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Making Trade Work for Public Health

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*Todd Tucker is doing a PhD in Developmental Studies. For more on his studies, click here. Picture credit: Graur Codrin and www.freedigitalphotos.net.

Tobacco use is the leading preventable cause of death in the world today. Developing countries are now the top tobacco-consuming nations, where men and women are addicted to tobacco at higher rates than in developed countries, and have less success stopping.

Nations have responded in domestic law by implementing warning labels and anti-teen smoking measures, and in international law through the World Health Organization's Framework Convention on Tobacco Control.

But international law may actually be hurting as much or more than it's helping.

Earlier this year, the World Trade Organization (WTO) ruled against US efforts to reduce teen smoking. Elsewhere, tobacco multinational Philip Morris is using international investment treaties to target so-called plain-packing laws in Australia and Uruguay. Philip Morris has also been supportive of three pending challenges of the Australian legislation at the WTO.

In this month's Transnational Dispute Management journal, I explore the first dispute, over the 2009 Family Smoking Prevention and Tobacco Control Act. Congress saw this as a hard-won political compromise. On the one hand, it took aggressive action to reduce smoking by teens by prohibiting the sale of sweet-flavoured cigarettes. (These cigarettes are particularly appealing to people in their teenage years - the so-called window of initiation that strongly influences future tobacco addiction.) On the other hand, it took seriously the warnings made consistently by the US Supreme Court, police organisations, and economists that banning cigarettes used by adults in large numbers could have serious adverse consequences for crime. A key part of this political compromise was exempting menthol from the flavoured cigarettes ban. Health researchers have shown that menthol smokers have less elastic demand, and that many would keep smoking the products even if illegal.

The WTO ruled against the US because one of the 13 banned flavors - clove - was primarily imported from Indonesia, while menthol was regulated by other means. While equity certainly requires that developing country cigarette workers be given some consideration, the WTO appellate body (staffed by trade lawyers, not health experts) made the interests of tobacco producers the only consideration that counted. As such, they went against smart, incremental policy, and sensible cost-and-benefit weighing. Indeed, if the US wants to try to comply with the ruling without reducing the number of flavours subject to the ban, it would have to ban menthol cigarettes - something that is not feasible politically or administratively.

The implications for this ruling extend far beyond the US. The World Health Organization's framework calls for, among other things, national prohibitions on sweet tobacco products that are appealing to teens. Over 75 countries report making progress on this front. The WTO ruling could be cited to pressure other countries' to weaken their bans on sweet products.

The Australia and Uruguay cases are also worrying. Philip Morris is arguing that warning labels go against international law and expropriate their brand value. If successful, citizens in these countries might be faced to pay the company massive compensation - all for the privilege of regulating in ways that their own legislatures and courts have approved.

How do we get international law on the right track?

In the short run, nations will understandably focus energy on winning the cases, or limiting the extent of losses. Uruguay is mounting a vigorous defence with the assistance of the Bloomberg Foundation. We can also sidestep the international law problem by lowering demand for cigarettes, as Gates Foundation grantees are doing in China, India and Africa.

But it is untenable to have international law like the health framework conflict with international trade law. WTO and investment treaty decisions with a bearing on public health could be appealed to panels with more expertise in such matters. This would create incentives to pay closer attention the regulatory logic that every country has to sort out in addressing addiction in a way that makes sense on the ground.

Better yet, costly litigation could be avoided in the first place by having trade negotiators carve out tobacco and other health matters from trade deals. This type of firewall could go a long way towards keeping kids from lighting up.