. This is certainly not true for Australia, where Big Tobacco’s case was heard fairly. Action on Smoking and Health will continue to work diligently for exclusions in trade agreements that protect tobacco control regulations from challenges, as we did in the draft Trans-Pacific Partnership Agreement.

For more information, visit our trade program website.

WASHINGTON, DC – June 28, 2018 – 

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