WTO law provides regulatory space for tobacco control measures
KEY MESSAGE: International trade agreements recognize the sovereign right of states to regulate in the interests of public health, as confirmed by case law.
World Trade Organization (WTO) agreements provide regulatory space for states to regulate in the public interest, including for the protection of public health. The tobacco industry routinely claims that tobacco control measures breach the provisions of international trade agreements. WTO is the central multilateral body dealing with the rules of international trade . The rules of the WTO — the agreements — are the result of negotiations between its members. As indicated in the preamble to the Marrakesh Agreement establishing the WTO, WTO agreements aim to reduce obstacles to international trade in goods and services, and provide minimum standards with respect to the protection of intellectual property rights :
…with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.
Three WTO agreements have been invoked in relation to tobacco control regulation – the General Agreement on Tariffs and Trade (‘GATT’) , the Agreement on Technical Barriers to Trade (‘TBT Agreement’) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’). A WTO dispute may arise where one member adopts measures that one or more fellow WTO members consider to be in breach of WTO agreements . Over the last few years, a number of tobacco control measures, including plain packaging and bans on additives and flavourings, have been discussed in the WTO’s TBT Committee and TRIPS Council, and WTO dispute proceedings have been brought against WTO members under the TBT, GATT and TRIPS agreements. While only WTO members may bring a legal claim against another member under WTO law, multinational tobacco companies have been publicly reported to be providing support to complainant countries in the WTO disputes against Australia’s tobacco plain packaging measures .
Domestic tobacco control measures implemented by members have been challenged under WTO agreements on the basis of three major grounds: trade-restrictiveness, discrimination, and failure to provide required intellectual property protections.
Tobacco control measures have been alleged to constitute technical regulations that restrict international trade in a manner that exceeds what is necessary to achieve a legitimate objective contrary to Article 2.2 of the TBT Agreement . Measures have also been challenged on the ground that they discriminate against imported products by providing less favourable treatment compared to like domestic products or like imported products from a different WTO member contrary to Article 2.1 of the TBT Agreement and Articles III:4 and I:1 of the GATT Agreement . Ordinarily, tobacco control measures are applied equally to tobacco products regardless of origin. However, the concept of discrimination includes not only de jure discrimination (discrimination in law) but also de facto discrimination (discrimination in fact). This means that, for example, claims may be made that a tobacco control measure that applies equally to all tobacco products discriminates in effect against imported tobacco products or imported tobacco products from certain countries. The lawfulness of plain packaging measures has also been challenged under Articles 16.1 and 20 of the TRIPS Agreement on grounds that they are an unjustifiable encumbrance by special requirements on the use of trademarks and do not protect rights required to be conferred on trademark owners .
Currently, a WTO challenge to Australia’s plain packaging laws is pending . Four members of the WTO – Cuba, the Dominican Republic, Honduras and Indonesia – have challenged Australia’s plain packaging measures arguing that the measures are more trade restrictive than necessary, and constitute an unjustifiable encumbrance on the use of trademarks and do not protect rights required to be conferred on trademark owners.
WTO agreements expressly provide regulatory space for states to regulate in the public interest, including for the protection of public health. For example, the preamble to the TBT Agreement provides that WTO members recognize that no country should be prevented from taking measures necessary for the protection of human health, provided they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination. Article 2.2 of the TBT Agreement explicitly specifies that protection of human health and safety is a legitimate objective for the purpose of determining whether a technical regulation is more trade-restrictive than necessary to fulfil a legitimate objective. An otherwise GATT-inconsistent tobacco control measure can be justified under Article XX(b) if the measure is necessary to protect human health and the measure is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries and is not a disguised restriction on international trade. Article 8.1 of TRIPS states that “members may…adopt measures necessary to protect public health” provided that such measures are consistent with the TRIPS Agreement, while Article 7 of the TRIPS Agreement references the need to protect and enforce IP rights ‘in a manner conducive to social and economic welfare and to a balance of rights and obligations’.
WTO Panel and Appellate Body decisions have confirmed the regulatory space available to governments for the protection of human health and that WTO members have the right to determine the level of protection of health that they consider appropriate in a given situation . Preservation of human life and health has been described by the WTO Appellate Body as “vital and important in the highest degree” . In the cases of Thailand — Cigarettes  and US – Clove Cigarettes , the WTO Panel recognized that tobacco consumption poses a serious risk to health, and that measures designed to reduce cigarette consumption fall within the scope of regulatory measures designed to protect human health.
WHO FCTC measures designed to protect public health, and implemented in a non-discriminatory manner, should not be found inconsistent with WTO agreements, as recognized in paragraph 58 by the United Nations Ad Hoc Inter-Agency Task Force on Tobacco Control :
One important issue which needs to be clarified in the global trade fora is that the WTO Agreements and implementation of the [WHO Framework Convention on Tobacco Control] WHO FCTC are not incompatible as long as the WHO FCTC is implemented in a non-discriminatory fashion and for public health.
In respect of the TRIPS Agreement in particular, in 2001 the WTO Ministerial Conference adopted the Doha Declaration on the TRIPS Agreement and public health, which states in paragraph 4 :
We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health ….
In responding to arguments that tobacco control measures infringe international trade law, global recognition of the harms of tobacco use and of the need to take action to combat the global tobacco epidemic will strengthen the legal position of governments responding to tobacco industry threats and claims. This recognition finds expression in the WHO FCTC, decisions of the Conference of the Parties to the WHO FCTC – the governing body of the WHO FCTC comprised of all the treaty’s parties – including implementation guidelines of the WHO FCTC  and in a range of other instruments adopted by the international community dealing with noncommunicable diseases (NCDs), sustainable development and human rights.
