Info Service on WTO and Trade Issues (Oct12/04)
10 October 2012
Third World Network
Panel set to examine Australia's plain tobacco packaging
Published in SUNS #7449 dated 2 October 2012
Geneva, 1 Oct (Kanaga Raja) -- The Dispute Settlement Body (DSB) of
the World Trade Organisation (WTO) on 28 September agreed to establish
a panel, at the request of Ukraine, to examine certain measures imposed
by Australia concerning trademarks and other plain packaging requirements
applicable to tobacco products and packaging.
This was a second-time request and panel establishment was automatic.
Uruguay, New Zealand, Norway, Zimbabwe, Honduras, Dominican Republic,
Zambia, Nicaragua, Indonesia, the United States, Chinese Taipei, Turkey,
Oman, Japan, the European Union, the Philippines, Ecuador, Korea,
India, Brazil, Argentina, Singapore, Guatemala, and Canada reserved
their third party rights to the dispute.
According to its communication to the DSB, Ukraine said that the dispute
concerns certain Australian laws and regulations that impose trademark
restrictions and other plain packaging requirements on tobacco products
It added that Australia's measures impose significant trademark restrictions
and other so-called "plain packaging" requirements regarding
the appearance and packaging of tobacco products.
The challenged measures are contained in the Tobacco Plain Packaging
Act 2011 and its implementing Tobacco Plain Packaging Regulations
2011; and the Trade Marks Amendment (Tobacco Plain Packaging) Act
According to the Ukrainian communication, the measures are applicable
to all tobacco products grown or manufactured for human consumption.
They impose criminal penalties for virtually any action, including
manufacture, supply, or packaging of tobacco products, that is not
in compliance with the "tobacco product requirements" of
the Plain Packaging Act and its implementing Regulations.
The Plain Packaging Act provides that "[n]o trade mark may appear
anywhere on a tobacco product" other than as permitted by the
Regulations. The Plain Packaging Act further provides, inter alia,
that "[n]o trade mark may appear anywhere on the retail packaging
of tobacco products," permitting the appearance of only the brand
name, variant, business or company name and other marks pursuant to
the relevant legislative requirements. The appearance of the brand
name is regulated by the Plain Packaging Act and the implementing
Ukraine said that the Plain Packaging Act further requires that tobacco
product packages be "drab dark brown" (specified as Pantone
448C in the Regulations) in a matte finish, with no other colours,
logos, or brand features visible on the package, other than the brand
and variant name in a standard form and font below the graphic health
Tobacco product packaging will continue to contain graphic health
warnings, which are increasing from 30 percent to 75 percent of the
front surface of each package and continue to cover 90 per cent of
the back surface of the package. The Plain Packaging Act and its implementing
Regulations also regulate the physical features of retail tobacco
packaging, imposing a standard form on the type and size of the package
to be used.
The Plain Packaging Act provides that cigarette packs and cartons
must have a standardised shape with no decorative elements, and that
cigarette packs must have flip-top openings. The lining of cigarette
packs must only be foil backed with paper, or a material allowed by
Ukraine stressed that Australia's measures, especially viewed in the
context of Australia's comprehensive tobacco regulatory regime, appear
to be inconsistent with a number of Australia's obligations under
the TRIPS Agreement, the Technical Barriers to Trade (TBT) Agreement,
and GATT 1994.
These violations nullify or impair the benefits accruing to Ukraine
under the aforementioned Agreements, it said.
In its statement at the DSB, Ukraine said that Australia's measures
deny the essence of the rights that are protected under the TRIPS
Agreement and erode the protection of intellectual property rights,
thus raising concerns.
These measures impose severe restrictions on the use of validly registered
trademarks and impose a significant number of product and packaging
requirements that will standardise tobacco products and their packages
in Australia, it added.
Following the notification (by Australia) of the Tobacco Plain Packaging
Bill to the WTO in April, Ukraine said that it had on several occasions
and in various fora expressed its serious concerns over these measures
which it said are inconsistent with a number of Australia's WTO obligations.
In that context, Ukraine and several other WTO Members posed specific
questions to Australia in an attempt to obtain additional information
from Australia concerning the basis for these measures and their alleged
consistency with Australia's obligations.
Regrettably, said Ukraine, Australia never directly responded to the
many constructive questions posed by Ukraine.
