18 March 2013

EU's planned tobacco curbs break WTO rules

The European Union's plans for tough new anti-smoking rules would break international trade rules.


The European Union's plans for tough new anti-smoking rules would break international trade rules, Malawi has told the World Trade Organisation, signaling a potential legal challenge from the developing world.

Malawi, one of the world's poorest countries, is concerned that EU plans to make cigarettes less attractive to new smokers will hurt a sector which provides more than 60% of its foreign exchange earnings, according to a WTO survey in 2010.

"Malawi is deeply concerned that the EU's proposed Tobacco Products Directive (TPD) will significantly restrict trade, and is inconsistent with the EU's binding obligations under the TBT (technical barriers to trade) Agreement," the southern African country said in a statement posted on the WTO website on Friday.

Concerns from other countries

It made the statement at a WTO committee meeting earlier this month, where it was one of nine countries - including Indonesia, Mexico, Cuba and the Philippines - to voice concerns about the EU's plans.

The EU policy proposals came after Australia, last December, enforced a ban on cigarette logos and required packets to be plain olive green with graphic health warnings. To bring in the world's toughest rules on tobacco packaging, it had to win a court fight against cigarette makers British American Tobacco, Imperial Tobacco, Philip Morris and Japan Tobacco.

The Australian law was seen as a precedent for other countries considering a similar move, including India, Norway, South Korea and Canada. But it could still face an upset at the WTO, where Ukraine, Dominican Republic and Honduras have launched litigation in a bid to force Australia to overturn it.

Malawi has taken an interest as a third party observer in that case but it has never launched a WTO dispute in the 18 years since it joined. It did voice objections to a Canadian tobacco law in 2010, without taking legal action to stop it.

Preventing young people from smoking

The EU's draft tobacco law, which aims to prevent young people from taking up smoking, was published in December, just weeks after Australia's rules came into force. It needs to be approved by EU governments and the European Parliament, which could take two years.

Malawi said it was not questioning the EU's right to protect health, but Brussels' plan broke the rules in four respects: by banning ingredients such as flavorings and additives, by imposing costly labeling requirements, by insisting on cuboid-shaped packaging with no lid or a fliptop lid and by banning "slim" cigarettes.

It said the EU needed to provide scientific evidence to show that its plans would reduce tobacco consumption and not just introduce barriers to trade. It also cited WTO rules that require technical regulations "take account of the special development, financial and trade needs of developing country members" to avoid creating unnecessary trade obstacles for poorer countries."The onerous new obligations of the TPD will clearly create new, unnecessary obstacles to the tobacco exports of developing countries ... (which) will disproportionately hit least-developed tobacco exporters such as Malawi," it said.


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