from the law, while the competing (mostly Indonesian)clove cigarettes are prohibited, constitutes protection-ism. Even though the statute is origin neutral on its face,and does not have explicitly different rules for importsand domestic products, there is clear evidence of the dis-criminatory nature of the statute. This discrimination may be disguised or hidden in purported health measures, butit can be uncovered by looking under the surface, as theAppellate Body did here.Critics of the decision expressed concern that this rulingundermines the ability to regulate tobacco for health pur- poses. In reality, though, the only problem with the measurewas its discriminatory nature. If the law had banned mentholas well, a move that health advocates supported, it wouldvery likely have been found to be consistent with the rules.Drawing a line between protectionist and nonprotec-tionist laws can be difficult. As the
caseshows, some measures that are ostensibly intended for nonprotectionist ends are in fact examples of disguised protectionism. But the characterization of measures as pro-tectionist or not is crucial for establishing appropriate tradeand investment rules, and thus must be examined carefully.While
fell on one side of the line, other cases may fall on the other. A good example is severaloverlapping cases, which are in their early stages, related toAustralia’s laws on “plain packaging” of cigarettes. Here,the critics of trade and investment agreements may have alegitimate reason to be concerned about the impact of theseagreements on domestic sovereignty.A number of countries have considered requiring thatcigarettes be sold in plain packaging. Australia was the firstcountry to adopt laws in this regard. Instead of the usual packaging, the legislation will force cigarette companies tosell their cigarettes in a logo-free drab dark brown package.As explained by the Australian Department of Health andAgeing, plain packaging will
increase the noticeability, recall, and impact of healthwarning messages,
reduce the ability of packaging to mislead consumersto believe that some products may be less harmfulthan others, and
reduce the attractiveness of the tobacco product for both adults and children.
Cigarette companies object strongly to such laws, and have brought (or convinced governments to bring) challengesin both Australian and international fora. With regard tointernational disputes, both trade and investment agree-ments have been invoked. The first case was brought by asubsidiary of the cigarette maker Philip Morris International(PMI) under the Hong Kong–Australia bilateral investmenttreaty. In its Notice of Claim,
filed in June of 2011, PMI put forward a number of arguments, including the claim thatthe law deprived it of “title to the intellectual property andgoodwill” and “the commercial value of its investments inAustralia.” PMI argued that it is clear that there is no cred-ible evidence that plain packaging legislation will have theclaimed effect of enhanced public health.
At around the same time that the investment claimwas made, several countries raised objections in WTOCommittees.
Then, in March, April, and July of 2012, dis- pute settlement proceedings began, as Ukraine, Honduras,and the Dominican Republic filed consultation requests.
Their key legal claims are that, as a result of the law, trade-mark rights are not being properly protected. With regardto “trade” arguments, the complainants alleged that the lawconstitutes an unnecessary obstacle to trade and is more traderestrictive than necessary to achieve the stated health objec-tives. They also alleged that various “discrimination” (i.e., protectionism) provisions of WTO law had been violated.However, the basis of these latter claims is unclear, as it isnot obvious how the plain packaging laws treat foreign prod-ucts or producers less favorably than domestic competitors.At its core, the case against plain packaging, unlike thecase of
, does not seem to be about pro-tectionism. Rather, the main allegation is that the measureviolates trade and investment rules that deal with issuesother than protectionism, such as intellectual property andthe protection of foreign investments. As a result, healthadvocates appear to have a point about the scope of theserules in relation to legitimate health regulation.
Is Tobacco Special? The Argument for ExcludingTobacco from Trade and Investment Agreements
and plain packaging haveled to renewed calls by health advocates to “carve out”tobacco from trade agreements. This argument is basedlargely on several U.S. legal and policy documents.During the 1980s and early 1990s, U.S. trade policy-makers worked actively to open foreign markets for U.S.cigarette exports, targeting both discriminatory measuresand nondiscriminatory public health measures that hadan impact on trade.
However, during the Clinton years,this policy began to change.
In 1997 Congress attachedan amendment to an appropriations bill—known as theDoggett Amendment—which stated the following: None of the funds provided by this Act shall beavailable to promote the sale or export of tobacco or tobacco products, or to seek the reduction or remov-al by any foreign country of restrictions on themarketing of tobacco or tobacco products, exceptfor restrictions which are not applied equally to alltobacco or tobacco products of the same type.Thus, under this provision the U.S. government will notseek to reduce or remove tobacco marketing restrictions,unless these restrictions are not applied “equally” (althoughthe language does not mention country of origin, presum-ably this is the main kind of unequal treatment being tar-geted). This provision separates marketing restrictions thatdiscriminate against foreign products from other, nondis-criminatory marketing restrictions. There is a clear distinc-tion here: Protectionist measures related to tobacco are notappropriate, but nondiscriminatory measures are acceptable.Soon after came a State Department cable along thesame lines, which set out policy for all U.S. embassies