1. PHILIP MORRIS VS. URUGUAY

2. MAIN ISSUES

Smoking in public closed places is forbidden

Bill 285/05

One cigarette type per brand

Bill 514/09
80% of cigarette pack surfaces be devoted to graphic warnings of the dangers associated with smoking
Bill 287/10 reg. 466/10
3. HOW THE ISSUES AFFECT PHILIP MORRIS INTERNATIONAL (PMI)
The labeling requirements and recent tax increase harm its investments and infringe on its trademarks in violation of the Switzerland-Uruguay bilateral investment treaty
Counterfeit cigarettes (more than 50% of market) have a significant advantage because they are not regulated
4. ACTORS

Leading international tobacco company,

5. 160 countries 6. Leading brand Marlboro 7. Net revenues $62,080 billion (2009)A country with a population of 3 million in South America
GDP $33,3 billion (2009)
Economy based in the agro industry
PMI doubles Uruguays GDP.
8. ACTORS
Unions:Tobacco Workers Union
World Health Organizations Framework Convention on Tobacco Control (WHO FCTC)
General Public:
9. ACTORS (Cont.)
These groups also offered to provide technical and legal assistance to the government of Uruguay.
10. INFORMATION
Inelastic cigarrette consumption (10% price increase, 5% consumption decrease)
Agreement on Trade-Related aspects of Intellectual Property rights (TRIPS) into BIT obligations between Uruguay and Switzerland, that was signed in 1988
Market share
11. INFORMATION (cont.)
Agreement with Organizacin Panamericana de la Salud regarding legislations to fight against tobacco consumption
Statistics:
A consumer spends an average of $1.50 per day on cigarettes
800,000 consumers
Us$438m per year is the industry size
Us$ 100m are from PMI
12. INFORMATION (cont.)
VAT (22%)
Production taxes (70% of production costs)
Production costs
4% of taxes collected comes from cigarettes.
13. INFORMATION (cont.)
Danger of Smoking
25% fatality rate of smoking related cancer.
4500 deaths per year caused by cigarettes
14. INFORMATION
Social costs:
Smoking-related health care spending
Effects on worker productivity.
Campaign to lower smoking rates among its population, as 50%
Tabar Vzquez, a trained medical doctor whose term as the countrys President ended March 1, promoted Uruguays anti-smoking laws. On the campaign trail and in declarations since his election, Mujica stressed that he will continue his predecessor's policies.
15. INTERESTS
Uruguayan Government
Protect populations health
Reduce health costs
Protect the countrys image of health concerned
Increase Foreign direct investment
16. INTERESTS (cont.)
Smokers
Ease of getting product
Low Price
Freedom to smoke freely
Boxes of cigarettes without unpleasant pictures
Non Smokers

Reduction of second-hand smoke in public places

17. Reduced availability of cigarette sales 18. Advertisements and promotions that deter minors 19. Improved public health 20. Tax increase to raise prices to discourage consumption and improve tax collection