WTO Tobacco Ruling Opens Door to New Plain-Packaging Laws

28 June 2018:

The World Trade Organization upheld Australia’s right to require cigarettes to be sold in plain packs without any logos in a landmark case that could usher in a new wave of global tobacco restrictions.

A panel of dispute-settlement experts backed the legality of Australia’s 2011 measure on Thursday. Australia requires tobacco companies to sell their products in drab, brown cardboard packages with standardized fonts.

Some governments have hesitated to implement such measures after a group of tobacco-producing countries sued Australia for allegedly violating WTO intellectual-property rules and setting illegal barriers to trade when it became the first country to implement plain packaging in 2011. Philip Morris International Inc. and Japan Tobacco Inc. have argued that such rules could set a precedent for other countries to implement new labeling rules for tobacco, alcohol and junk food, plus they make it easier for cigarettes to be counterfeited.

“Tobacco plain packaging is an evidence-based measure that WHO recommends as part of a comprehensive approach to tobacco control,” said Tarik Jasarevic, a WHO spokesman, in an email. “A positive decision from the WTO panel is likely to accelerate global implementation.”

The ruling affirmed Australia’s right to impose tobacco plain-packaging rules because WTO agreements contain exemptions that permit countries to implement regulations deemed necessary to protect the health of their citizens. Bloomberg News reported last year that the WTO sided with Australia, citing people close to the situation. The official notification took time because of the complexity of the issue and translation requirements.

A long list of countries including Belgium, Canada, Colombia, India, Panama, Malaysia, Turkey and Singapore are considering plain-packaging measures. So far, France, Hungary, Ireland, New Zealand, Norway, Slovenia and the U.K. have already passed such rules.

Tobacco is the leading cause of preventable death and disability in Australia and smoking is estimated to kill almost 19,000 Australians a year, according to the Australian Department of Health.

Cigarette packs in Australia must also include health warnings with images of diseased lungs, eyes and other body parts.

Four tobacco-growing countries — Cuba, the Dominican Republic, Honduras and Indonesia — filed the WTO dispute. They can appeal the decision, which normally would require a ruling within 90 days. However, the deadline is likely to be extended, because of the complexity of the dispute and a shortage of panelists in the WTO’s appellate-body system. The WTO hasn’t met the 90-day deadline on any appeal since 2014.

Since August, the U.S. has blocked nominees to the WTO’s appellate body, saying it has overstepped its mandate. If the U.S. continues its hold, the body will be paralyzed by late 2019 because it will lack the three panelists required to sign off on rulings.

Source: Bloomberg