Implications of Free Trade & Investment Agreements (FTIAs) for NZ’s Smokefree 2025 Policies

Professor Jane Kelsey, School of Law, The University of Auckland, NZ

Focus of this presentation

1. Background to the report2. Key observations3. Example of Australia’s plain packaging law4. Tobacco issues in the Trans-Pacific Partnership Agreement negotiations

9 August 2012

Background• Maori Affairs Committee 2010 – FTIA issues invisible• Cabinet papers & RIA – minimal FTIA content redacted• Tobacco industry pressure raised profile of issue • Complex and secretive area

Report International Trade Law & Tobacco Controlaims to identify legal pressure points, legal risks and

chilling effect from current and proposed FTIAs

9 August 2012

Key observations (i)• Smokefree goal needs more assertive policies• Long phase-in has less legal risk, but not by 2025 • Industry will challenge most potent, most vigorously• Uses legal arguments & disputes tactically to ‘chill’• Industry helps countries fund WTO disputes• WTO issues involve in goods, services, TBT, IP• Interpretation of WTO public health exception is

improving, but rarely succeeds as a defence

9 August 2012

Key observations (ii)• Tobacco companies (esp PMI) aggressively using

investor-state dispute powers in FTIAs• Unpredictable, lengthy and invisible process• Legal costs average $8m, sometimes $50m• ISDS disputes aim to chill and deter 3rd countries• NZ has 6 agreements with ISDS• New ‘comfort’ language does not protect public policy• New NZ FTIAs must be consistent with FCTC• Deeper and more extensive obligations increase risk

9 August 2012

Australia’s plain packaging law3 legal challenges(i)4 tobacco companies constitutional challenge in Australian courts allege ‘taking of property’ (trademark) based on Australian lawcase has been hearddecision awaited

9 August 2012

World Trade Organization disputeBrought by Ukraine, Honduras, Dominican Republic, maybe others Legal support from PMI and BATAlleges breach of •intellectual property rights (trademark, goodwill)•technical barriers to trade (not evidence based or least burdensome option to achieve goal)NZ joined as third partyUneven WTO jurisprudence Australia & NZ oppose Thai alcohol labels on same basisSuccessful dispute means Aust must withdraw measure or face trade sanctions

9 August 2012

Investor-state disputePhilip Morris Asia launched dispute under Australia Hong Kong bilateral investment treatyChanged ownership of PM Australia to take advantage of treatyAlleges breach of

– fair and equitable treatment– security and protection of investment– indirect expropriation

Likely to rely on OIA, RIA, political statement & industry reportsPrivate hearing, in Singapore, tribunal just appointedAd hoc process, reasoning & outcomes unpredictable, no appealPotentially large award of damages unless policy is reversed

9 August 2012

Tobacco & the TPPA9 country negotiation of ‘21st century’ FTIAUS: Industry & tobacco states v tobacco control lobbyUSTR proposes middle ground ‘tobacco exception’

(i) defence against complaints adapts current exception(ii) only regulation by delegated agency, not legislation(iii) not apply to investment rules

Not tabled cos tobacco industry kickbackConcern that implies existing exception inadequate

9 August 2012

Exception not address A/NZ concerns

Exception does not apply to investment rulesAustralia opposes any ISDS powers in TPPAUS proposes more extensive IP rules, benefit tobaccoTransparency & regulatory coherence chapters give rights for industry to influence domestic decisions, contrary to FCTC Art 5.3Tobacco carveout not address other NCDsNZ must ensure new treaties are FCTC compatible

9 August 2012

Final observationsGovernments have the right to regulate tobacco as they see fit in the public interestBut potential collisions with FTIAsCompatibility issues with Australia under TTMRA No tidy solution to competing priorities Expect enormous pressure & public campaigns by industry

9 August 2012

Smokefree by 2025 will require

Awareness and assessment of arguments Commitment to policies Strategic decisions about which fights to pick Political will following Australia’s example

9 August 2012