Alcohol Industry s Objectives Role in Global Trade Agreements: 172155 Donald W. Zeigler, Ph.D. American Medical Associa

1. Alcohol Industry’s Objectives & Role in Global Trade Agreements: 172155Donald W. Zeigler, Ph.D. American Medical Association American Public Health Association Annual Meeting, 28 October 2008 San Diego, CA

2. Rationale for trade liberalization enhanced competition and efficiency lower prices better quality wider consumer choice increased domestic and foreign investment leading to economic growth, a higher standard of living, and improved health

3. Trade agreements negotiated primarily in secret by government often in consultation with business interests

4. Easy to sell tobacco or alcohol when the President of your country is on your side advocating promotion of free trade, reducing barriers with an agenda driven by corporate interests. Most obvious on tobacco but becoming more obvious on alcohol Philosophy of free trade, unfettered by regulations Governments tend to promote the interests & rights of their major industries & producers congruence of free trade policy of governments and business interestsEasy to sell tobacco or alcohol when the President of your country is on your side advocating promotion of free trade, reducing barriers with an agenda driven by corporate interests. Most obvious on tobacco but becoming more obvious on alcohol Philosophy of free trade, unfettered by regulations Governments tend to promote the interests & rights of their major industries & producers congruence of free trade policy of governments and business interests

5. Revolving door from government to business Government officials become industry lobbyists Lobbyists become government officials Example: Deborah Lamb - staff U.S. Senate Finance Committee Now DISCUS Vice President, International Issues & Trade US at least, a revolving door between government and business trade lawyers In and out of government service, writing the official texts & laws they later use as tools on behalf of future corporate clients. U. S. Government >> Distilled Spirits Council of the U.S. (DISCUS) Deborah Lamb - staff U.S. Senate Finance Committee Now DISCUS Vice President, International Issues & Trade Deborah Lamb, 10 years staff U.S. Senate Finance Committee that formulated trade relations with China. Now the VP, International Issues and Trade, Distilled Spirits Council the U.S. (DISCUS) Bush named her to U.S. Trade Representative’s Transition Advisory Team. Gives advice on market access, bilateral and multilateral trade.. US at least, a revolving door between government and business trade lawyers In and out of government service, writing the official texts & laws they later use as tools on behalf of future corporate clients. U. S. Government >> Distilled Spirits Council of the U.S. (DISCUS) Deborah Lamb - staff U.S. Senate Finance Committee Now DISCUS Vice President, International Issues & Trade Deborah Lamb, 10 years staff U.S. Senate Finance Committee that formulated trade relations with China. Now the VP, International Issues and Trade, Distilled Spirits Council the U.S. (DISCUS) Bush named her to U.S. Trade Representative’s Transition Advisory Team. Gives advice on market access, bilateral and multilateral trade..

6. US Trade Representative 14 Advisory Committees Consumer Goods (DISCUS, Brown-Forman Beverages) Distribution Services (Southern Wine & Spirits of America) Intellectual Property (Anheuser-Busch) No public health representation U.S. law requires consultation with the private sector in the development of trade proposals. The U.S. Trade Representative (USTR) has established trade advisory committees to receive counsel on specific sectors and issues. Currently, of the fourteen committees, those on Consumer Goods, Distribution Services, and Intellectual Property have five alcohol industry representatives [35-36]. [need USTR citation]. The bi-lateral U.S. - Bahrain FTA agreement was strongly endorsed by the USTR’s consumer goods advisory committee which included Deborah Lamb of DISCUS, Marcus Smith of Brown-Forman Corporation, and chaired, at that time, by Donald Nelson of Altria Government Accountability Office (GAO): formal public health input into U.S. trade policy from the public health community has been limited. Since most have no public interest health representation, there is a movement among public health and environmental groups for permanent input U.S. law requires consultation with the private sector in the development of trade proposals. The U.S. Trade Representative (USTR) has established trade advisory committees to receive counsel on specific sectors and issues. Currently, of the fourteen committees, those on Consumer Goods, Distribution Services, and Intellectual Property have five alcohol industry representatives [35-36]. [need USTR citation]. The bi-lateral U.S. - Bahrain FTA agreement was strongly endorsed by the USTR’s consumer goods advisory committee which included Deborah Lamb of DISCUS, Marcus Smith of Brown-Forman Corporation, and chaired, at that time, by Donald Nelson of Altria Government Accountability Office (GAO): formal public health input into U.S. trade policy from the public health community has been limited. Since most have no public interest health representation, there is a movement among public health and environmental groups for permanent input

