Transcript The Real Deal on International Trade and Investment Agreements

The Real Deal on International Trade; Investment
Agreements; and Packaging and Labeling Regulations
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Benn McGrady, PhD
International trade and investment lawyer based at
Georgetown University’s O’Neill Institute for National and
Global Health Law, USA
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Topic 1: Government’s power to enact strong
packaging and labeling measures.
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The Measures
• Bans on misleading descriptors / signs
– Required by Article 11 of the WHO Framework
Convention on Tobacco Control (WHO FCTC)
– Address myth of ‘light’ products being less harmful
• Warning labels
– Shall be no less than 30% of the principal display areas,
but should be 50% or more under Article 11 of the WHO
FCTC
– Guidelines to Article 11 recognize graphic and large
warnings to be more effective
• Plain packaging
– Not yet implemented (although Australia intends to
implement), but recognized in Guidelines to Articles 11
and 13 of the WHO FCTC
Topic 2: Tobacco Industry arguments and
relevant agreements.
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Overview of Industry Arguments
• Large graphic health warnings, measures
prohibiting misleading descriptors / signs (including
trademarks) and plain packaging:
– unlawfully interfere with trademark rights under the
Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) and the Paris Convention for
the Protection of Industrial Property; and
– are more trade restrictive than necessary to protect
health, contrary to Article 2.2 of the Agreement on
Technical Barriers to Trade (TBT Agreement).
• These arguments ignore widespread implementation
of large graphic health warnings and bans on
misleading descriptors / signs without a related WTO
dispute having arisen.
Topic 3: Relevant WTO Articles: TRIPS
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TRIPS and Trademark Registration
• TRIPS and the Paris Convention oblige
Parties to register trademarks in certain
circumstances.
– No obligation to register misleading marks
(Art. 6 quinquies (B)(3) Paris Convention; TRIPS Art. 15.2)
– Warning labels, plain packaging and even
bans on use of misleading marks can be
implemented without interfering with
trademark registration.
Trademark Rights: Not Rights of Use
• A trademark right under these
agreements is a negative right to prevent
others from using the mark in certain
circumstances. (TRIPS Art. 16; EC - Geographical
Indications)
– WTO Members are not obliged to permit
trademark owners to use their marks.
– TRIPS is not violated simply because a
tobacco control measure affects use of a
trademark.
Unjustifiable Encumbrances on
Trademarks
• TRIPS Article 20 prohibits WTO Members from
unjustifiably encumbering the use of a trademark
with special requirements.
• It is not clear what types of measures constitute
special requirements under Article 20.
• Nonetheless, Article 20 concerns only ‘unjustifiable’
encumbrances.
• The principles in TRIPS Article 8 emphasize that
WTO Members may adopt measures necessary to
protect public health.
• These principles guide what is ‘unjustifiable’ i.e.
necessary measures are justifiable.
Topic 4: The Necessity Requirement in WTO
Law
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Measures Necessary to Protect
Human Life or Health
• Guidance may be sought in Article XX(b) of the
General Agreement on Tariffs and Trade (GATT),
which permits measures necessary to protect
human life or health.
• To determine whether a measure is necessary,
WTO panels weigh the trade restrictiveness of a
measure against its contribution to health
protection, in light of the importance of the goal.
• WTO panels then consider whether less trade
restrictive alternatives are reasonably available.
Measures Necessary to Protect
Human Life or Health
• In recent cases, a high degree of deference
has been shown to the regulatory choices of
WTO Members.
• Protecting human health is considered to be
a goal of the highest importance. (Source: EC Asbestos)
• The effectiveness of a measure need not be
established (the measure need only make a
material contribution to its goal). (Source: Brazil Retreaded Tyres)
• WTO law is also interpreted in light of other
international laws. (Source: US - Gasoline)
Topic 5: The TBT Agreement and The
Necessity Requirement
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The TBT Agreement
• Article 2.2 provides that technical
regulations shall not be more trade
restrictive than necessary to achieve a
legitimate objective, such as protection of
human health.
• A technical regulation to protect health, in
accordance with relevant international
standards shall be presumed necessary.
• Whether WHO FCTC guidelines would
constitute relevant international standards
is an open question.
Conclusion on WTO Law
• Bans on misleading descriptors / signs
(including trademarks) and large graphic
health warnings are implemented widely,
without controversy at the WTO.
• Plain packaging is yet to be implemented,
but should withstand any WTO challenge
due to
– the limited character of trademark rights under
TRIPS; and
– the necessity of the measure to protect human
health, as reflected in guidelines to Articles 11
and 13 of the WHO FCTC.
Topic 6: Investment Agreements
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International Investment
Agreements
• Companies have standing to bring claims under
these agreements as foreign investors.
• Tobacco companies argue that international
investment agreements require payment of
compensation from governments implementing
packaging measures because those measures
interfere with property rights.
• Philip Morris is bringing a claim against
Uruguay concerning:
– the size of pack warnings (80% of pack surface);
– the content of the graphics; and
– implementation of the Uruguayan prohibition on
misleading packaging.
Topic 7: Protection of Investors’ Property
Rights
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Expropriation of Investments
• Tobacco companies argue that packaging measures
expropriate trademarks and other rights indirectly.
• In determining whether expropriation has occurred
tribunals usually consider factors including:
– the impact of a measure on property rights;
– the objective and character of the measure i.e. whether it
is general regulation; and
– whether there is a relationship of proportionality
between the measure, its objective and the impact on
property rights.
• This type of analysis usually leaves considerable
scope for health measures.
Topic 8: How governments can protect
themselves.
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Protecting Against Expropriation
Claims
• To minimize uncertainty governments can:
– carve tobacco products or tobacco control measures
out of an international investment agreement; and
– clarify key concepts such as expropriation.
• Governments can also protect themselves by:
– refusing to register misleading tobacco trademarks,
the act of which may create a domestic law property
right for a tobacco company;
– not making specific representations to tobacco
companies about their ability to avoid regulation.
Engage With Us
• Website: www.tobaccocontrollaws.org
• Email: [email protected]
Thank you for your participation
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