The World Trade Organization and plain packaging

People may disagree but in my opinion one of the major causes of World War 2 was the desperate economic situation of the 1930s. The Wall Street Crash, the credit boom and bust and subsequent protectionism led to a contraction of world trade by 66%. The resulting mass unemployment allowed Adolf Hitler to be elected.

Post war to neutralise future protectionism the General Agreement on Tariffs and Trade (GATT) began in April 1947 and was superseded by the World Trade Organization (WTO) on January 1 1995.   It seems common sense that some countries are more efficient at producing certain goods and services than others. For example the UK’s financial services are a tour de force while China and India are better at manufacturing clothes.

Australia are in the vanguard of leading the world in forcing plain cigarette packets with extensive health warnings on tobacco companies and the public.  Professor Simon Chapman is the main force behind it. The tobacco companies are of course fighting tooth and nail to stop it.

One of the biggest obstacles is that under WTO rules this would be illegal because of intellectual property rights.  With the signing of the 1986 Uruguay round of agreements Article 20 has been cited by the tobacco companies and says.

“Article 20 
Other Requirements

The use of a trademark in the course of trade shall not be unjustifiably encumbered by 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. This will not preclude a requirement prescribing the use of the trademark identifying the undertaking producing the goods or services along with, but without linking it to, the trademark distinguishing the specific goods or services in question of that undertaking.”

In principle the anti tobacco lobby may have its work cut out but on matters of health there may be a get out clause. The WTO to its credit are not sitting on their hands and the committee that may well arbitrate called the Trade Related aspects of Intellectual Property Rights (TRIPS) is taking evidence already. In face they met this year on the 7th June and I quote:

“Australia’s plain packaging bill for cigarettes

In this new agenda item, the Dominican Republic objected to a draft Australian law requiring cigarettes to be sold in plain packaging without logos or trademarks. The brands would be identified simply in a standard typeface with large graphic health warnings.

Australia originally notified the draft and the public consultation on it under the Technical Barriers to Trade (TBT) Agreement, in documentG/TBT/N/AUS/67, which contains details of the requirements. (See alsothis Australian government web page, which includes images of samples of the proposed packaging.)

Support or sympathy for the Dominican Republic came from Honduras, Nicaragua, Ukraine, the Philippines, Zambia, Mexico, Cuba and Ecuador.

The Dominican Republic said it has “serious and grave” concerns that the proposed law would also violate the WTO’s intellectual property agreement and the linked Paris Convention. Among the legal concerns was that it would be a “special requirement” that would “unjustifiably” encumber the use of trademarks “in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings” (TRIPS Article 20).

The proposed law, the Dominican Republic argued, would hurt tobacco producers in small and vulnerable economies. It would fail to reduce smoking because the lower costs of the packaging and the competition on price — the only remaining marketing tool available — would make cigarettes cheaper and encourage higher consumption. It would also make counterfeiting easier, it said. But it added that it does recognize countries’ right to protect public health.

Australia explained why the law has been proposed — as the next available step in the campaign to deal with a major and lethal health hazard. Higher excise duties and the possibility of using anti-counterfeiting labelling would make the cigarettes more expensive and prevent smuggling, it said. Australia will do this in a way that complies with its international obligations, it added.

New Zealand, Uruguay and Norway said Australia’s draft law is justified. India did not comment on the law specifically but said studies show that plain packaging does reduce smoking. India, Brazil and Cuba stressed their view that countries have the right to implement public health policies without intellectual property being an obstacle — referring directly or indirectly to the 2001 Doha Declaration on TRIPS and Public Health.

Brazil, Chile, Ecuador and China described the issue as complex, requiring balance and a closer examination. Switzerland said it understands both sides of the debate and expects Australia to abide by its TRIPS obligations.

The World Health Organization (WHO), an observer in the TRIPS Council provided information on its policies and on the WHO Framework Convention on Tobacco Control.”

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3 Responses to The World Trade Organization and plain packaging

  1. Pingback: More government interference: why plain tobacco packets are plain nonsense | Counterfeit Cigarettes: An Enforcement Forum

  2. Pingback: My article on plain packaging published in The Commentator | LifestyleReviews

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