7. Global: World Trade Organization (WTO) Only global international organization dealing with rules of trade between nations 153 member countries Uruguay Round formed the WTO - 1995 Significant influence of non-governmental organizations (NGOs: business and civil society) 65% of the civic organizations accredited to attend the Singapore Ministerial represented business interests 153 member countries Uruguay Round formed the WTO - 1995 Significant influence of non-governmental organizations (NGOs: business and civil society) 65% of the civic organizations accredited to attend the Singapore Ministerial represented business interests

8. General Agreement on Trade and Tariffs (GATT) Technical Barriers to Trade Agreement (TBT) Trade Related Aspects of Intellectual Property Rights (TRIPS) General Agreement on Trade in Services (GATS) Establishes trade rules - tariffs and non-tariff issues Obligations apply to all levels of government - federal, state/provincial and local governmental bodies Governs more than a dozen agreements Strong enforcement mechanism Dispute settlement panels Panels consist of trade experts, with no public health background, or conflict of interest restraints Meet in secret, no amicus Binding decisions with significant consequences enforced by sanctions or fines Country enforcement Establishes trade rules - tariffs and non-tariff issues Obligations apply to all levels of government - federal, state/provincial and local governmental bodies Governs more than a dozen agreements Strong enforcement mechanism Dispute settlement panels Panels consist of trade experts, with no public health background, or conflict of interest restraints Meet in secret, no amicus Binding decisions with significant consequences enforced by sanctions or fines Country enforcement

9. GATS: first and only set of multilateral rules governing international trade in services professional, health related, educational and environmental services No government action, whatever its purpose is beyond the scrutiny and challenge of GATS - including measures taken by “central, regional or local governments and authorities; and non-governmental bodies” in the exercise of government-related powers professional, health related, educational and environmental services No government action, whatever its purpose is beyond the scrutiny and challenge of GATS - including measures taken by “central, regional or local governments and authorities; and non-governmental bodies” in the exercise of government-related powers

10. Services might include Research and development on natural sciences Production Marketing Distribution and Sales of products (incl. alcohol and tobacco) Services might include Research and development on natural sciences Production Marketing Distribution and Sales of products (incl. alcohol and tobacco) production, transportation of grain to the brewery or distillery, alcohol production, bottling, distribution, marketing, advertising and serving of alcohol. Services might include Research and development on natural sciences Production Marketing Distribution and Sales of products (incl. alcohol and tobacco) production, transportation of grain to the brewery or distillery, alcohol production, bottling, distribution, marketing, advertising and serving of alcohol.

11. former WTO Director-General Ruggiero’s prediction (1998) since “GATS provides guarantees …into areas never before recognized as trade policy. I suspect that neither governments nor industries have yet appreciated the full scope of these guarantees or the full value of existing commitments.” former WTO Director-General Ruggiero’s prediction (1998) since “GATS provides guarantees …into areas never before recognized as trade policy. I suspect that neither governments nor industries have yet appreciated the full scope of these guarantees or the full value of existing commitments.” former WTO Director-General Ruggiero’s prediction (1998) since “GATS provides guarantees …into areas never before recognized as trade policy. I suspect that neither governments nor industries have yet appreciated the full scope of these guarantees or the full value of existing commitments.”

12. World Bank: higher price of admission to the WTO Ex: Algeria Vietnam One-sided power plays by current WTO members which “wring commercial advantage out of weaker economic partners” Concessions have involved alcohol Algeria lifted a ban on alcohol imports to help negotiations for WTO membership U.S. was Vietnam’s biggest obstacle to admission U.S. questioned Vietnam’s tax policies which allegedly favored domestic distilled spirits One-sided power plays by current WTO members which “wring commercial advantage out of weaker economic partners” Concessions have involved alcohol Algeria lifted a ban on alcohol imports to help negotiations for WTO membership U.S. was Vietnam’s biggest obstacle to admission U.S. questioned Vietnam’s tax policies which allegedly favored domestic distilled spirits

