Tobacco Industry Expropriates Intellectual Property Rules

1. Tobacco Industry Expropriates Intellectual Property Rules Ellen R. Shaffer, PhD MPH Joseph Brenner, MA Sohil Sud, MD MA CPATH Center for Policy Analysis on Trade and Health Trans Pacific Partnership Jan. 31, 2012

2. CPATH Mission Research, analysis and advocacy to advance global economic policies that improve and protect public health 2 CPATH

3. CPATH On Tobacco and Trade • Shaffer, ER, JE Brenner and TPHouston. International trade agreements: a threat to tobacco control policy. Tobacco Control 2005;14;19-25. • Shaffer, ER, H Waitzkin, J Brenner, R Jasso-Aguilar. Global Trade and Public Health. American Journal of Public Health. January, 2005

4. Tobacco Industry Expropriates IP • Tobacco is a deadly product • Countries are enacting increasingly strong and effective tobacco control policies that are proven to reduce tobacco use. • Industry has long contested these measures as violations of trade agreement rules. • To reduce worldwide tobacco consumption, tobacco must be carved out from all protections afforded under the TPP. • AAFP, AAP, ACPM, ASAM, CPATH to Congress, 12/11

5. Tobacco Is A Deadly Product Tobacco Consumption fast becoming the leading preventable cause of illness and mortality Annual death toll worldwide: 5.2 million U.S. – tobacco use still kills more than 400,000 people each year Use of Tobacco Products: Chile - 29% of population Singapore – 15% of population, up from 12.6% Vietnam – 18% of population, down from 25%

6. Teen Smoking: U.S. “About 30% of youth smokers will continue smoking and die early from a smoking-related disease.” “People who start smoking before the age of 21 have the hardest time quitting.” “Teen smokers are more likely to use alcohol and illegal drugs” -Centers for Disease Control & Prevention

10. Framework Convention on Tobacco Control “to protect present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke” • Established minimum standards in the areas of • tobacco demand reduction • passive smoking • packaging and labeling • health awareness • advertising • sale to minors • smuggling

11. Countries Are Enacting Protections • Industry on the Run • Countries limiting advertising on packaging • Graphic warning labels: Uruguay, US • Plain packaging: Australia • Ban on point-of-sale displays: Norway, Ireland

12. Canadian Cigarette Label

13. Tobacco/Trade Threats:Long History • Tobacco added as a covered commodity in trade round 1986-94 • Thailand forced to open market, 1990 • Canada dissuaded from plain packaging, 1994

14. Tobacco Control in Uruguay 2009 Uruguayan Tobacco Control Measures Increase health messaging on the bottom portion of cigarette packages from 50% to 80%, Mandate the placement of one of six selected health images on packages. Prohibit the use of “brand families” in which the same brand name is used across various across product lines (e.g., Malboro Red, Malboro Green, Malboro Gold, etc). Tabaré Vázquez, MD (2005-2010) José Mujica (2010-)

16. Australia

18. Opposition from Big Tobacco

21. Opposition from Big Tobacco How can a corporation file suit against a country? At stake: the ability of sovereign states to safeguard the health of their own citizens.

22. Trade Agreements • Bilateral • Multilateral (e.g., NAFTA) • International (e.g., TRIPS) Company A Philip Morris Investor-State Espousal Expropriation

23. Weak Cases Delay Implementation • Trademarks protect companies from use of their brand by competitors • They do not confer unlimited rights to advertise lethal products • “Trademark rights under TRIPS are rights to exclude third parties from using a trademark or mark that is sufficiently similar as to cause confusion concerning the source of the product. A WTO panel has confirmed that these are negative rights to exclude third parties and not positive rights of use (EC – Geographical Indications). Hence, the purpose of the right is to protect the ability of the rights holder to identify the provenance of the product, and not to promote the product per se.” – Benn McGrady, Georgetown Law

24. Problems Ahead: Trademark • TPPA can expand rather than limit trademark and other rights • Can extend trademark protections in foreign markets

25. Problems Ahead: Expanding Corporate Rights to Arbitrate TRIPS • PMI claim: Uruguay violates fair & equitable treatment and WTO/TRIPS obligations • Under the BIT’s umbrella clause – • Uruguay must “observe the commitments it has entered into with respect to the investments of Swiss investors.” • Commitments include obligations under TRIPS

