Tobacco, health and trade rules

Malaysia is taking the lead on two fronts to prevent the use of trade and investment agreements to block anti-smoking measures, but will these initiatives succeed?

by Martin Khor

Smoking is the number one preventable cause of death. Some 6 million people die each year from tobacco use, and by 2030 this will rise to 8 million, most of them in developing countries.

Almost 200 countries signed the World Health Organization (WHO)’s Framework Convention on Tobacco Control (FCTC) and are obliged to take measures to curb tobacco use.

But the industry has hit back. A big tobacco company (Philip Morris) has taken Uruguay and Australia to tribunals under bilateral investment treaties, claiming billions of dollars in compensation for the two countries’ measures to have big warning signs and small or no brand logos on cigarette packets.

Under trade agreements like the proposed Trans-Pacific Partnership Agreement (TPPA), companies can similarly sue governments, claiming loss of profits resulting from policy measures. At the World Trade Organization, cases are also being taken against countries for their tobacco control measures.

Now for the good news. Many governments are fighting back against the Big Tobacco onslaught, with Malaysia taking a lead role on two important fronts, the FCTC and the TPPA.

Malaysian NGOs, including the Malaysian Council for Tobacco Control and the Bantah coalition, have linked up with government health and trade authorities to forge a position to exclude tobacco control measures from all the TPPA’s disciplines.

The Malaysian initiative won it bouquets from international health groups and the New York Times published an editorial urging the United States to support it. Even the attorney-generals of many states in the US supported it.

However, reports indicate that the Malaysian position is not acceptable to the US. The tobacco lobby is fighting hard and the US is proposing a weaker kind of exclusion which health groups view as inadequate. 

FCTC decision

At the Conference of the Parties to the FCTC held in Moscow on 13-18 October, Malaysia led a move to thwart the tobacco industry’s use of trade and investment agreements to block anti-smoking measures.

Malaysia put forward a draft decision expressing concern over the tobacco industry’s use of trade and investment rules to undermine the implementation of the Convention’s measures, and the dissipation of time and resources caused by the industry’s attempts to challenge governments’ tobacco control measures through these rules.

Malaysia proposed that the Convention adopt four action points. The draft decision asked governments to explore options to prevent the industry from abusing trade and investment rules; and to deal with tobacco products uniquely, in accordance with the Convention, during trade negotiations. The draft also requested governments to support efforts to exclude tobacco from trade and investment agreements; and asked the Convention Secretariat to produce a report on the impact of the trade rules and to recommend mechanisms to safeguard tobacco control measures.  

It was the first time the Convention had future trade and investment agreements on its agenda and the Malaysian proposal was the basis for discussion. The proposal received wide support, including from all countries in the Southeast Asia and African regional groups in the Convention.

However, a number of Parties did not want any decision that expressly suggested an “exclusion” for tobacco products in trade negotiations and rules. Because the Conference makes decisions by consensus, the final decision omitted the term “exclusion”. Instead, Parties are reminded to take into account their public health objectives when negotiating trade and investment agreements.

The other points proposed by Malaysia were adopted, through in diluted ways.

 The result overall is positive. The issue of how tobacco companies make use of trade and investment agreements to threaten governments not to take anti-smoking measures is now firmly on the future agenda.

The decision can be used as guidance by policymakers and the public when their countries negotiate these agreements, reminding them that protection of public health should be given priority.

Investor-state disputes

Meanwhile opposition is growing to the kind of investor-sue-the-state system that enabled Philip Morris to claim millions or even billions of dollars from Uruguay and Australia. This kind of claim can also be made against TPPA member countries unless tobacco is excluded from the rules.

Uruguay was sued over its measure to increase the size of health warnings to 80% on cigarette packets. In its 500-page defence, the government said it has a duty to safeguard its citizens’ health and it is complying with the WHO tobacco control treaty, according to an article in The Independent. After Uruguay’s anti-smoking campaign, the smoking rate among adults fell from 40% in 2005 to the present 23%,  according to the defence document.

A similar case is being brought by Philip Morris against Australia for banning logos on cigarette packets, which the company claims restricts its right to use brands and trademarks to sell its products.

Many countries are watching to see what is decided in the two cases, as they too may be sued if they introduce similar plain-packaging measures.

From a public health perspective, the misuse of trade and investment rules by the tobacco industry and its backers in order to continue to promote their deadly products is unacceptable. Promoting tobacco use is immoral and governments have the responsibility to stop it.

According to WHO, tobacco kills up to half of its users. Tobacco kills nearly 6 million people each year. More than five million of those deaths are the result of direct tobacco use while more than 600,000 are the result of non-smokers being exposed to secondhand smoke.

WHO warns that unless urgent action is taken, the annual death toll could rise to more than 8 million by 2030.

Nearly 80% of the world’s one billion smokers live in the developing countries. This is where tobacco use is growing fastest and where the industry hopes to find its future markets.

Preying on the public is bad enough but to do so on the most vulnerable is unconscionable. Hopefully the initiatives that began at the FCTC will accelerate and bear fruit. And the negotiators at the TPPA will exclude tobacco from their rules.                                                   

Martin Khor is Executive Director of the South Centre, an intergovernmental policy think-tank of developing countries, and former Director of the Third World Network. This article first appeared in The Star (Malaysia) (27 October 2014).

Third World Economics, Issue No. 579, 16-31 Oct 2014, pp13-14