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Philip Morris to Canada "Drop Dead"

The latest evidence of absurdity of existing international trade rules comes from Philip Morris, which has told Canada that proposed health regulations to prohibit the use of the terms “light” and “mild” on tobacco packaging are impermissible under numerous trade rules.

Canada proposed the regulation in late 2001 in response to a consensus among public health experts that the mild and light descriptors are fundamentally misleading. Mild and light cigarettes are not less hazardous to smokers’ health, in part because it has been determined that smokers compensate for reduced tar and nicotine by inhaling more deeply, covering the “vents” on filters and by other means.

In announcing the regulatory proposal, Canada’s health department cited survey data which suggested that more than a third of smokers of “light” or “mild” cigarettes choose these products for health reasons.

In its comments — produced in response to a U.S. announcement of the regulation, after the Canadian notice and comment period had concluded — Philip Morris disclaims any health benefits for “light” or “ultralight” cigarettes, and agrees that “consumers should not be given the message that descriptors means that any brand of cigarettes has been shown to be less harmful than other brands.”

But the company insists it should still be able to use the terms, which it alleges communicate differences of taste to consumers. Barring use of the terms, Philip Morris claims, would violate Canada’s obligations under the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) agreements.

“The ban would be tantamount to an expropriation of tobacco trademarks containing descriptive terms [e.g., “light”] as well as of the substantial investment in and goodwill associated with those marks and the brands they represent,” Philip Morris argues in it submission. The company claims that the “descriptive terms such as ‘lights’ are an integral part of registered trademarks” for products such as Benson & Hedges Lights and Rothmans Extra Light.

Under NAFTA’s controversial Chapter 11, countries are barred from taking measures that either take investors’ property without payment of compensation, or even which are “tantamount” to a taking.

Chapter 11 of NAFTA also confers on investors such as Philip Morris standing to sue, meaning they can bring claims directly against governments. Under other trade agreement provisions, company complaints can only be brought by their home country governments.

If Philip Morris were to bring and win a Chapter 11 lawsuit, Canada would be obligated to pay the corporation the value of the lost property, here the value of the trademark and associated goodwill.

Philip Morris also claims in its submission that the Canadian regulation violates at least two sets of WTO rules.

The bar on use of terms would encumber the use of Philip Morris trademarks in violation the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), the company contends.

Philip Morris further argues the Canadian regulation would violate the WTO’s Technical Barriers to Trade Agreement. The agreement requires countries to choose the least trade restrictive means to pursue legitimate regulatory objectives, such as protection of public health.

In place of the ban on the terms, Canada could enact, and Philip Morris says it would support, labeling requirements that state that “light” products have not been shown to be safer than other cigarettes.

Philip Morris has not indicated that it intends to bring suit against Canada under Chapter 11, and it is not likely to be able to get the U.S. government, at least, to file a WTO challenge against Canada on the matter.

But even if Philip Morris takes no further action, the prospect of such a challenge will likely chill many other governments, less resolute in pushing tobacco control measures, and more vulnerable to legal threats, from enacting Canadian-style tobacco control regulations.

It is no surprise that Philip Morris will use every tool at its disposal to defend its deadly interests.

But what does one conclude about the global trade agreement negotiators, who have created international treaties — with strong enforcement mechanisms — that can be used to challenge public health regulations such as Canada’s?

With tobacco set to take 10 million lives a year by 2030, it is imperative that steps be taken to remove the trade rule impediments to sound tobacco control measures.

This means, first, that the Framework Convention Tobacco Control — a global tobacco control treaty now under negotiation — must include provisions that specifically establish its supremacy over competing global trade agreements.

Second, tobacco should be carved out of all existing and future trade agreements. Not only do trade agreements threaten lifesaving tobacco control measures, but the purported benefits of trade — most significantly, lower prices — are actually harmful to public health when it comes to tobacco.

Finally, the fact that the agreements enable Philip Morris-style arguments should prompt a review of the trade rules themselves. Certainly the Philip Morris-Canada dispute makes clear that the NAFTA investor provisions — the rules empowering Philip Morris to file suit directly against Canada, if it so chooses — should be stripped from NAFTA, and kept out of the Free Trade Area of the Americas (FTAA) and other agreements now under negotiation.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor, and the co-director of Essential Action. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999).

(c) Russell Mokhiber and Robert Weissman

 

 

 

 

 

 

 

 

 

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Russell Mokhiber is the editor of the Corporate Crime Reporter..

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