Info Service on WTO and Trade Issues (Apr14/02)
22 April 2014
Third World Network
set on Australia's plain tobacco packaging
Published in SUNS #7775 dated 1 April 2014
Geneva, 31 Mar (Kanaga Raja) -- The Dispute Settlement Body (DSB)
agreed on 26 March to establish a panel, at the request of Indonesia,
to examine certain measures imposed by Australia concerning trademarks,
geographical indications (GIs) and other plain packaging requirements
applicable to tobacco products and packaging.
This was a first-time request by Indonesia but Australia did not object
to a panel being established at this instance, as it was entitled
Cuba, China, Canada, Brazil, Nigeria, Oman, Ukraine, Japan, the European
Union, Honduras, India, Malaysia, the Philippines, Thailand, the Russian
Federation, India, Norway, Turkey, the United States, Uruguay, Korea,
Guatemala, Nicaragua, Mexico, Chinese Taipei and New Zealand reserved
their third party rights to the dispute.
According to trade officials, so far, five Members (Cuba, Dominican
Republic, Honduras, Indonesia and Ukraine) have initiated disputes
against Australia's measures concerning plain packaging requirements
for tobacco products.
In these disputes, three panels have been established (on complaints
by Ukraine, Honduras and now Indonesia) but not yet composed.
Later, speaking at the DSB under a separate agenda item (see below),
Australia raised procedural and systemic issues relating to these
disputes raised by five Members since 2012, but with panel proceedings
yet to commence in any of the complaints brought against tobacco plain
packaging, thus, among others, prolonging the dispute settlement processes,
and raising uncertainties for everyone, including other Members planning
to put in place restrictions against tobacco consumption, identified
by the World Health Organisation as the top killer in the world.
In the present dispute, Indonesia, in its communication to the DSB,
said that the Australian measures apply to the retail sale of cigarettes,
cigars, and other tobacco products, and that the measures establish
comprehensive requirements regarding the appearance and form of the
retail packaging of tobacco products, as well as the tobacco products
According to the communication, the measures also establish penalties,
including criminal sanctions, for the violation of these requirements.
The measures require, inter alia, the following:
* With respect to the retail packaging of tobacco products, the measures:
(i) regulate the appearance of trademarks and geographical indications,
including by prohibiting the display of design and figurative features,
including those forming part of these intellectual property rights;
(ii) prescribe that the brand and variant names forming part of trademarks
appear on the front face, top and bottom of the package in a uniform
typeface, font, size, color, and placement;
(iii) prohibit the display of other words (except for basic information,
including country of origin and manufacturer contact details); and
(iv) mandate a matt finish and drab dark brown color (Pantone 448C)
for retail packaging;
* the measures establish that individual cigarettes may not display
trademarks, geographical indications or any other marking other than
an alphanumeric code for product identification purposes;
* the measures provide that individual cigars may carry: the brand
name, variant name, country of origin, and an alphanumeric code; these
must be displayed in a uniform typeface, font, size, and color on
a single band in a drab dark brown color (Pantone 448C); and
* the measures regulate other aspects of both tobacco packaging and
tobacco products, such as the following requirements: (i) a retail
package for cigarettes must be in a prescribed size, form and material;
(ii) cigarettes must be white; and (iii) a cigar tube must be cylindrical,
rigid, and have an opening of at least 15 mm.
Indonesia said that these measures regulating the plain packaging
and appearance of tobacco products for retail sale appear to be inconsistent
with Australia's obligations under Articles 2.1, 2.2 of the TBT (Technical
Barriers to Trade) Agreement, Articles 1.1, 2.1, 3.1, 15.4, 16.1,
16.3, 20, 22.2(b), 24.3 of the TRIPS Agreement, and Article III: 4
of the GATT 1994.
In its statement at the DSB, Australia said that its world-first tobacco
plain packaging measure has now been in force for over a year, and
that as part of its comprehensive range of tobacco control measures,
it believes that it is already having a positive impact.
It said that tobacco use is the leading global cause of preventable
death and is the only legal product that kills up to half of those
who use it as intended. According to the World Health Organisation,
tobacco kills nearly six million people a year worldwide, meaning
someone dies roughly every six seconds from tobacco.
It is estimated that tobacco-related deaths will increase to over
eight million per year by 2030 worldwide, an increase which will affect
developing countries like Indonesia.
Australia noted that the harmful effects of tobacco are also of concern
to the Indonesian government. It understands that Indonesia is one
of the largest tobacco markets in the world. The WHO estimates that
67% of male adults in Indonesia are current smokers and that 57% are
daily smokers - the second highest male smoking rate in the world.