Ukraine said that it wished to emphasise that every government, including
the Ukraine government itself, clearly has a sovereign right to introduce
regulations to protect and improve the health of its population.
However, Ukraine considers that governments should pursue legitimate
health policies through effective measures without unnecessarily restricting
international trade and without nullifying intellectual property rights
as guaranteed by international trade and investment rules.
Ukraine considered that Australia's plain packaging requirements violate
a number of Australia's obligations under the TRIPS Agreement, the
TBT Agreement and the GATT.
In particular, it considered that the plain packaging measures are
inconsistent with the TRIPS Agreement and the Paris Convention because
the measures fail to give effect to the trademark holder's legitimate
intellectual property rights as protected under these agreements.
In addition, it considered that the measures are clearly more trade
restrictive than necessary to achieve the stated health objectives
and thus violate Article 2.2 of the TBT Agreement as an unnecessary
obstacle to trade.
Finally, it considered that the plain packaging measures adversely
affect competitive opportunities for imported products and foreign
trademark right holders and thus fail to respect the national treatment
requirement set out in several provisions of the WTO Agreements.
In its statement, Australia said that like all WTO Members, it and
Ukraine are confronting the global tobacco epidemic. It added that
it is aware of the substantial progress which Ukraine has made in
implementing tobacco control measures in accordance with the WHO (World
Health Organisation) Framework Convention on Tobacco Control, to which
both Australia and Ukraine are parties.
This progress includes, since 16 September of this year, a wide ban
in Ukraine on tobacco advertising, sponsorship and promotion; from
4 October 2012, new health warnings on cigarettes, covering 50% of
the front and back of packs; and from 16 December 2012, a ban on smoking
in all public and work places including cafes, bars and restaurants.
Ukraine has also implemented significant increases in tobacco excise
in recent years.
Australia noted that Ukraine, like itself, was a member of the Working
Group which developed the Guidelines for implementation of Article
11 of the Framework Convention, which include a recommendation that
parties should consider adopting tobacco plain packaging.
These Guidelines were adopted by consensus of the Conference of the
Parties to the Framework Convention, together with the Guidelines
for implementation of Article 13, which also recommend plain packaging.
Australia's tobacco plain packaging measure is clearly in line with
these Guidelines, it stressed.
Given Ukraine's own tobacco control initiatives in accordance with
the Framework Convention and its membership of the Article 11 Working
Group, Australia said it is "surprised and disappointed"
that Ukraine has decided to challenge Australia's tobacco plain packaging
"This step is at odds with the policies being pursued within
Ukraine to comply with the Framework Convention."
Indeed, Australia added, in implementing an increasingly comprehensive
suite of tobacco control measures, Ukraine appears to be following
a similar path to the progressively more comprehensive and stringent
approach to tobacco control which has been adopted over time by Australia.
According to Australia, the tobacco plain packaging measure is a sound,
well-considered measure designed to achieve a legitimate objective
- the protection of public health. The WTO Agreements recognise the
fundamental right of WTO Members to implement measures necessary for
the protection of the public health of their citizens.
"The measure applies to all tobacco products, regardless of origin,
and is clearly non-discriminatory. The tobacco plain packaging measure
does not undermine the protection afforded to trademarks as required
under the TRIPS Agreement. Nor is the measure more trade restrictive
than necessary to fulfil its legitimate objective," said Australia.
According to trade officials, Uruguay expressed support for Australia,
saying that it could not remain silent in this fight against "the
most serious pandemic confronting humanity."
It added: "The norms of the Multilateral Trading System cannot
and should not force its Members to allow that a product that kills
its citizens in unacceptable and alarming proportions continues to
be sold wrapped as candy to attract new victims."
According to trade officials, New Zealand and Norway also supported
Australia. New Zealand said that it is also considering plain packaging
measures, while Norway said that countries are under the obligation
to adopt measures to protect public health.
On the other hand, trade officials said that Zimbabwe, Honduras, Dominican
Republic, Nicaragua and Indonesia supported Ukraine.
According to trade officials, Zimbabwe said that 200,000 farmers and
their families in the country depend on tobacco for their livelihood.
Honduras said that the WHO Framework Convention is indicative and
non-binding, while Nicaragua said that tobacco is one of the most
important items in the country's exports. +