Implementation of the WHO FCTC has been recognized as critical in reducing the burden of NCDs in the Political Declaration adopted at the September 2011 United Nations General Assembly High-level Meeting on the Prevention and Control of NCDs , the Outcome document of the 2014 High-Level Meeting of the United Nations General Assembly on the comprehensive review and assessment of the progress achieved in the prevention and control of NCDs , and in goal 3.a of the 2030 Agenda for Sustainable Development, adopted by the United Nations General Assembly .
Collectively, these instruments provide evidence of an international consensus on the harms caused by tobacco and the effective measures required to address these harms. They reflect a global commitment to tobacco control to achieve the right to the highest attainable standard of health and sustainable development, and global recognition that tobacco control falls within the sovereign right of states to regulate in the interests of public health. These instruments strengthen the position of governments enacting tobacco control measures by establishing international norms and by constituting a source of evidence that can be expected to inform the consideration of WTO panels and Appellate Body examining the lawfulness of such measures.
Governments have a sovereign right to regulate to protect public health, including through tobacco control measures.
Regulatory space is recognized in international trade agreements and clarified in case law.
Preservation of human life and health has been described by the WTO Appellate Body as “vital and important in the highest degree” . The WTO Appellate Body has recognized that WTO members have the right to determine the level of protection of health that they consider appropriate in a given situation .
In addition, states have committed to implement effective tobacco control measures under the WHO FCTC and a range of other international instruments. These instruments establish obligations and provide evidentiary support for governments implementing WHO FCTC measures.
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The TBT Agreement, Annex 1A of the Marrakesh Agreement establishing the WTO, “aims to ensure that technical regulations, standards, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade. At the same time, it recognises WTO members’ right to implement measures to achieve legitimate policy objectives, such as the protection of human health and safety, or protection of the environment”. WTO members/observers “use the TBT Committee to discuss specific trade concerns…usually in response to notifications” and “exchange experiences on the implementation of the Agreement with a view to making implementation more effective and efficient” . ↩︎
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The WTO’s Agreement on TRIPS, Annex 1C in the Marrakesh Agreement, introduced standards of intellectual property protection into the multilateral trading system. The TRIPS Council, open to all members of the WTO, is responsible for administering the TRIPS Agreement . ↩︎
Agreement on Trade-Related Aspects of Intellectual Property Rights, In: World Trade Organization [website]. Geneva: World Trade Organization; 2016. (https://www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm) ↩︎ ↩︎
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Appellate Body Report, US – Clove Cigarettes, WT/DS406/AB/R (4 April 2012). ↩︎
Australia – Certain measures concerning trademarks, geographical indications and other plain packaging requirements applicable to tobacco products and packaging (‘Australia — Tobacco Plain Packaging‘ ), WT/DS435/441/458/467. ↩︎ ↩︎
United Nations Ad Hoc Inter-Agency Task Force on Tobacco Control. Report of the Secretary-General. New York: United Nations Economic and Social Council; 2012 (http://www.un.org/en/ecosoc/docs/adv2012/tobacco_or_health_sg_report_to_ecosoc_29_may_12.pdf). ↩︎
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Article 2.2 of the TBT Agreement, Article XX (b) of GATT, Article 8 of the TRIPS Agreement and the Doha Declaration are all included in the Punta del Este Declaration on the Implementation of the WHO FCTC, adopted by the Conference of the Parties (COP) to the WHO FCTC in 2010. In the Punta del Este Declaration, the COP, inter alia, “recogniz[ed] that measures to protect public health, including measures implementing the WHO FCTC and its guidelines fall within the power of sovereign States to regulate in the public interest, which includes public health” and declared the Parties’ “firm commitment to prioritize the implementation of health measures designed to control tobacco consumption in their respective jurisdictions” . This was reiterated at the COP’s most recent session, held in October 2014, in a decision which noted that “the tobacco industry has used and might use international trade and investment rules taken to challenge tobacco control measures to implement the WHO FCTC.” . ↩︎
WHO FCTC/COP4(5), Punta del Este Declaration on the Implementation of the WHO Framework Convention on Tobacco Control (http://apps.who.int/gb/fctc/PDF/cop4/FCTC_COP4(5)-en.pdf), 19 November 2010. Conference of the Parties to the WHO Framework Convention on Tobacco Control Fourth session, Punta del Este, Uruguay, 15–20 November 2010 ↩︎ ↩︎
WHO FCTC/COP 6(19), Trade and investment issues including international agreements, and legal challenges in relation to implementation of the WHO FCTC (http://apps.who.int/gb/fctc/PDF/cop6/FCTC_COP6(19)-en.pdf) 18 October 2014. Conference of the Parties to the WHO Framework Convention on Tobacco Control. Sixth session Moscow, Russian Federation,13–18 October 2014 ↩︎ ↩︎
Political Declaration of the High-level Meeting of the General Assembly on the Prevention and Control of Noncommunicable Diseases. New York: United Nations; 2014. In: Sixty-sixth session of the United Nations General Assembly, 19 September 2011,(A/RES/66/2, http://www.who.int/nmh/events/un_ncd_summit2011/political_declaration_en.pdf). ↩︎
Outcome document of the high-level meeting of the General Assembly on the comprehensive review and assessment of the progress achieved in the prevention and control of noncommunicable diseases. New York: United Nations; 2014. In: Sixty-eighth session of the United Nations General Assembly, 7 July 2014 (A/RES/68/300; http://www.who.int/nmh/events/2014/a-res-68-300.pdf). ↩︎
Transforming our world. The 2030 Agenda for Sustainable Development. New York: United Nations; 2015. In: Seventieth session of the United Nations General Assembly (ARES/70/1; https://sustainabledevelopment.un.org/post2015/transformingourworld/publication). ↩︎
References accessed on August 11th, 2016.