26. Expanding Corporate Rights • Most Favored Nation (MFN) and other clauses are designed to incorporate obligations from outside of the agreement, including from BITs. These include: • Minimum standard of treatment (fair and equitable treatment): Ensure compliance with customary international law (CIL) • International law clauses: Ensure treatment “in accordance with international law” – not limited to CIL. • Umbrella clauses: Observe “any obligation” with regard to investments. • More favorable treatment clauses: If another agreement between the parties provides “more favorable treatment” of investments, it will prevail. • Most-favored nation treatment: Ensure the most favorable treatment provided to investors from any third country. - Analysis by Forum on Democracy

27. Avoiding expansive investment clauses • The US, Australia and New Zealand are using some or all these approaches: • Avoiding umbrella clauses • Avoiding more favorable treatment clauses • Limiting minimum treatment to CIL (not broader international law)

28. These reforms are not enough • Limiting minimum treatment to CIL does not restrain expropriation or expansive umbrella or more favorable treatment clauses. • MFN treatment could incorporate expansive clauses from older BITs. • 2 important limits on MFN in recent US FTAs do not affect: • Excluding arbitration and procedural treatment. • Excluding differential treatment based on reciprocal trade concessions. - Forum on Democracy

29. Effective Remedies: IP • Carve out tobacco trade and other industries that pose extraordinary threats to public health, food security, the environment, and public order

30. Remedy 1. Tobacco Control • Tariff and Nontariff Provisions: Exclude tobacco products from all trade rules and in each relevant Schedule and Annex, including but not limited to Market Access, Most Favored Nation, National Treatment, Services, Intellectual Property, and tariff reduction schedules.

31. Remedy 2. Tobacco Control • Notwithstanding any language to the contrary, nothing in this agreement shall block, impede, restrict, or modify the ability of any party to take or maintain any action, relating to manufactured tobacco products that is intended or expected, according to the party, to prevent or reduce tobacco use or its harms and costs or that is reasonably likely to prevent or reduce tobacco use or its harms, including tariffs and restrictions on the marketing of tobacco or tobacco products.

32. Remedy 3. Tobacco Control • Add: Provisions of the Framework Convention on Tobacco Control shall govern, in the event of any conflict with this Agreement

33. Challenges To Excluding Tobacco • Corporate opposition • “We haven’t done it so far so it can’t be done.”

34. Mounting Action, Take Tobacco Out: San Francisco Trans-Pacific Partnership

35. Reps. Lewis, Ways and Means Members: For Public Health in TPP

36. Major medical and public health associations in U.S. and worldwide support tobacco carve outhttp://www.cpath.org/id47.html

37. Remedies: Dispute Rules (Investor-State) • Exclude investor-state remedies – as in the Australia-US FTA. • Limit MFN treatment – without it, TPPA carve-outs and other reforms can be undermined by investor recourse to more favorable provisions of older FTAs and investment agreements.

38. Public Health Objectives for Global Trade To assure democratic participation by public health and transparency in trade policy To develop mutually beneficial trade relationships that create sustainable economic development To recognize the legitimate exercise of national, regional and local government sovereignty to protect population health TPP 38 CPATH

39. Public Health Objectives for Global Trade To exclude tariff and nontariff provisions in trade agreements that address vital human services To exclude tobacco and tobacco products To exclude alcohol products To eliminate intellectual property provisions related to pharmaceuticals from bilateral and regional negotiations… and promote trade provisions which enable countries to exercise all flexibilities provided by the Doha Declaration on Public Health TPP 39 CPATH

40. CPATH on CAFTA and Access to Medicines in Guatemala Shaffer, ER and JE Brenner. A trade agreement’s impact on access to generic drugs. Health Affairs, Web Exclusive. Aug. 25, 2009. w957-w967.

42. Trade Advisory Committees 2005:Business: 42 Public Health: 0 TPP 42 CPATH

43. CPATH Center for Policy Analysis on Trade and Health Joseph Brenner Ellen R. Shaffer www.cpath.org ershaffer@cpath.org Phone: 415-922-6204 Fax: 415-885-4091 TPP 43 CPATH