13 January 2014

Tobacco and the TPPA

'International trade law, plain packaging and tobacco industry political activity: the Trans-Pacific Partnership' by Gary Fooks and Anna B Gilmore in (2014) 23(1) Tobacco Control comments that
Tobacco companies are increasingly turning to trade and investment agreements to challenge measures aimed at reducing tobacco use. This study examines their efforts to influence the Trans-Pacific Partnership (TPP), a major trade and investment agreement which may eventually cover 40% of the world's population; focusing on how these efforts might enhance the industry's power to challenge the introduction of plain packaging. Specifically, the paper discusses the implications for public health regulation of Philip Morris International's interest in using the TPP to: shape the bureaucratic structures and decision-making processes of business regulation at the national level; introduce a higher standard of protection for trademarks than is currently provided under the Agreement on Trade Related Aspects of Intellectual Property Rights; and expand the coverage of Investor-State Dispute Settlement which empowers corporations to litigate directly against governments where they are deemed to be in breach of investment agreements. The large number of countries involved in the TPP underlines its risk to the development of tobacco regulation globally. 
The article notes that
Leaked text of a draft TPP chapter on ‘regulatory coherence’ suggests that negotiating parties are seeking to use the TPP to stipulate guidelines for regulatory rulemaking and review along the lines of the Better Regulation and regulatory review agenda in the European Union (EU) and USA. This represents a departure from existing investment agreements and is part of a global process of regulatory reform that draws heavily on US administrative law and its cost-benefit approach to regulatory review. The formal purpose of the chapter is to establish rules for regulatory formation and review that will reduce the likelihood of TPP countries creating and maintaining regulations that are inconsistent with the agreement. Some of the guidelines proposed are consistent with well-informed, methodical decision-making. However, they also promise to increase tobacco companies’ capacity to influence health policy by increasing their access to the policymaking process, augmenting their ability to challenge regulation and reinforcing their existing information advantage. 
Three provisions in the draft chapter are likely to facilitate tobacco companies’ policy access. The first is a recommendation that parties to the TPP establish a national coordinating body with the power to review whether regulatory measures adhere to ‘good regulatory practices’. A similar system of review is practiced by the Australian Office of Best Practice Regulation, a regulatory oversight body in Australia which monitors how government departments and agencies develop regulation. In 2010, the office concluded that a draft regulatory impact assessment prepared by the Department of Health and Ageing for the Australian plain packaging law did not satisfy best practice guidelines. The policy was subsequently adjudged ‘non-compliant’ and earmarked for a postimplementation review within 2 years of it taking effect. Reviews such as this provide tobacco companies with increased opportunities to challenge and shape regulation. In the case of the TPP, which recommends that existing, as well as new, regulation is regularly appraised, these opportunities are likely to be substantial. The second, a recommendation that the national coordinating body ensures that all ministries with an interest in a particular regulation participate in its development, is likely to increase involvement of non-health ministries who are more likely to promote tobacco industry interests. The third provision is a recommendation for collaboration between governments and ‘their respective stakeholders’, including dialogue, meetings and exchange of information. British American Tobacco played a key role in a broad alliance of multinational corporations promoting a similar requirement for stakeholder consultation in EU policymaking and the tobacco industry has subsequently used such requirements in its efforts to undermine Article 5.3 of the WHO Framework Convention on Tobacco Control which, among other things, seeks to reduce tobacco industry access to policymakers. 
A recommendation in the draft to integrate impact assessments into policy may also enhance tobacco companies’ influence over policymaking. Existing research on British American Tobacco's efforts to embed impact assessments into the policymaking processes of the EU indicates that their primary aim was to formalise their ability to exploit information asymmetries that commonly characterise business-government relations. Finally, the draft chapter also proposes that governments ensure their regulatory bodies provide access to ‘supporting documentation’ relating to regulatory measures, analyses and data. Such detailed disclosure exacerbates existing information asymmetries between business and government, thereby increasing the industry's leverage to challenge decision-making.
 The authors conclude -
Trade and investment agreements have been criticised for transferring state decision-making from the national to the international level and providing transnational corporations with a supranational court of appeal with which to challenge the capacity of governments to introduce new public health legislation. PM Asia's continuing action against the Australian government under the Hong Kong-Australia BIT given its defeat in the Australian High Court over the 2011 Act illustrates this point well. PMI's formal request to the USTR that the TPP be used to extend IP rights, harmonise the process of regulatory formation, and provide a comprehensive system of ISDS reflect the contents of leaked drafts of the TPP agreement. These suggest the TPP will extend IP protection to trademark use, strengthen corporate influence in regulatory formation, and provide tobacco companies with extensive powers to litigate against governments directly. Although the extension of IP protection is subject to exceptions for measures aimed at promoting public health, the precise scope of these exceptions is unclear. Consequently, all three measures are likely to increase the tobacco industry's policy influence and to deter governments from introducing plain packaging, albeit in different ways. First, by increasing litigation risk for legislating states, the extension of IP protection to trademark use will increase tobacco companies’ power to present the costs associated with plain packaging and other policies affecting pack design as prohibitively expensive. Likewise, proposals such as regulatory review, stakeholder consultation and the use of impact assessments provide the industry with a range of tools to access and feed information into health policymaking. Combined with the TPP's proposal for states to provide access to ‘supporting documentation’ relating to regulatory measures, analyses and data, which may exacerbate existing information asymmetries between states and multinational corporations, these reforms are likely to facilitate challenges to regulatory innovation under international law. By underpinning these measures with ISDS, which increases the economic costs associated with litigation and institutionally embeds uncertainty in treaty interpretation, the TPP provides a powerful new toolbox for the industry in preventing the introduction of plain packaging and other innovative health measures. 
Finally, the lack of transparency in the TPP negotiations illustrates the limitations inherent in the state-centric nature of Article 5.3 of the WHO Framework Convention on Tobacco Control. Article 5.3 aims to limit tobacco industry involvement in health policy by, among other things, requiring parties to the Convention to make interactions between the tobacco industry and public officials as transparent as possible. The USA is a non-party to the Convention and is, therefore, under no obligation to make public any involvement of tobacco companies, either directly or through third parties, in TPP policymaking. This enables the tobacco industry to undermine APEC states’ efforts to implement Article 5.3 and influence health policy remotely through TPP negotiations. 
Key messages 
The TPP threatens to increase the tobacco industry's policy influence and increase the litigation risks of plain packaging legislation and other innovative tobacco control measures. 
Parties to the Framework Convention on Tobacco Control should consider how Article 5.3 can be implemented to prevent tobacco companies from influencing public health policy remotely through trade and investment agreements. 
Agreements involving non-party states raise additional complications which need to be raised during treaty negotiations.