The WHO has noted that 41% of Indonesian males aged between 13 and
15 years smoke. Global evidence shows that 88% of adults who become
daily smokers first used cigarettes by 18 years of age. Female smoking
rates, while much lower than male smoking rates, are also increasing.
In 2012, said Australia, Indonesia's president Susilo Bambang Yudhoyono
signed into law tobacco control regulations aimed at protecting the
health of individuals, families, communities and the environment from
the hazards of materials that contain carcinogens and addictive substances
in tobacco products.
Australia recognised Indonesia's efforts to strengthen its tobacco
control laws and welcomed recent statements by Indonesia's Minister
of Health, Nafsiah Mboi, signalling that Indonesia would seek to accede
to the World Health Organisation's Framework Convention on Tobacco
Against this background, Australia said that it is disappointed that
Indonesia has requested the DSB to establish a panel in relation to
tobacco plain packaging.
"However, in the interests of ensuring a harmonised panel process
and to avoid contributing to any further delay in the multiple disputes
relating to Australia's tobacco plain packaging measure, and consistent
with its desire to ensure the overall efficiency and effectiveness
of the WTO dispute settlement system, Australia today accepts Indonesia's
request to establish a panel in this dispute."
Australia noted that panels have already been established in September
2012 and September 2013, with Ukraine and Honduras, respectively,
and hoped that the three complaints regarding its tobacco plain packaging
measure can be managed in the most efficient way possible.
Under a separate agenda item, Australia again spoke on this issue,
by updating Members on progress in the disputes brought against it
concerning tobacco plain packaging, as well as raising some procedural
It noted that more than two years have elapsed since WTO dispute settlement
proceedings were initiated by Ukraine with respect to Australia's
tobacco plain packaging measure, and that since that time, another
four WTO Members have started proceedings against Australia concerning
the same measure.
A record number of Members have joined the disputes as third parties,
and tobacco plain packaging has also been the subject of extensive
debate in the TBT Committee and the TRIPS Council.
Between April 2012 and October 2013, Australia had participated in
separate WTO dispute consultations with each of the five complainants
- Ukraine, Honduras, Dominican Republic, Cuba and Indonesia - on the
tobacco plain packaging measure.
As of today, it said, three separate panels have been established
by the DSB in relation to Australia's measure: with Ukraine in September
2012, Honduras in September 2013 and today, Indonesia.
Australia, Ukraine and Honduras have held several rounds of discussions
on panel composition, but at this time it has not been possible to
reach agreement. Thus, nearly two years on, panel proceedings are
yet to commence in any of the complaints brought against tobacco plain
In December 2012, Australia and Ukraine agreed to suspend panel composition
discussions to allow Honduras and Dominican Republic, which had each
made a first request for establishment of a panel, time to catch up
by having panels established in those disputes.
However, following its first request for the establishment of a panel
in November 2012, ten months elapsed before Honduras again requested
the establishment of a panel in September 2013, said Australia, adding
that following panel establishment, Honduras immediately sought to
suspend the panel composition process.
In the meantime, Ukraine had advised Australia that it wanted to resume
composition discussions in relation to its complaint. Australia therefore
refused Honduras' request to suspend panel composition, so as to ensure
the two processes would proceed together, given Honduras had declined
to have the complaints considered by a single panel under Article
9.1 of the DSU.
In the most recent development, Australia said that in a letter dated
24 March, Ukraine requested that the Director-General compose the
Panel in its complaint against Australia.
Australia said that it will today request the Director-General to
compose the panel in relation to Honduras' complaint against Australia
to ensure harmonisation of the two disputes, consistent with Article
9.3 of the Dispute Settlement Understanding (DSU).
It said that the Dominican Republic made its first request for establishment
of a panel in December 2012, which it rejected in line with normal
practice. In the nearly 16 months since that date, Dominican Republic
has not made a further panel request.
Australia noted that consultations have also been held with Cuba in
June 2013, and that Cuba is yet to request the establishment of a
It further said that the progress of these disputes to date raises
three issues for Members to consider: the first concerns the role
of the WTO dispute settlement system in providing security and predictability
to the multilateral trading system; the second relates to the resource
implications of the way the complaints have proceeded to date; and
the third comprises some of the procedural questions that have arisen.
