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TWN Info Service on WTO and Trade Issues (Jul18/06)
9 July 2018
Third World Network

       
Australia wins major WTO ruling over tobacco plain packaging
Published in SUNS #8712 dated 2 July 2018


Geneva, 29 Jun (Kanaga Raja) - In a landmark ruling that could have major implications for the enactment of tobacco control policies by other countries, Australia has won a significant victory at the WTO, with a WTO panel rejecting complaints that the Australian tobacco plain packaging regulations violated the Agreement on Technical Barriers to Trade or trademark rights under the TRIPS Agreement.

The ruling was handed down by a dispute panel that heard the complaints raised by Honduras, the Dominican Republic, Cuba and Indonesia.

A number of WTO members that had kept ready similar regulations held up the ir moves when the Australian regulations were challenged at the WTO.

The ruling can be appealed by any of the parties, and according to media reports, Honduras has indicated that it would appeal the ruling, arguing that it contained a number of legal and factual errors.

Notice of appeal would block adoption, and with the US blocking any process for filling vacancies on the WTO's Appellate Body, hearing of the appeal will remain blocked.

In a much-anticipated ruling of over 880 pages, the panel found that the complainants had not demonstrated that the TPP measures enacted by Australia are inconsistent with Australia's obligations under the relevant provisions of the Technical Barriers to Trade (TBT) Agreement and the TRIPS Agreement.

In respect of a claim by Cuba, the panel also found that Cuba had not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article IX:4 of the GATT 1994.

Importantly, the panel further found that, individually, each of the four alternative measures proposed by the complainants would not make a contribution to Australia's objective that is equivalent to the contribution made by the TPP measures as part of Australia's broader regulatory framework regarding tobacco control.

The four proposed alternative measures are an increase in the minimum legal purchasing age (MLPA); increased taxation of tobacco products; social marketing campaigns; and a pre-vetting mechanism.

In conclusion, the panel declined the complainants' requests that the panel recommend that the DSB request Australia to bring the measures at issue into conformity with the TRIPS Agreement and the TBT Agreement (in the case of Cuba's claim, also the GATT 1994).

Some 40 WTO members participated as third parties in at least one of the four disputes. In addition, some 41 "amicus curiae" briefs were submitted during the panel proceedings.

Ukraine was also initially a complainant in the panel proceedings (DS434). On 28 May 2015, the panel received a request from Ukraine to suspend the proceedings in its dispute with Australia. On 2 June 2015, the panel notified the Chairman of the DSB of its decision to grant Ukraine's request and suspend its work in that case.

The panel was not requested to resume its work during the 12 months following suspension, and pursuant to Article 12.12 of the DSU, the authority for the establishment of the panel in that dispute lapsed as of 30 May 2016.

REACTIONS TO THE LANDMARK RULING

Media reports cited Australian Trade Minister Steven Ciobo and Rural Health Minister Bridget McKenzie as saying in a statement following the issuing of the ruling: "Australia has achieved a resounding victory."

In a statement, the World Health Organisation (WHO) said that the ruling "clears another legal hurdle thrown up in the tobacco industry's efforts to block tobacco control and is likely to accelerate implementation of plain packaging around the globe."

It noted that in December 2012, Australia was the first country to fully implement tobacco plain packaging (also known as "standardized packaging").

WHO said that plain packaging prohibits the use of logos, colours, brand images and promotional information on tobacco products and packaging, other than brand and product names in a standardized colour and font.

Today, said the WHO statement, six other countries have implemented plain packaging laws (Hungary, Ireland, France, New Zealand, Norway and the United Kingdom), another six have passed laws yet to be implemented (Burkina Faso, Canada, Georgia, Romania, Slovenia and Thailand) and a number of other countries are examining the policy.

The WHO and the WHO Framework Convention on Tobacco Control (WHO FCTC) Secretariat provided the WTO Panel with a joint submission or amicus brief.

According to the WHO statement, the WTO complaints brought by the four countries were not the only legal challenge brought against Australia's tobacco plain packaging law.

A domestic Constitutional challenge to the legislation was dismissed in August 2012, and in December 2015, an international Tribunal hearing a claim brought by Philip Morris Asia under a bilateral investment treaty between Australia and China (Hong Kong Special Administrative Region) on tobacco plain packaging held that it did not have jurisdiction to hear the claim.

Legal claims challenging plain packaging laws in other countries, including France (5), Norway (6) and the United Kingdom of Great Britain and Northern Ireland (7) have also been dismissed, said WHO.

A Reuters news report has cited Vera Luiza da Costa e Silva, the head of FCTC secretariat, as saying that it was a huge day for tobacco control. "What th s shows in reality is that plain packaging is a reality."

"It will happen anyway, and parties will progressively adhere more to plain packaging," Da Costa e Silva added.

