The Impact of Trade Liberalization on Tobacco Control in Developing Countries

By Myriam Denis, Assistant Contributor

Tobacco consumption, and the accompanying health problems and healthcare costs, is a reality developed countries have been dealing with for a long time now. But for developing countries, this problem is just starting to emerge as a significant public policy issue. Following significant decreases in cigarette consumption in North America, Oceania and Western Europe, tobacco companies have shifted their focus to market their products in developing countries, where tobacco control regulations are virtually nonexistent. The World Health Organization estimates that 70% of the 8.4 million of deaths that will result of tobacco use by 2020 will occur in developing countries.

This new reality calls for states and other international actors to cooperate on a broad range of issues. One of these topics is the impact of trade liberalization on the implementation of tobacco control measures in developing countries. The Trans-Pacific Partnership (TPP) is currently being negotiated by 12 nations (United States, Australia, New Zealand, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Canada, Mexico and Peru), which together account for roughly one third of global economic input. If ratified, it will be the largest trade agreement in the world after the World Trade Organization (WTO). Trade negotiations are crucial for public health and tobacco control because the related dispute options will have a dramatic impact on the capacity of those countries to pass laws regulating the consumption of tobacco products, such as packaging measures and marketing restrictions.

Free-trade agreements such as the TPP usually contain investor-state dispute options that allow companies to challenge regulations believed to discriminate against foreign products. This option is especially appealing to corporations because unlike domestic law or WTO disputes, there is no appeal procedure in investor-state dispute options. Tobacco companies such as Phillips Morris International have taken advantage of this legal option to challenge proposed tobacco control measures, such as Uruguay’s idea to require 80% of the cigarette package to be covered in warning labels.

Health advocates are worried that such a framework would allow tobacco companies to successfully block every tobacco control law that governments in developing countries will attempt to pass. It is then quite possible to imagine an unbalanced scenario of a developing country pitted against a multinational corporation in an investor-state dispute: the multinational corporation would without a doubt have more budget, expertise, experienced lawyers and knowledge than the country representatives. Moreover, as mentioned by Campaign for Tobacco-Free Kids, “these costly challenges are aimed not only at defeating tobacco control measures, but also at discouraging governments from enacting them in the first place.”

In May 2013, the US, via the United States Trade Representative (USTR), presented in TPP negotiations its first proposal on this issue, which advised for a new language that would have created a “safe harbor” protecting national tobacco control measures from being challenged under the agreement. USTR stated at the time that the proposal would “explicitly recognize the unique status of tobacco products from a health and regulatory perspective.”  This proposition was accepted with enthusiasm by tobacco control groups.

However, in August, USTR abandoned this proposal and alternatively offered a weaker proposition, which would not cover lawsuits initiated by tobacco companies and would not offer substantive protection to nations wishing to adopt strong tobacco control measures. Instead of recognizing tobacco as a uniquely harmful product as the first proposition would have done, this second proposition merely mentions that tobacco control measures involve public health. A USTR press release justified this change on the grounds of “remaining consistent with [their] trade policy objectives of negotiating a comprehensive agreement that does not create a precedent for excluding agricultural products.” Additionally, farm lobbies and other business groups feared that a tobacco exception would later expand to a “health-related excuse for protectionism against many other agricultural products.” US-based tobacco companies were obviously afraid that their sales in developing countries would decline if the twelve countries drafting the trade agreement accepted the proposal.

Shortly after the USTR, Michael Bloomberg, Mayor of New York City and defender of strong tobacco control measures, published an op-ed in the New York Times in which he argued that Obama’s administration legacy on public health care could be “severely tarnished at a terrible cost to the poor in the developing world.” He described the USTR second proposal as being “weak half-measures at best that will not protect American law — and the laws of other countries — from being usurped by the tobacco industry.”

A third proposal, initiated by Malaysia and supported by several anti-smoking groups, recommends the complete removal of tobacco control measures from the trade, thus allowing countries to pass whichever laws regulating tobacco consumption they wish, without fear of violating any terms of the Trans-Pacific Partnership. This suggestion “protects the sovereign rights of participating nations to adopt measures to reduce tobacco use.”

In his article “The Tobacco Problem in U.S. Trade,” Council on Foreign Relations Senior Fellow Thomas Bollyky argues for three manners in which tobacco should be exempted. It should “explicitly encompass the full range of tobacco control measures addressed under the Framework Convention on Tobacco Control and permitted under U.S. laws,” “be limited to nondiscriminatory tobacco control measures,” to prevent developing countries from favoring their own domestic cigarette producers, and, lastly, it “must not include the cross-reference that exists in most U.S. trade agreements to the health exceptions in WTO agreements,” to prevent interference with tobacco litigation already filed under other agreements.

If we acknowledge that tobacco, a product responsible for the deaths of six million people per year and the only product that kills its consumers when used as intended to, is a serious public health issue that needs to be addressed both at the domestic and at the international levels, it makes no sense to allow trade agreements to undermine nations’ efforts to reduce tobacco use. As mentioned by Mayor Bloomberg in his op-ed, “a deal that sells out our national commitment to public health, and forfeits our sovereign authority over our tobacco laws, does not merit the support of Mr. Obama […] of the American people.” For this reason, governments of those 12 countries, and especially the American government, should accept the Malaysia plan and agree to give tobacco a special protection under the TPP.