Trade policies and precedents and implications for tobacco control
| Trade policies | Purpose | Implication(s) for tobacco control |
| 1947–1994–5: General Agreement on Tariffs and Trade (GATT) | Most favoured nation (MFN) or no less favourable treatment of like products | Article XX(b) grants Member States the right to take measures to protect human, animal or plant life or health. However, the measures should be ‘necessary’ and ‘least restrictive,’ and should not constitute a ‘disguised restriction on international trade’ or ‘arbitrary or unjustifiable discrimination. The burden is on countries to prove that their tobacco control measures meet these standards7–9 13 16 20–22 |
| Like products should be granted national treatment or non-discrimination | ||
| Prohibition of quantitative restriction on imports | ||
| 1980s: The US enforced 1984 Amendment to Section 301 of the 1974 Trade Act | The US Cigarette Export Association lobbied the US Trade Representative, which used the threat of trade sanctions to open markets in Japan, Taiwan, South Korea and Thailand to US tobacco companies. | The opening of the Asian markets resulted in increased tobacco use9 23–25 |
| 1986–1994–5: Uruguay round of trade talks | Tobacco products and raw tobacco were made part of the negotiations on agricultural products such as coffee, maize and rice. | Tobacco negotiated as part of agricultural products and made a tradable commodity under the international trading regime, which places limitation on countries' ability to develop innovative public health policies without fear of violating World Trade Organization (WTO) rules or retaliation from other countries5 26 |
| 1990: GATT Panel ruling in the Thai case | The US claimed that Thailand's 1966 Tobacco act violated GATT principle. The Thai government defended the Act under GATT Article XX(b) | Panel concluded that tobacco control measures should be ‘non-discriminatory,’ and recognised the right of Member States to adopt and implement tobacco control measures, but such measures should be equally applicable to both domestic and imported products5 8 15 21 27 |
| 1994: Canada and plain packaging for tobacco products. | Philip Morris threatened to instigate a trade dispute over violation of trademark rules | Canada abandoned the policy (C Callard, personal communication, 2009)9 16 |
| 1994: World Trade Organization (WTO) General Agreement on Trade in Services (GATS) | Covers rules governing trade in services | Opens health services to participation of the private sector and multinational corporations. These services include advertising, packaging, retailing, distribution, telecommunication, health care, licensing, and education, which impact trade in tobacco8 9 13 15 28 |
| 1994: WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) | Regulations of patents, copyrights, trademarks, and industrial designs | Affects governments' ability to introduce medication programs such as those for treating tobacco dependence and cessation, and can apply to trademarks, labelling and packaging, and product/ingredient disclosure5 7 9 13 15 28 29 |
| 1994: WTO agreement on technical barriers to trade (TBT) | Technical regulations and standards for products, and recognises international standards by organizations such as the International Standards Organization | Grants Member States the ability to adopt and implement non-discriminatory and least restrictive measures that do not excessively impede trade. This agreement is relevant for product regulation, health warning and packaging, testing methods and regulation of the content of tobacco products5 7 9 13 15 28 |
| 1994: WTO Agreement on import licencing procedures | Regulations concerning issuing of import licences | Relevant for licence to business to import both manufactured and un-manufactured tobacco products, and its relevant for measures to deal with illicit tobacco trade5 8 30 |
| 1994: Agreement on rules of origin | Regulations governing the transport of goods from the origin to destination | Relevant to tracing and tracking and duty-free tobacco control policies, and measures to deal with illicit trade in tobacco products5 30 |
| 2001: Chile versus Peru | Chile claimed that Peru's General Sales Tax and Selective Consumption Law that identify goods subject to selective consumption tax places different specific tax on imported cigarettes made by tobacco (dark and bright) primarily from Chile. As such, the Peru's tax regime was discriminatory | Chile withdrew the case following Peru's amendment of the law to make all cigarettes subject to the common selective tax system regardless of their origin, price, type or quality of tobacco and/or number of sales market.31 That is, the amended law became consistent with the ‘non-discrimination principle.’ Thus, governments must ensure that their tobacco control measures are universal and does not discriminate against imported products, necessary, and consistent with the WTO |
| 2000–2003: Ban on misleading descriptors (‘light,’ ‘mild,’ ‘low’) in Canada and European Union | Philip Morris threatened to bring claim against Canada under the North Atlantic Free Trade Area. British American Tobacco, Imperial Tobacco, and Japan Tobacco International challenged the European Union ban at the European Court of Justice for infringement on trademark rights | The European Court of Justice dismissed the case, but did not determine TRIPS legality9 |
| 2003: Honduras versus The Dominican Republic | Honduras claimed that the application of the Dominican Republic Selective Tax Law created less favourable conditions for imported cigarettes and inhibited the importation of foreign cigarettes, contradicting GATT principles32 | The Appellate Body concluded that the requirement that tax stamps be affixed on cigarette packets in the Dominican Republic was ‘not necessary’ because there were ‘reasonably available’ alternative WTO-consistent measures; rejected Honduras' claim that the policy accords less favourable treatment to imported tobacco because ‘detrimental effect of a measure on a given imported product does not necessarily imply that the measure accords less favourable treatment to imports if the effect is explained by factors unrelated to the foreign origin of the product;’ and that the Dominican Republic imposition of bond requirement on cigarette importers violated the principle of no less favourable treatment of like products33 34 |
| 2008: The Philippines case | Philippines claims that Thailand is violating GATT rules through a ‘partial and unreasonable’ administration of tobacco tax measures that give advantage to the Thai Tobacco Monopoly | The first tobacco-related case filed at the WTO since the FCTC became international law in February 2005. The case had not been decided as of May 201035 |
| Emerging issue: plain packing in Asia | Tobacco companies have threatened to bring claim against some countries in Asia for violating trademark rules under TRIPS | Formal complaint has not been filed. These threats could have ‘chilling effects’ on states' innovation of tobacco control measures |