13. 380 Regional and Bilateral Agreements North American Free Trade Agreement (NAFTA) US-Central American FTA-Dominican Republic US-Jordan, US-Vietnam, US-Chile, US-Morocco EC Treaty of Rome 1958 EU-Romania 1995 EC-Norway Regional and Bilateral Agreements – about 300 NAFTA - North American Free Trade Agreement US-CAFTA-DR US-Jordan, US-Vietnam, US-Chile, US-Singapore, US-Morocco Pending US-Columbia & US-Korea Regional and Bilateral Agreements – about 300 NAFTA - North American Free Trade Agreement US-CAFTA-DR US-Jordan, US-Vietnam, US-Chile, US-Singapore, US-Morocco Pending US-Columbia & US-Korea

14. Regional/Bilateral Agreements Easier to implement Have independent obligations & enforcement powers Must comply with WTO rules . Bypassing the WTO, these offer flexibility to pursue “trade-expanding policies not addressed well in global trading rules.” Easier to implement Major power can influence weaker nations Generally, similar terms to WTO, but independent obligations and enforcement powers Not bound by good interpretations at WTO Widespread concerns about Regional and Bilateral agreements not only among critics of free trade but also among proponents of trade liberalization As early as the late 1990s the WTO itself set up a special Committee on Regional Trade Agreements A recent report indicated that even though members nations are permitted by the WTO to enter into separate agreements outside of the WTO, regional and bilateral agreements represent “regulatory regimes which increasingly touch upon policy areas uncharted by multilateral trade agreements [and which] may place developing countries, in particular, in a weaker position than under the multilateral [i.e. WTO] framework Must comply with WTO rules . Bypassing the WTO, these offer flexibility to pursue “trade-expanding policies not addressed well in global trading rules.” Easier to implement Major power can influence weaker nations Generally, similar terms to WTO, but independent obligations and enforcement powers Not bound by good interpretations at WTO Widespread concerns about Regional and Bilateral agreements not only among critics of free trade but also among proponents of trade liberalization As early as the late 1990s the WTO itself set up a special Committee on Regional Trade Agreements A recent report indicated that even though members nations are permitted by the WTO to enter into separate agreements outside of the WTO, regional and bilateral agreements represent “regulatory regimes which increasingly touch upon policy areas uncharted by multilateral trade agreements [and which] may place developing countries, in particular, in a weaker position than under the multilateral [i.e. WTO] framework

15. Now plurilaterally(groups of members) EU, US and others have issued collective or plurilateral requests which include alcohol Pressuring countries to essentially give up the policy tools they will need to address future alcohol problems in their countries Applying such powerful US & European pressure makes addressing the global harm caused by alcohol much more difficult Dec 2006 Hong Kong Declaration mandated groups of members to start presenting their request on various services sectors to other members Private meetings expected between 27 March and 7 April On the GATS plurilateral issue, we all should be deeply disturbed by the EC negotiating position. They continue to pressure developing (and developed) countries through the use of bilateral requests, and now they (with the US and others) have issued collective requests. By co-sponsoring this plurilateral request *which includes alcohol*, the US is pressuring other countries to essentially give up the policy tools they will need to address future alcohol problems in their countries (or pay scarce negotiating capital to protect that policy space). The application of such powerful US (and European) pressure makes addressing the global harm caused by alcohol much more difficult. Dec 2006 Hong Kong Declaration mandated groups of members to start presenting their request on various services sectors to other members Private meetings expected between 27 March and 7 April On the GATS plurilateral issue, we all should be deeply disturbed by the EC negotiating position. They continue to pressure developing (and developed) countries through the use of bilateral requests, and now they (with the US and others) have issued collective requests. By co-sponsoring this plurilateral request *which includes alcohol*, the US is pressuring other countries to essentially give up the policy tools they will need to address future alcohol problems in their countries (or pay scarce negotiating capital to protect that policy space). The application of such powerful US (and European) pressure makes addressing the global harm caused by alcohol much more difficult.

