USTR Draft Tobacco Proposal for TPP

Tobacco companies are using trade agreement rules to block a clove cigarette ban in the US, and advertising restrictions in Australia, Uruguay, Norway and Ireland.  Medical and public health groups have long called for carving out tobacco control measures from trade agreements. The U.S. Trade Representative is proposing a compromise to discourage trade challenges.  The USTR website states:

BACKGROUND

The Obama Administration sought input from stakeholders on TPP when we launched the negotiations and received many comments from health advocates, farmers, industry stakeholders, and others. The Administration also considered the increasing effort both in the United States and around the world over the past several years to regulate tobacco products. The Family Smoking Prevention and Tobacco Control Act, passed by Congress in 2009, gave the Food and Drug Administration (FDA) significant new authorities to regulate tobacco products for public health reasons. This will lead to important changes in the way tobacco products are marketed and sold in the United States. We have reviewed this input and the implications of the Tobacco Control Act carefully as we have developed a draft proposal for the TPP negotiations.

TPP TOBACCO PROPOSAL

We are currently consulting with stakeholders and Congress on our draft proposal. Below is a detailed summary of the current draft proposal, which we have prepared in order to facilitate meaningful engagement on its contents. The draft proposal has three elements:

• It would explicitly recognize the unique status of tobacco products from a health and regulatory perspective.

• As in the past, the proposal would make tobacco products (like other products) subject to tariff phase-outs, thus avoiding putting U.S. tobacco products at a competitive disadvantage and avoiding a precedent for excluding tobacco or other products from future U.S. tariff negotiations. The United States will engage in discussions regarding the elimination of tariffs and tariff rate quotas with the four countries with which the United States is negotiating bilaterally—Brunei, Malaysia, New Zealand and Vietnam. Tariffs and tariff rate quotas on tobacco and tobacco product trade with Australia, Chile, Peru and Singapore have already been eliminated or are being phased out under the provisions of our existing bilateral FTAs with those countries.

• The proposal would include language in the “general exceptions” chapter that allows health authorities in TPP governments to adopt regulations that impose origin-neutral, science-based restrictions on specific tobacco products/classes in order to safeguard public health. This language will create a safe harbor for FDA tobacco regulation, providing greater certainty that the provisions in the TPP will not be used in a manner that would prevent FDA from taking the sorts of incremental regulatory actions that are necessary to effectively implement the Tobacco Control Act, while retaining important trade disciplines (national treatment, compensation for expropriations, and transparency) on tobacco measures.

Experts in trade and health discussed the proposal in Washington, D.C., on Friday, June 8, 9:30 - 11 a.m.

Speakers: Ellen R. Shaffer, PhD, CPATH; Robert Stumberg, Harrison Institute, Georgetown Law; Benn McGrady, O'Neill Institute, Georgetown Law

U.S. Proposes A Statement on Tobacco on the Eve on a new TPP Round; Medicine and Public Health Call for Progress: AAFP, AAP, ACOG, ACP, ACPM, AMA, CPATH

New Letters from Medical Groups Call for Carve-Out: IASLC, STS, HRCTN

Call to Action on Trade, Tobacco and Health 

Tobacco use is the leading preventable cause of death worldwide, and a drain on national coffers. The tobacco industry has seized on complex rules governing international trade to stymie tobacco control neasures, and tobacco control advocates are also calling for removing tobacco products and tobacco control measures from the jurisdiction of trade agreements.  

 

The Obama Administration has announced an admirable and historic intention to shape a trade policy that recognizes and contains the uniquely deadly effects of tobacco.

 

It must effectively stop the tobacco industry from delaying or reversing the implementation of life-saving tobacco control measures. It must materially improve current trade provisions that seem to offer protection for these public health measures, but have fallen short.

The medical and public health community continue to exercise the scientific and moral authority, and the collective voice, to transform this gesture into an effective trade policy that will protect lives, by carving out tobacco from trade agreements. 

We commend the Administration on advancing this important proposal in the TPP negotiations, which may contribute to reducing the enormous burden of disease related to tobacco use.
 

On the positive side, if the reports are accurate, the proposal affirms that tobacco is a unique product.  

The proposal offers some affirmative defense against disputes by other countries, or by tobacco companies themselves, by creating a "safe harbor" for evidence-based tobacco control measures approved through regulatory public health agencies.  In the event that a trade violation is asserted, the country's own standards for judging the necessity of the measure would have preponderant weight.

In addition, it creates a defense for measures that are "origin-neutral." 

Free trade agreements should not be used to make countries vulnerable to attack by foreign corporations or their trading partners when they adopt strong tobacco control measures that are facially neutral as to country of origin.  “Facially neutral as to country of origin” in this context would refer to measures not specific to a particular country but to tobacco products.  For example, the ban on the import of clove cigarettes didn’t state that the U.S. was banning Indonesian cigarettes, just the import of clove cigarettes, regardless of where they were manufactured. 

There are weaknesses in the proposal that we hope the U.S. and other TPP trading partners will address. First, the language of the proposal should be made public. Second, measures adopted by legislatures are not included, and they should be. Third, we need certainty that the "origin neutral" provision will assure that a country's own standards will deem a tobacco control measure valid, as they currently do in the case of national security. Fourth, tobacco control measures should not be subject to the "investor-state" rules that enable challenges by tobacco companies. Finally, the U.S. must discontinue pressure to eliminate tariffs on tobacco leaf and tobacco products. Raising the price of tobacco products is an effective strategy for discouraging initiation of use and encouraging quitting. For these and other reasons, we have a long history of supporting the removal of tobacco, tobacco products, and tobacco control measures from trade agreements.

MEDICINE AND PUBLIC HEALTH SUPPORT BAN ON CLOVE CIGARETTES, URGE USTR TO DEFEND THE BAN

A World Trade Organization (WTO) panel recently found against a U.S. regulation banning certain flavored cigarettes known to facilitate initiation of tobacco addiction. In several pending trade disputes, tobacco companies claim that regulations which limit exposure to tobacco marketing are violations of bilateral investment treaties.

On April 23, 2012, the American Academy of Pediatrics, American Academy of Family Physicians, American College of Preventive Medicine, American Medical Association, American Medical Student Association, American Public Health Association Center for Policy Analysis on Trade and Health (CPATH) sent the following to the USTR, HHS, FDA and CDC:

We are writing to confirm our continued support for the U.S.' ban on clove cigarettes, and urge the government to maintain the ban despite the adverse ruling by a World Trade Organization dispute panel in the U.S. – Clove Cigarettes case, DS 406. The dispute panel's decision is scheduled to be presented to the World Trade Organization for final approval on April 24, 2012.

 The Family Smoking Prevention and Tobacco Control Act granted authority to the Food and Drug Administration to regulate the manufacture, marketing and distribution of tobacco products to protect public health and reduce tobacco use in minors in June, 2009. According to the Centers for Disease Control and Prevention, clove cigarettes, which typically contain a mixture of tobacco, cloves, and other additives, are associated with lung diseases.

The WTO dispute panel found in favor of Indonesia, the primary exporter of clove cigarettes, which charged that the ban violates trade rules that require countries to treat foreign and domestic products equally.

We share the government's disappointment in this poorly founded decision.  Indonesia has already announced its intention to resume exporting clove cigarettes to the U.S., exposing young people to this addictive and deadly product.

We urge the U.S. not to retreat from implementing this important health policy. To protect against further unwarranted threats to tobacco control measures and to public health, we call on the U.S. to exclude tobacco products and tobacco control measures from future and current trade agreements.