TPP : No Ifs, No Butts

The TPP trade deal needs to take a stand against Big Tobacco
by Gordon Campbell

Tobacco is not like other products. Famously, It is the only legal substance that when used as directed, will kill you. And according to World Health Organisation estimates, tobacco use kills more people annually than HIV/AIDS, malaria, and tuberculosis combined and is projected t5o kill one billion people this century, most of them in poor countries. Reportedly, there are now 1.2 billion smokers globally, about one-third of the world’s adult population. Nearly 40 percent of the world’s children – seven hundred million – breathe secondhand tobacco smoke at home. Little wonder then, that tobacco regulation has become a burning issue of conflict within the Trans Pacific Partnership (TPP) trade talks.

Some countries wish to retain the right to regulate tobacco marketing for health reasons. The US however, after vacillating on this issue, is now toughening its stance within the TPP talks against making a meaningful exemption for tobacco. In passing, the tobacco issue has shown just how susceptible President Barack Obama is to pressure from major business lobbies. The simple political reality is that tobacco is grown in states that the White House feels it cannot afford to ignore as it goes into mid-term Congressional elections next year. As ever, the TPP is hostage to domestic US politics.

What is at stake for the rest of the world is the right to regulate against a dangerous product, in order to protect the health of their citizens. Those regulations may involve inhibitions on advertising and on cigarette labelling. Malaysia has sought an exemption for tobacco, for health reasons. It has good reason to be concerned about the power of tobacco marketing and it needs to clarify its legal position. Otherwise, it will be liable to being sued in so called investor-state disputes before international trade law tribunals. The health issues involved are genuine. As this US Government Accountability Office report on US international tobacco policy discovered, smoking among teens rose 11 percent and quintupled among girls in the first year after multinational tobacco companies entered South Korea in 1989. In addition, the legality of the plain packaging policies enacted by the Australian government are currently under legal challenge from tobacco multinationals, and several other countries – such as Canada and New Zealand – are watching the outcome of this litigation before daring to follow the Australian example. How the TPP decides this issue therefore, will be crucial to progress on what is arguably, one of the most important health challenges of the 21st century.

As this thoughtful report by the Council on Foreign Relations says, a tension between trade and health goals has existedin US policy on tobacco issues for many years:

In 1997, Congress conditioned the appropriations of several U.S. government agencies on those funds not being used to promote tobacco internationally. An uneasy compromise over tobacco and trade emerged. U.S. trade officials refrained from tobacco-specific initiatives and, despite occasional, significant congressional pressure, declined to bring trade cases against other countries’ tobacco control measures. Meanwhile, nearly every U.S. trade and investment agreement negotiated over the past decade has reduced tobacco tariffs and continued to protect tobacco investments like those of any other U.S. industry.

That last sentence is what the current battle over tobacco within the TPP is about. Malaysia wants a strong regulatory exemption included within the TPP, based on health grounds. Initially, the US had no problem with that. As the Washington Post recently editorialised, the Obama administration was initially in favour of a TPP provision exempting individual nations’ tobacco regulations — such as those banning advertising or requiring warning labels — from legal attack as “non-tariff barriers” to the free flow of goods. The idea was that, when it comes to controlling a uniquely dangerous product, there is no such thing as “protectionism.” Tobacco is unique.

Unfortunately, the White House then came under pressure from Big Tobacco, and Obama folded. New York mayor Michael Bloomberg recently went after Obama for doing so, in a scorching op ed piece ( “Why Is Obama Caving on Tobacco?”) in the New York Times.

As the Washington Post put it :

Alas, the United States softened its position at a public meeting of TPP negotiators last month. The new [US] proposal simply specifies that tobacco is included in an existing exemption for policies necessary to protect human life or health, and requires governments to consult before challenging each other’s tobacco rules.While better than the status quo, in that it might constrain governments from going to bat for domestic tobacco producers, this suggestion would leave tobacco companies free to mount legal challenges to various nations’ policies. The office of U.S. Trade Representative Michael Froman explained the new stance reflected “consultations with Congress and with a wide range of American stakeholders” — a polite reference to pushback from farm-state legislators, farm lobbies and other interest groups that feared a tobacco exception would expand to a health-related excuse for protectionism against many other products.

