Bad Things Can Come in Small Packages Too: The Global Movement Towards Plain

Packaging

Dr. Allyn Taylor

Overview

• Plain Packaging and Public Health

• Plain Packaging and National Action

• Legal Challenges to Australia’s Plain Packaging Law:• Constitutional• Bilateral Investment Agreement• World Trade Organization

(WTO)

• Framework Convention on Tobacco Control (FCTC) and and Plain Packaging

• Advocacywww.ads-ngo.com

Plain Packaging and Public Health

• The tobacco industry treats cigarette packaging as a critical aspect of marketing and invests significant research and funds into designing packaging that is appealing to specific groups, especially young people.

• Plain packaging legislation:

• reduces appeal of smoking.

• makes warnings and images more noticeable & effective.

• reduces likelihood consumers will acquire false perception about the safety of tobacco products.

Plain Packaging and Public Health

• Australia’s plain packaging rules stipulate:• brand names can only be displayed

on the lower front, the top, and the bottom of the packages.

• brand names must be displayed in a standard font, style, and color.

• the outer and inner surface of the retail packaging must be a drab dark brown color and have a matte finish.

• packaging may not have any decorative ridges, embossing, bulges, or other decorative irregularities and must be made of cardboard

http://www.yourhealth.gov.au/

Plain Packaging: National Action & Litigation

• Australia is the only country to date to formally adopt plain packaging legislation.

• Ireland, New Zealand and the United Kingdom have announced intentions to introduce similar plain packaging legislation. Plain packaging has also being considered by Canada, France, India, South Africa, and the European Union.

• Since adopting plain packaging legislation, Australia has faced multiple legal challenges in separate forums: • The Australian legal system:

• Constitutional challenges dismissed by Australia’s High Court.

• International arbitration pursuant to the Australia-Hong Kong Bilateral Investment Treaty (Ongoing).

• WTO challenge and dispute resolution procedure for alleged violation of commitments under three WTO treaties (Ongoing).

1. Australia’s Plain Packaging Litigation:the Constitutional Challenge

• Australian plain packaging legislation was challenged by four tobacco companies in the High Court of Australia: British American Tobacco, Imperial Tobacco, Japan Tobacco, and Philip Morris.

• Tobacco industry groups’ two principle arguments: • (1) The restrictions on groups’ property and related rights (including

trademarks, copyrights, patents, and etc.) by the Tobacco Plain Packaging Act and Regulations constituted an acquisition of property for which just terms had not been provided.

• (2) The Act gives the Commonwealth the use of, or control over, tobacco packaging in a way that amounts to an acquisition of industrial property for which just terms had not been provided.

• High Court of Australia’s response to industry arguments: • (1) Court determined that while the tobacco industry’s business may be

harmed, the Commonwealth does not, as a result of the Act, acquire something in the nature of property itself.

• (2) Court argued that the Act’s requirements are no different than any other legislation requiring labels warning against the use or misuse of a product and such labels do not affect an acquisition of property.

2. Australia’s Plain Packaging Arbitration:The Investor/State Dispute Mechanism under the Australia- Hong Kong Bilateral Investment

Treaty (BIT)

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The Investor/State Dispute: Arbitration Under the Australia-Hong Kong BIT

• In 2011, Philip Morris Asia (PMA), a Hong Kong-based company, served a notice of arbitration against Australia’s plain packaging legislation under the auspices of a Hong Kong-Australia bilateral investment treaty. • The arbitration is ongoing.

• PMA’s claims plain packaging legislation: • Unlawfully expropriates PMA’s investments and intellectual

property w/o compensation (Art. 6.1).• Does not provide full protection and security for PMA’s

investments in Australia (Art. 2(2)).• Unreasonably impairs PMA’s Australian investments (Art.

2(2)).• Breaches Australia’s international obligations relating to

PMA’s investments under WTO Agreements and the Paris Convention for the Protection of Industrial Property.

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• The tobacco industry’s use of BIT investor-state arbitration provisions to dampen governmental efforts to regulate tobacco is a troubling development for national and global tobacco control and may induce a “regulatory chill”, especially in low-income states lacking resources to battle the tobacco industry

• The tobacco industry has challenged or threatened to challenge point-of-sale tobacco display limitations in countries including Australia, Canada, Norway, and Uruguay under the international investment rules of BITs.

• In February 2010, Philip Morris alleged that Uruguay’s new tobacco regulations, which mandated that health warnings cover over 80% of the package, violated several provisions of the Swiss-Uruguay BIT and filed a request for arbitration.

Bilateral Investment Treaties (BITs)and Public Health

• Unlike relevant WTO agreements, BITs do not generally include provisions that provide states with flexibility to protect public health.

• Arbitration proceedings may completely lack transparency - neither the proceedings nor the final award may be made public: – The rules of the UN Commission

on International Trade Law permit arbitration proceedings to be held outside the country whose regulation is being challenged by an ad hoc tribunal.

Bilateral Investment Treaties and Public Health

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• To prevent the tobacco industry from challenging tobacco regulations through BITs, states should: • develop new strategies and measures to ensure that

bilateral investment treaties are not manipulated by the tobacco industry.