16. Greider W. “Why the WTO is going nowhere.” The Nation. Sept 22, 2003 Business and finance multinationals are driving the politics No longer only tariff reduction Principal agenda: non-trade rules on Investment property rights & domestic sovereignty Prior to 2003 Cancun Ministerial, business and finance multinationals are driving the politics No longer only tariff reduction Principal agenda: imposing a complex set of non-trade rules covering investment, property rights & domestic sovereignty Prior to 2003 Cancun Ministerial, business and finance multinationals are driving the politics No longer only tariff reduction Principal agenda: imposing a complex set of non-trade rules covering investment, property rights & domestic sovereignty

17. World Spirits Alliance’sunified trade stance (1993 Cancun) Tariffs: reductions or elimination of tariffs on distilled spirits Reduction of non-tariff measures import quotas import licensing restrictions state-trading inappropriate product standards labeling requirements World Spirits Association Major distiller associations around the globe agreed to a unified trade negotiating strategy and priorities for the WTO Ministerial meeting in Cancun Sept 2003. Key priorities in support of open markets for the global spirits industry: At the conclusion of the three day session here, the WSA affirmed the following key priorities in support of open markets for the global spirits industry:Tariffs. Significant reductions, and where possible, elimination of tariffs on distilled spirits. Non-Tariff Measures. Reduction of non-tariff barriers, e.g., import quotas and import licensing restrictions, state-trading, inappropriate product standards and labeling requirements. World Spirits Association Major distiller associations around the globe agreed to a unified trade negotiating strategy and priorities for the WTO Ministerial meeting in Cancun Sept 2003. Key priorities in support of open markets for the global spirits industry: At the conclusion of the three day session here, the WSA affirmed the following key priorities in support of open markets for the global spirits industry:

18. WSA II Services liberalization of restrictions on marketing restrictions on foreign firms engaged in importation, distribution or retailing Intellectual Property Greater certainty of legal protection for spirits with geographical indications Services liberalization of restrictions on marketing, including the elimination of discriminatory advertising measures restrictions on foreign firms engaged in importation, distribution or retailing Services liberalization of restrictions on marketing, including the elimination of discriminatory advertising measures restrictions on foreign firms engaged in importation, distribution or retailing

19. World Spirits Alliance: 2005 Hong Kong Called for “elimination of non-tariff barriers and other procedural/regulatory obstacles to trade” Warned: “if the negotiations on trade in services do not succeed, the industry will seek action through the Triennial Review of the agreement on Technical Barriers to Trade (TBT)” World Spirits Alliance prior to the 2005 WTO Hong Kong Ministerial meeting, called for “elimination of non-tariff barriers and other procedural/regulatory obstacles to trade but warned that if the negotiations on trade in services [Doha Round] do not succeed, the industry will seek action through the Triennial Review of the agreement on Technical Barriers to Trade (TBT).” TBT sets a code of practice by central and local governments and non-governmental bodies related to products and processes to eliminate barriers to trade. Regulations, standards, testing and certification procedures may be considered technical barriers to trade. May also cover health, safety, environmental and consumer regulations Creates opportunities for pressure to accept industry-led standards or self regulation Might affect public health measures relating to alcohol production and sale, alcohol licensing restrictions and sales in stadiums or other venues. For example, American brewers sought to reduce non-tariff barriers in a challenge of an Ontario law taxing non-refillable alcohol beverage containers (disposable cans), arguing that the policy benefited Canadian brewers who used more glass bottles World Spirits Alliance prior to the 2005 WTO Hong Kong Ministerial meeting, called for “elimination of non-tariff barriers and other procedural/regulatory obstacles to trade but warned that if the negotiations on trade in services [Doha Round] do not succeed, the industry will seek action through the Triennial Review of the agreement on Technical Barriers to Trade (TBT).” TBT sets a code of practice by central and local governments and non-governmental bodies related to products and processes to eliminate barriers to trade. Regulations, standards, testing and certification procedures may be considered technical barriers to trade. May also cover health, safety, environmental and consumer regulations Creates opportunities for pressure to accept industry-led standards or self regulation Might affect public health measures relating to alcohol production and sale, alcohol licensing restrictions and sales in stadiums or other venues. For example, American brewers sought to reduce non-tariff barriers in a challenge of an Ontario law taxing non-refillable alcohol beverage containers (disposable cans), arguing that the policy benefited Canadian brewers who used more glass bottles