The Council on Foreign Relations report explains the compromise that Obama is now peddling, in greater detail :

The revised proposal cites tobacco within the standard public health and safety exception that appears in U.S. trade agreements, but it no longer includes other tobacco-specific protections. The U.S. proposal still includes the language used in other recent U.S. trade deals that enables companies to legally challenge public health, safety, or environmental regulations, but it also includes standards that reduce the likelihood of those challenges prevailing. The compromise satisfied no one.

Does the US – and its tobacco industry – have reason to fear that Asian countries and Australia (and other countries like New Zealand that are currently sitting on the fence) might discriminate against the lethal products of Philip Morris and its peers, on bogus health-related grounds? No it doesn’t. A strong TPP exemption can easily be framed in ways that would still prevent anyone – including the Malaysians – from discriminating against US multinationals in favour of local cigarette manufacturers. Nor could a health exemption for tobacco be transported to other products. Tobacco poses a unique threat, as the Council on Foreign Relations points out, and strong grounds already exist within US law for Obama to allow American TPP negotiators to step aside, and abide by the Malaysian exemption :

In 2001, tobacco….became the only legal consumer product with a binding U.S. executive order (PDF), signed by President Bill Clinton and still in force, requiring all U.S. executive branch agencies not to promote its sale or export. That order also does not permit the use of U.S. trade initiatives to restrict governments’ tobacco marketing and advertising regulations, unless those regulations discriminate against U.S. tobacco products in favor of that country’s domestic tobacco products.

In sum, the White House would be on strong footing in treating tobacco differently from other products in the TPP talks. This combination of an enormous public health threat, a widely subscribed treaty binding all other TPP member countries, and an executive order mandating the U.S. trade policy on the matter is highly unlikely to reoccur for any other consumer or agricultural good. The U.S. Trade Representative should reassure the business community by formally indicating that its proposal supporting tobacco control in the TPP talks is mandated by this unique constellation of factors and cannot serve as precedent under other circumstances.

Fine. So in sum : a unique threat, an exemption that cannot be carried over elsewhere, and that cannot be used to favour local makers of the same deadly products. The CFR paper sets out how the TPP should proceed, but note its third provision : that any TPP exemption clause should not inhibit the current litigation being taken by the topbacco multinationals against Australia for its plain packaging regulations. Here’s the CFR summary of how the US – and the TPP – should now proceed within the TPP :

1 …..the [Obama] administration should exempt tobacco control measures from legal challenge under the TPP in three ways:
2 This exception must explicitly encompass the full range of tobacco control measures addressed under the Framework Convention on Tobacco Control and permitted under U.S. laws.
3 This exception should be limited to nondiscriminatory tobacco control measures. An exemption from legal challenge cannot serve as a pretext for TPP countries to favor domestic cigarette producers. This condition is consistent with overall U.S. trade policy and the terms of the 2001 U.S. executive order on tobacco and trade.
4 This exception must not include the cross-reference that exists in most U.S. trade agreements to the health exceptions in World Trade Organization agreements. Such references might inappropriately interfere with tobacco litigation already filed under those other agreements against Australia and other TPP countries.

On that last point, the Council on Foreign Relations position is open to serious challenge. Arguably, the cross -reference to WTO health exceptions should and must be included. Otherwise, any TPP -led stand against the harms done by tobacco would be likely to fall at the first fence – the plain packaging regulations. Cross referencing to WTO exceptions would help to undermine the case being pursued by the tobacco multinationals against Australia, and it would encourage New Zealand and Canada to climb down from the fence and enact similar legislation.

Perhaps it is time that Prime Minister John Key and Health Minister Tony Ryall came clean on what New Zealand’s stance on this issue is within the TPP, in detail – do we support Malaysia in its bid for a strong exemption on tobacco, or do we support the compromise proposal that has been mooted by the White House at the behest of Big Tobacco ? Helen Clark was always very clear about where she stood on tobacco-related issues. As the TPP deals with tobacco, the Key government should be brave enough to show similar levels of transparency.