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.

Peter Fray

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