International Trade and Investment Law

Tobacco and International Trade and Investment Law

Tobacco and tobacco products are traded across the globe and the tobacco companies act as foreign investors in most countries. Tobacco products are therefore subject to the international agreements that govern global trade and foreign investment.

The tobacco industry has a long history of using international trade agreements to force open new markets in low- and middle-income countries, increasing tobacco use and the death and disease it causes. The tobacco companies lobby government trade representatives to gain preferential market access, encourage and even fund state to state trade disputes, and threaten the governments of small countries with international litigation to delay or prevent tobacco control measures.

Trade and investment treaties should not promote or increase the use of tobacco products, and they should not allow tobacco companies to challenge the sovereign authority of any nation to protect public health by taking action to reduce tobacco use.

It is important that government health officials and civil society organizations have some understanding of these issues so they can:

• influence government trade policy so that public health and tobacco control are protected from industry interference;
• ensure that tobacco control measures are robust against industry threats and international legal challenges;
• resist and respond to false allegations made by the tobacco industry of breaches or violations, so that there is no delay (or ‘chilling effect’) on the progress of tobacco control laws.

Big Tobacco Uses Trade Laws to Fight Health Protection

Tobacco companies have brought legal challenges against tobacco control measures under international investment treaties. These dispute mechanisms are lengthy and costly. The case brought against Uruguay by Philip Morris took over 5 years to be dismissed and the total legal costs and court fees from both sides were in excess of $28 million. Philip Morris’ failed investment treaty claim against Australia’s plain packaging law took 4 years and tens of millions of dollars in legal costs just to be thrown out by the tribunal on a jurisdictional issue as an ‘abuse of rights’.

Philip Morris and British American tobacco have also provided financial and legal assistance to countries, such as the Dominican Republic and Honduras, to bring complains under the World Trade Organisation (WTO) dispute system against Australia’s plain packaging law. The final submissions were made in March 2016 but the WTO panel has still not published its ruling, although leaked reports of the panel’s interim report indicate that Australia has won the dispute.

These cases were part of a global strategy by the tobacco companies to delay and prevent the adoption of strong tobacco control measures by using international law arguments on trade, in an attempt to reframe the issues away from the devastating public health impacts of their products.

As well as legal challenges, Big Tobacco also use threats and allegations to countries that are considering strong tobacco control measures. Letters and submissions to governments regularly use flawed arguments to allege that policies such as large health warnings or plain packaging would breach international rules.

International trade and investment agreements were not intended to put constraints on a state’s right to implement genuine, non-discriminatory public health measures. Despite this, the tobacco industry has sought to abuse the system to create ‘regulatory chill’ and deter governments from adopting tobacco control policies. That is why the Bloomberg/Gates Anti –Tobacco Trade Litigation fund was established, to help combat this threat.

Exclude tobacco from trade and investment agreements

Tobacco is simply not like any other consumer products, and should not be treated as one in trade and investment agreements. What’s at stake is the ability of nations to take actions that would save millions of lives. The best approach for governments is therefore to exclude tobacco products entirely from trade and investment agreements; at a minimum, tobacco control measures should be protected from challenges by the tobacco industry under the Investor-State Dispute Settlement provisions.

In a historic step forward for public health, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreement reached in January 2018 between 11 countries - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam - includes a provision that prevents tobacco companies from using the CPTPP to launch legal attacks on tobacco control measures. A similar provision has also come into force in the updated Australian/Singapore Free Trade Agreement. More details on these provisions are set out in the Information and Resources page.