20. Corporate actions open marketsPolitical intimidation: DISCUS EC & US challenged Chile's tax system before the WTO, stating that Chile protected its domestic pisco industry by taxing domestic spirits less than imported spirits. The WTO recommended that Chile bring its tax structure into compliance with its international obligations. The Chilean government appealed the decision, and, on Jan. 12, 2000, the WTO Dispute Settlement Body upheld the earlier WTO ruling against Chile's discriminatory tax structure. "Throughout the entire process, DISCUS has worked closely with the Scotch Whisky Association to ensure fair treatment for all distilled spirits," DISCUS President Cressy concluded. US-Chile: ended tariffs on American spirits Discus used political intimidation to open Romanian market US extends preferential treatment of duty free importation to developing countries Interested parties affected can appeal In 2003, petitioned the U.S. Government to suspend preferential duty-free treatment extended to developing countries until Romania reduced its tariff on U.S. spirits to that on EU products. DISUCS took credit for using corporate political intimidation to pressure Romania to reduce tariffs on US Bourbon. EC & US challenged Chile's tax system before the WTO, stating that Chile protected its domestic pisco industry by taxing domestic spirits less than imported spirits. The WTO recommended that Chile bring its tax structure into compliance with its international obligations. The Chilean government appealed the decision, and, on Jan. 12, 2000, the WTO Dispute Settlement Body upheld the earlier WTO ruling against Chile's discriminatory tax structure. "Throughout the entire process, DISCUS has worked closely with the Scotch Whisky Association to ensure fair treatment for all distilled spirits," DISCUS President Cressy concluded. US-Chile: ended tariffs on American spirits Discus used political intimidation to open Romanian market US extends preferential treatment of duty free importation to developing countries Interested parties affected can appeal In 2003, petitioned the U.S. Government to suspend preferential duty-free treatment extended to developing countries until Romania reduced its tariff on U.S. spirits to that on EU products. DISUCS took credit for using corporate political intimidation to pressure Romania to reduce tariffs on US Bourbon.

21. Inherent & growing tension between modern trade treaties and health-promoting alcohol regulation

22. No-ordinary commodity Countries can limit market access to “sensitive products” European Community seeks to eliminate restrictions on alcohol and tobacco exempting only arms, ammunition and explosives making health claims even more difficult to withstand challenge

23. What effect does trade liberalization have on use? More competition for market share More aggressive advertising Lower prices Aspirational goods – “sexy” international brands, and easier to smoke; alcopops for young girls

24. “perfect storm” Continued global economic advancement together with the erosion of public health policies create the “perfect storm” for alcohol related problems in developing countries

25. ‘chilling effect’ on governments ‘chilling effect’ on governments that cannot or do not want to risk the legal burdens involved in trade disputes‘chilling effect’ on governments that cannot or do not want to risk the legal burdens involved in trade disputes

26. What’s at stake in alcohol control? Laws concerning distribution of alcohol Licensing Restrictions regarding Hours of service Number of alcohol outlets Selected types of alcohol (alcopops) Training and qualification of owners and servers of minors and intoxicated Keg registration Governent alcohol monopolies (existing, expansion or development of new monopolies

27. More at stake in alcohol control? Information, education and prevention Restrictions on blood alcohol concentrations Drink driving Minimum legal drinking age Public treatment services Laws concerning alcohol advertising and sponsorships Drink specials Restrictions on radio, TV, internet, press, billboards

28. Advocacy Approaches Encourage WHO to address trade in its report Involvement of Health Ministries and NGOs in trade negotiations Utilize influence of NGOs to raise awareness

29. “Statement on Reducing the Global Impact of Alcohol on Health and Society” Presented by the AMA & adopted by the World Medical Association General Assembly Santiago, Chile October, 2005 18. Promote consideration of a Framework Convention on Alcohol Control 18. Promote consideration of a Framework Convention on Alcohol Control

30. consideration of alcohol as an extra-ordinary commodity & measures affecting the supply, distribution, sale, advertising, promotion or investment in alcoholic beverages be excluded from international trade agreements

31. consideration of alcohol as an extra-ordinary commodity & measures affecting the supply, distribution, sale, advertising, promotion or investment in alcoholic beverages be excluded from international trade agreements .

32. A Call for a Framework Convention on Alcohol ControlAmerican Public Health AssociationAdopted at Nov, 2006 APHA Annual Meeting An international alcohol convention may, in the interests of public health, usefully counter developments in trade agreements which seek to expand alcohol markets, to reduce prices and reduce national and local regulation of alcohol

33. Donald W. Zeigler, Ph.D.Director, Long Range Health Care TrendsSecretary, Council on Long Range Planning and DevelopmentAmerican Medical Association515 N. State Street, #14550Chicago, IL 60654 (312) 464-5320Donald.Zeigler@ama-assn.org