03 July 2018

More products may be impacted by WTO 'plain' tobacco packaging ruling

Australia has won a major trade dispute over 'plain' tobacco packaging law, but opponents say it sets dangerous precedent for other products.

World Trade Organisation (WTO) judges have rejected a complaint brought by Cuba, Indonesia, Honduras and Dominican Republic against Australia’s ‘plain’ tobacco packaging law. The WTO panel said Australia’s law improved public health by reducing the use of tobacco products, refuting claims that alternative measures would be equally effective.

Test case

The WTO rejected the argument that Australia had unjustifiably infringed tobacco trademarks and violated intellectual property rights. Australia introduced a law in 2012 that bans logos and distinctively-colored cigarette packaging in favour of plain olive packets with brand names printed in small standardised fonts. The law was controversial from the start, leading to a number of lawsuits, including a six-year legal battle between the Australian government and tobacco giant Philip Morris, which cost the Australian government nearly £40 million to defend. Honduras brought the case against Australia to the WTO and was subsequently followed by Cuba, Indonesia, and the Dominican Republic. The challenge turned into a test case for public health legislation globally, and could lead to tighter marketing rules for unhealthy foods and alcohol as well as tobacco.

Dangerous precedent

Honduras indicated that it was considering an appeal, saying in a statement that the ruling contained legal and factual errors and appeared not to be even-handed, objective or respectful of the complainants’ rights. The statement said: ‘It appears that this dispute will require the review of the Panel’s findings by the WTO Appellate Body before any final conclusions can be drawn.’ Indonesia is planning to study its options, while Cuban and Dominican trade officials were not commenting at this stage. Geir Ulle, International Trade Director at Japan Tobacco International, said the decision was a major step backwards for the protection of intellectual property rights internationally, explaining “it sets a dangerous precedent that could encourage governments to ban branding on other products without providing any reliable evidence of benefits to public health.’ Mr Ulle said recent data showed plain packaging was not working.

Domino effect

Australia said it was ready to defend against an appeal. The World Health Organisation (WHO) welcomed the WTO ruling, saying it cleared ‘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.’ WHO said six other countries had brought in plain packaging laws (Hungary, Ireland, France, New Zealand, Norway and Britain), and another six had passed laws yet to be implemented (Burkina Faso, Canada, Georgia, Romania, Slovenia and Thailand). Vera Luiza da Costa e Silva, head of the secretariat of the WHO’s Framework Convention on Tobacco Control, said the changes are part of a ‘domino effect’ on the issue.