Noting that the general provisions in Article 3 of the DSU set out
a number of overarching principles underpinning the operation of the
dispute settlement system, Australia stressed that until the complaints
about its measure are resolved, there will be uncertainty about tobacco
plain packaging, and the application of relevant provisions of the
GATT, the TBT and the TRIPS Agreement to it.
"That uncertainty has a cost for all Members which extends beyond
the circumstances of this case," said Australia, adding that
since the introduction of tobacco plain packaging in Australia, a
number of Members have indicated that they too are considering introducing
tobacco plain packaging.
In response, Honduras, Dominican Republic and Cuba have stated in
the TRIPS Council and TBT Committee that those other Members should
wait until the outcome of the disputes against Australia's measure
Australia said that the cost of the continued uncertainty engendered
by these proceedings and the failure to proceed to a prompt settlement
of the disputes is "a regulatory chilling effect on other WTO
Members that may wish to take into account the outcome of the disputes
against Australia before implementing their own tobacco control measures."
Australia noted that when the measure at issue is genuinely designed
to protect public health (as is the case with tobacco plain packaging
measures), then the human cost of delays in implementation can be
"Against that background, prompt resolution of these complaints
is essential," it said.
Australia said that there are also resource implications of prolonging
dispute settlement procedures. Participating as a principal party
in a dispute is a resource-intensive exercise for any Member, which
is exacerbated when the progress of a dispute is unpredictable, it
Members may consider that Australia, as a developed country, should
be well placed to manage the defence of a complaint lodged by multiple
complainants. However, Members may wish to reflect upon the implications
should a developing country itself face the sort of situation Australia
finds itself in at the moment - a scenario that the DSU would not
Delays in dispute settlement processes also affect the resources of
the third parties and the WTO Secretariat, it said, adding that Members
are aware of the difficulties the Secretariat is already facing in
managing its workload.
Highlighting some procedural questions, Australia said that Members
will recall the debate in the DSB last September about the application
of Article 6.1 to Honduras' panel request. It said it is not seeking
to reopen that debate today, "but clearly substantial delay between
panel requests undermines the secure and predictable operation of
The fact that Australia will today request the Director-General to
compose the panel in relation to Honduras' dispute and has agreed
to Indonesia's first request for the establishment of a panel demonstrates
that Australia's views are not motivated by any interest in delaying
the tobacco plain packaging proceedings.
"Indeed, prolonged delay is contrary to Australia's interests
in these proceedings, and to the effective functioning of the WTO
dispute settlement system as a whole."
According to Australia, the second procedural issue relates to the
request by the Dominican Republic to participate in discussions among
the parties on panel composition.
While Australia said it is seeking to promote coherence in the progress
of the disputes, including panel composition, it would have been extraordinary
for Australia to have accepted that request in the absence of a further
request by Dominican Republic for establishment of a panel in relation
to its own complaint.
"Should Dominican Republic have followed normal practice for
panel requests, a panel would have been established by now and Dominican
Republic would already have joined the panel composition discussions
in its own right."
Australia said it does recognise that there may be circumstances where
prolonging formal dispute processes might be justified. The first
is where the parties are seeking to settle the issue bilaterally,
including through a mutually agreed solution.
"But it is not the case here. Not one of the parties has approached
Australia to resolve the dispute through a mutually agreed solution."
Alternatively, it said, where the measure or measures at issue are
evolving, a complainant may need to delay dispute processes to ensure
it is targeting the measure in a way that will be effective.
"Again, however, that is not the case here. Australia's measure
was foreshadowed by the Australian Government in April 2010, nearly
four years ago, and it was notified to the WTO TBT Committee in April
2011. Moreover, the measure has been in full force since December
Australia went on to cite Article 3.3 which provides that prompt settlement
of disputes is "essential to the effective functioning of the
WTO and the maintenance of a proper balance between the rights and
obligations of Members."
Also citing Article 3.7 which provides that "before bringing
a case, a Member shall exercise its judgment as to whether action
under these procedures would be fruitful", Australia said that
in its view, this means that a Member should not request consultations
or a panel and only afterwards start considering whether it has a
case that is capable of succeeding.
Meanwhile, in other actions, the DSB agreed to establish two other
panels, one at the request of Japan over definitive safeguard measures
imposed by Ukraine on certain passenger cars, and the other, at the
request of China over certain methodologies and their application
by the United States to anti-dumping proceedings involving China.
Both were second-time requests and panels establishment were automatic.
Under a separate agenda item, the European Union blocked a panel request
by Argentina over anti-dumping measures imposed by the EU on bio-diesel
This was a first-time request and panel establishment will be automatic
when the request comes up again before the DSB.