• ensure that states retain the right to protect their populations within any bilateral investment treaty.

• consider renegotiating investment treaties to include exceptions for the protection of public health and exclude investor-state arbitration provisions.

• Australia has announced it will oppose the inclusion of investor-state arbitration in future free trade agreements in part because of tobacco industry challenges to its plain packaging legislation.

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Bilateral Investment Treaties: The way Forward for Public Health

3. Australia’s Plain Packaging Litigation: Challenges through the WTO

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• Indonesia, Ukraine, Honduras, the Dominican Republic, and Cuba are seeking WTO dispute panel rulings arguing Australia’s plain packaging law violates global trade rules.

• Challenges to plain packaging under WTO Law under: • the General Agreement on Tariffs and Trade (GATT) 1994.• the Agreement on Technical Barriers to Trade (TBT).• the Agreement on Trade Related Aspects of Intellectual

Property Rights (TRIPS).

• The complaints by all five countries against Australia are ongoing. • The WTO Director-General established dispute panels for the

five countries on May 5, 2014.• Challenges to plain packaging have drawn the support of US

business groups like the US Chamber of Commerce, the National Association of Manufacturers, and the United States Council for International Business.

WTO & GATT (1994)

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• The WTO challenges to Australia’s plain packaging legislation under the GATT assert:• Australia’s plain packaging

legislation violates Art. III.4 of the GATT because the measures “fail to respect the national treatment requirement… by not providing equal competitive opportunities to imported tobacco products and foreign trademark right holders as compared to like domestic tobacco products and trademark right holders.”

• Exceptions to GATT rules:• GATT Art. XX(b) permits measures

necessary to protect human health.

WTO & Technical Barriers to Trade Agreement (TBT)

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• The WTO challenges to Australia’s plain packaging legislation under the TBT assert: • Australia’s plain packaging legislation

violates Art. 2.1 of the TBT because it fails to respect national treatment requirements by “not providing equal competitive opportunities to imported foreign trademark right holders as compared to domestic…”

• Australia’s plain packaging legislation violate Art. 2.2 of the TBT because they are more trade-restrictive than necessary to achieve Australia’s objective of reducing the appeal of tobacco products.

WTO & TRIPS

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• The TRIPS Agreement establishes a minimum set of standards for the protection of intellectual property rights, including trademarks. TRIPS applies to all trademarks, including tobacco packaging.• Flexibilities “enshrine a high degree of

domestic regulatory autonomy with respect to health protection.”

WTO & TRIPS

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• The WTO challenges to Australia’s plain packaging under TRIPS arise under a number of TRIPS articles (Arts. 1.1, 2.1, 3.1, 15, 16, 20, 27).

• Art. 20 claim is perhaps most relevant. Challengers assert Australia’s plain packaging legislation violates Art. 20 because it unjustifiably encumbers the use of tobacco industry trademarks through special requirements such as “use with another trademark, use in a special form, or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.”

WTO Dispute Panels

• Ongoing WTO cases are seen by many as a means to delay and discourage plain packaging measures.• The Ukraine/Australia

WTO panel took over two years to be composed.

• Legal scholarship suggests that Australia’s plain packaging laws are on firm legal ground

“Plain” Packaging

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Plain Packaging & the FCTC

http://smokefreepartnership.org/

Plain Packaging & the FCTC

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• FCTC establishes binding international legal obligations for national governments that have ratified the treaty.

• Health advocates argue that the WHO FCTC gives countries the right to use plain packing to promote public health objectives. • In it’s plain packaging proposal, the New Zealand Ministry of Health argued

that New Zealand should institute plain packaging as part of its obligations under FCTC Articles 11 and 13.

• FCTC support of plain packaging under Article 13: • Art. 13 obligates States Parties to institute a comprehensive ban on all

tobacco advertising, promotion, and sponsorship. • The FCTC State Parties developed non-binding Guidelines to help parties

meet their obligations under the Convention. The Guidelines for Art. 13 state that “parties should consider adopting plain packaging requirements to eliminate the effects of advertising or promotion on packaging.”

Advocacy

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Areas of Focus for Advocacy

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• Clarify or renegotiate BITs to include exceptions or exemptions for tobacco control measures.

• Increase coordination regarding tobacco control across government ministries.

• Stress obligations under the FCTC Art. 13 to institute a comprehensive ban on all tobacco advertising, promotion, and sponsorship and, pursuant to the Guidelines for Art. 13, adopt plain packaging requirements.

Areas of Focus for Advocacy

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• Stress that plain packaging is consistent with international legal obligations and a state’s plenary authority to protect public health under international law:

• Plain packaging represents “an exercise of sovereign regulatory power which restricts the exploitation of IP rights to protect and promote an important public interest, namely public health.”

• Plain packaging represents a logical step in a state’s long-running efforts to reduce tobacco use “through the implementation of a comprehensive programme of tobacco control measures” and, as such, does not violate any “legitimate expectations” of investors or obligations requiring states to maintain stable and predictable regulatory environments. (Liberman).