Meanwhile, in a statement released in Washington DC, Matthew L. Myers, President of the Campaign for Tobacco-Free Kids, said: "This is a landmark victory in the global fight against tobacco use and a resounding defeat for the tobacco industry, which has fiercely fought plain packaging laws."

He noted that to date, the tobacco industry has lost every legal challenge to plain packaging both in international and national courts, not only in Australia, but also in the United Kingdom, France, Norway and the European Union.

"This victory for Australia provides a tremendous boost to the growing glob al movement to require that cigarettes and other tobacco products be sold in plain packaging, without colourful logos and other branding that attract youth, mislead consumers and increase the appeal of these deadly and addictive products," said Myers.

"Plain packaging laws are both scientifically and legally sound. Other countries considering plain packaging should move forward with the confidence that they can defeat tobacco industry challenges," he added.

He pointed out that tobacco use kills more than seven million people worldwide each year and is projected to kill one billion people this century unless countries take strong action now to prevent it.

THE MEASURES AT ISSUE

According to the panel report, the measures at issue in the proceedings are : (a) the Tobacco Plain Packaging Act 2011 (Cth) (TPP Act); (b) the Tobacco Plain Packaging Regulations 2011 (Cth), as amended by the Tobacco Plain Packaging Amendment Regulation 2012 (No. 1) (Cth) (TPP Regulations); and (c) the Trad e Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth) (TMA Act).

On 7 April 2011, the Australian Government released an Exposure Draft of the Tobacco Plain Packaging Bill 2011 (Cth) (TPP Bill) for public consultations, which lasted until 6 June 2011.

The TPP Bill and Trade Marks Amendment (Tobacco Plain Packaging) Bill 2011 (Cth) (TMA Bill) were passed by the Parliament in November 2011 and received Royal Assent on 1 December 2011, thus becoming, respectively, the TPP Act and the TMA Act.

The TPP Regulations were adopted on 7 December 2011 and amended on 8 March 2012.

Taken together, the TPP Act, the TMA Act and the TPP Regulations form the TPP measures at issue in these disputes.

Tobacco products manufactured or packaged in Australia for domestic consumption were required to comply with the TPP measures from 1 October 2012.

As of 1 December 2012, all tobacco products sold, offered for sale, or otherwise supplied in Australia were required to comply with the TPP measures.

According to the panel report, the TPP Act regulates the retail packaging and appearance of tobacco products in order to: (a) improve public health; and (b) give effect to certain obligations in the WHO Framework Convention on Tobacco Control.

The term "tobacco product" is defined in the TPP Act to mean "processed tobacco, or any product that contains tobacco" that is "manufactured to be used for smoking, sucking, chewing or snuffing" and "not included in the Australian Register of Therapeutic Goods maintained under the Therapeutic Goods Act 1989".

According to the panel, this definition encompasses not only cigarettes, but also "non-cigarette" products, such as cigars, little cigars (also known as cigarillos) and bidis.

The panel noted that the requirements set out in the TPP Act and the TPP Regulations operate in conjunction with other legislative requirements that are not challenged in these disputes, including graphic health warnings (GHWs).

The requirements set out under Australia's TPP measures stipulate, inter alia, standardized size, font, and location of brand names, variant names, and other marks on retail tobacco packaging; the colour, dimensions and shape of tobacco packaging; the material from which packages may be made; and the manner in which tobacco packaging may open.

The requirements also regulate and "standardize" the appearance of tobacco products themselves, including, in respect of cigars, the appearance of brand and variant names.

PANEL'S FINDINGS AND CONCLUSIONS

In respect of Honduras's complaint (DS435), the Panel concluded that:

a. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.2 of the TBT Agreement;

b. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies of the Paris Convention (1967);

c. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 15.4 of the TRIPS Agreement;

d. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.1 of the TRIPS Agreement;

e. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 20 of the TRIPS Agreement;

f. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 10bis of the Paris Convention (1967);

g. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 22.2(b) of the TRIPS Agreement; and

h. Honduras has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 24.3 of the TRIPS Agreement.

The Panel declined to rule on Honduras's claims under Article 3.1 of the TRIPS Agreement, Article 2.1 of the TBT Agreement, and Article III:4 of the GATT 1994, in relation to which Honduras presented no arguments.

In light of these findings, the Panel also declined Honduras's request that the Panel recommend, in accordance with Article 19.1 of the DSU, that the DSB request Australia to bring the measures at issue into conformity with the TRIPS Agreement and the TBT Agreement.

