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Crikey Clarifier: will Indonesia sink Australian plain packaging laws?

Indonesia has become the third country to challenge Australia’s plain packaging laws for cigarettes. Freelancer writer Sally Whyte talks to experts about the case — and who is likely to win.

Australia’s cigarette plain packaging laws are back in the news, with a fresh legal challenge coming from Indonesia through the World Trade Organization. Indonesia is the third country to launch a challenge through the WTO, but a result doesn’t look likely in the near future …

So what is the case about?

Indonesia has become the third country, after Ukraine and Honduras, to be granted the right to challenge Australia’s plain packaging laws in front of a panel of trade and legal experts at the WTO. Cuba and the Dominican Republic have also filed initial complaints against Australia, but they haven’t moved to file the second request that is necessary to establish a panel.

The case is based on three WTO agreements: TRIPS (Trade Related Aspects of Intellectual Property Rights), TBT (Technical Barriers to Trade) and the GATT 1994 (General Agreement on Tariffs and Trade).

In layman’s terms, “they’re alleging that Australia’s laws are more burdensome than necessary on trade and they discriminate against imported products”, says Tania Voon, professor and associate dean (research) at Melbourne Law School and a former legal officer of the WTO’s appellate body secretariat. Experts say that this contention is unlikely to hold up as the laws discriminate equally against local and imported products.

William New, editor of international observer website Intellectual Property Watch, says “these cases represent a challenge to the primacy of trade rules over rules such as those governing public health”.

Who is paying for it?

It isn’t clear yet who is funding Indonesia’s case against Australia, but big tobacco companies have previously been less than coy about funding Ukraine’s challenge against Australia. Ukraine was the first country to bring this challenge to the WTO even though the country has no tobacco trade with Australia.

The WTO is the third legal avenue that tobacco companies are using to fight plain packaging laws. After losing a challenge in the Australian High Court in 2012, Philip Morris Asia is challenging the law in the international Permanent Court of Arbitration, claiming it breaches a bilateral trade agreement between Hong Kong and Australia.

How long will Indonesia’s challenge take?

Disputes at the WTO have several stages. Indonesia and Australia have already taken part in consultations in October last year, and although the government could have blocked Indonesia’s request for a panel to be established, it’s been accepted.

The Australian government wants this wrapped up quickly, which is why it agreed to Indonesia’s request to start a panel without forcing its Asian neighbour to make a second request. Voon says although it is “on the more unusual side” that Australia hasn’t objected to the panel, the Australian government is confident of coming out on top. Australia has requested that all five cases, including those by Cuba and the Dominican Republic (which are yet to make a second request for a panel hearing), be heard together to speed up the process.

[Australia] is making a concerted effort to bring the various cases together on one track in order to reduce costs and time expenditures,” New said.

If a panel is composed within the next two months, the case could take about two years, allowing time for an appeal, according to Voon. But it is likely to take much longer, considering the WTO established a panel to hear the Ukrainian case against the laws in September 2012, but proceedings have been delayed in composing the members of the panel.

The biggest detriment to Australia to the cases moving slowly is that other nations, such as New Zealand and some in Europe, that are considering similar plain packaging legislation have indicated they are waiting for the outcome of these cases before they move forward. And I think Australia would like some company on this as soon as possible,” New said.

So which side will win?

All the legal experts who spoke to Crikey believe Australia has a good chance of winning, although there are no precedents to draw on. Voon says Australia has “quite strong grounds”; another legal source said: “No WTO case has ever suggested that members are not entitled to introduce public health measures even if they do restrict trade.”

If Australia does lose it won’t have to pay damages but will have to change the law according to the findings. Other countries that want to introduce plain packaging laws will be watching with interest.

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  • 1
    amy robinsons
    Posted Tuesday, 1 April 2014 at 2:08 pm | Permalink

    Will CSG companies be able to sue relevant governments where their access to leases has been denied say by protests or public health concerns, local pollution etc under similar laws or via the TPP say?

  • 2
    Dawson Colin
    Posted Tuesday, 1 April 2014 at 4:46 pm | Permalink

    @amy, I had the same thought. Big energy had been following the play book written by big tobacco, especially criticism of research showing that its product is harmful. With their bottomless war chests, we could be in for decades of vexatious gas/coal cases based on threats to the profits of multinationals.

  • 3
    Harry Holt
    Posted Tuesday, 1 April 2014 at 8:45 pm | Permalink

    Perhaps the solution will be for Australia to withdraw from these trade agreements. Sovereignty seems to be a great vote winner. Giving it up to an unelected, corporately motivated organisation could be described as Orwellian.

  • 4
    R. Ambrose Raven
    Posted Tuesday, 1 April 2014 at 11:02 pm | Permalink

    Big Tobacco may be given an extra avenue, courtesy of the Noalition and their “Free” trade agreements (better used for toilet paper).

    Abbott Coalition Trade Minister (and ex-NFF) Andrew Robb indicated in mid-Dec ’13 that Australia would allow an investor-state dispute settlement (ISDS) clause – which allows multinational companies an additional means of suing governments – in return for “substantial market access”. Indeed, he later indicated support for it.

    The ISDS Mechanism allows transnationals to sue any signatory government. One such is being used by Philip Morris to sue Australia on plain packaging and graphic warnings for cigarettes, since reducing deaths from smoking requires reducing the effectiveness of advertising and other means of psychological manipulation and exploitation by a Big Tobacco that has spent decades lying about the dangers of smoking.

    Robb omitted to mention that the substantial financial and political connections between the Liberal Party and Big Tobacco.

    In mid-2010, a supposedly grass-roots protest against the plain packaging of tobacco products was in fact run by former Howard government advisers and then current Liberal Party strategists (one being Crosby Textor – infamous for his comparison of the Indonesian President to “a 1970s Pilipino porn star and has ethics to match”), almost entirely financed by the tobacco industry.

    Or that from 2004 – from when the ALP refused Big Tobacco donations, the Liberals and the Nationals continued to jointly receive an average of $280,000 annually from the tobacco industry.

    In Aug ’13 Tony Abbott did announce that the Liberal Party would no longer accept donations from tobacco companies. But which category of Abbott’s promises was that one - “the promise that we made”, “the promise that some people thought we made [and was extensively publicised without Noalition challenge], or a later reversal of position by a leader and party that before the 2013 election promised that, if elected, unlike Julia and the carbon levy, there would be none of those either?

    After all, Abbott has defended his party’s acceptance of tobacco industry donations on the basis that the money does not influence policy. In 2011 Abbott said that he intended to keep on taking those donations for as long as tobacco was legal.

  • 5
    CML
    Posted Wednesday, 2 April 2014 at 3:25 am | Permalink

    Plain packaging was a silly idea in the first place. It does/will not stop anyone from smoking, because it is an addiction, not a ‘life-style’.
    Many smokers I have spoken to, say they would continue to smoke no matter how the addictive sticks are packaged.
    You can lead a horse to water, but you can’t make it drink!

  • 6
    Chris Hartwell
    Posted Wednesday, 2 April 2014 at 10:03 am | Permalink

    CML - it won’t stop current smokers. It may stop potential smokers from starting (and all the attendant health risks and costs starting entails)

  • 7
    R. Ambrose Raven
    Posted Wednesday, 2 April 2014 at 10:40 am | Permalink

    Well, CML, if plain packaging doesn’t matter, why is Big Tobacco so hostile to it? An obvious question. Your answer is?

  • 8
    CML
    Posted Wednesday, 2 April 2014 at 10:55 pm | Permalink

    Simple R A R - they think it lowers their profits. Money is all these people care about. I would have thought that was obvious!

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