In respect of the Dominican Republic's complaint (DS441), the Panel concluded as follows:

a. in respect of Australia's preliminary ruling request, the Panel concluded that:

i. Australia failed to demonstrate that the terms "including", "complement" and "add to", as used in the Dominican Republic's panel request, are, on their face, inconsistent with the requirement under Article 6.2 of the DSU to identify the specific measures at issue.

b. in respect of the Dominican Republic's claims regarding the TPP measures , the Panel concluded that:

i. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.2 of the TBT Agreement;

ii. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 15.4 of the TRIPS Agreement;

iii. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.1 of the TRIPS Agreement;

iv. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 20 of the TRIPS Agreement;

v. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 10bis of the Paris Convention (1967);

vi. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 22.2(b) of the TRIPS Agreement; and

vii. the Dominican Republic has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 24.3 of the TRIPS Agreement.

The Panel declined to rule on the Dominican Republic's claims under Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies of the Paris Convention (1967), Article 3.1 of the TRIPS Agreement, Article 2.1 of the TBT Agreement, and Article III:4 of the GATT 1994 in respect of which the Dominican Republic presented no arguments.

In light of the above findings, the Panel also declined the Dominican Republic's request that the Panel recommend to the DSB that Australia be required to bring its TPP measures into conformity with the above- mentioned provisions of the TRIPS Agreement and the TBT Agreement.

In respect of Cuba's complaint (DS458), the Panel concluded as follows:

a. in respect of Australia's preliminary ruling request, the Panel concluded that:

i. Australia failed to demonstrate that Cuba's claims under Article 16.3 of the TRIPS Agreement and Article 6bis of the Paris Convention (through Article 2 .1 of the TRIPS Agreement) fall outside its terms of reference;

ii. it was unnecessary to make a determination as to whether its claims under Article 15.1 and 17 of the TRIPS Agreement are properly before the Panel;

iii. it was unnecessary to determine whether Cuba's panel request "presents the problem clearly" in relation to its claims under Article 15.1 and 17 of the TRIPS Agreement; and

iv. Australia failed to demonstrate that the terms "including", "complement " and "add to", as used in Cuba's panel request, are, on their face, inconsistent with the requirement under Article 6.2 of the DSU to identify the specific measures at issue.

b. in respect of Cuba's claims regarding the TPP measures, the Panel concluded that:

i. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.2 of the TBT Agreement;

ii. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies of the Paris Convention (1967);

iii. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 15.4 of the TRIPS Agreement;

iv. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.1 of the TRIPS Agreement;

v. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.3 of the TRIPS Agreement;

vi. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 20 of the TRIPS Agreement;

vii. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 10bis of the Paris Convention (1967);

viii. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 22.2(b) of the TRIPS Agreement;

ix. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 24.3 of the TRIPS Agreement; and

x. Cuba has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article IX:4 of the GATT 1994.

The Panel declined to rule on Cuba's claims under Article 2.1 of the TRIPS Agreement in conjunction with Article 6bis of the Paris Convention (1967), Article 3.1 of the TRIPS Agreement, Article 2.1 of the TBT Agreement, and Article III:4 of the GATT 1994, in respect of which Cuba presented no arguments.

In light of the above findings, the Panel also declined Cuba's request that the Panel recommend, in accordance with Article 19.1 of the DSU, that the DSB request Australia to bring its measures into conformity with the TRIPS Agreement, the TBT Agreement and the GATT 1994.

In respect of Indonesia's complaint (DS467), the Panel concluded as follows:

a. in respect of Australia's preliminary ruling request, the Panel concluded that:

i. Australia failed to demonstrate that the terms "including", "complement" and "add to", as used in Indonesia's panel request, are, on their face, inconsistent with the requirement under Article 6.2 of the DSU to identify the specific measures at issue.

b. in respect of Indonesia's claims regarding the TPP measures, the Panel concluded as follows:

i. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.2 of the TBT Agreement;

ii. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 15.4 of the TRIPS Agreement;

iii. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.1 of the TRIPS Agreement;

iv. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.3 of the TRIPS Agreement;

v. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 20 of the TRIPS Agreement;

vi. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 10bis of the Paris Convention (1967);

vii. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 22.2(b) of the TRIPS Agreement; and

viii. Indonesia has not demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 24.3 of the TRIPS Agreement.

The Panel declined to rule on Indonesia's claims under Article 1.1 of the TRIPS Agreement, Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies of the Paris Convention (1967), Article 3.1 of the TRIPS Agreement, Article 2.1 of the TBT Agreement, and Article III:4 of the GATT 1994, in respect of which Indonesia presented no arguments.

In light of the above findings, the Panel also declined Indonesia's request that the Panel find that the TPP measures are inconsistent with Australia's obligations under Article XXIII:1(a) of the GATT 1994 because it has nullified or impaired benefits accruing directly or indirectly to Indonesia under the TBT Agreement.

The Panel also declined Indonesia's request that the Panel recommend that Australia bring its measures into conformity with its obligations under the TRIPS Agreement and the TBT Agreement.

(A further report detailing some of the key findings of the panel will appear in a forthcoming issue of SUNS.)

 


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