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International trade impacts tobacco control

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Shobha Shukla, Citizen News Service - CNS

(CNS): The tobacco industry has a history of using international trade agreements to force open new markets in low and middle income countries, greatly increasing tobacco use and the consequent death/disease it causes. Tobacco companies are also challenging measures to reduce tobacco use as violations of trade and investment agreements, threatening the authority of nations to protect the health and well-being of their citizens.

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At the 6th Session of the Conference Of Parties (COP) to the WHO Framework Convention on Tobacco Control (FCTC) in Moscow this October 2014, Dr Margaret Chan, Director General WHO, had reminded the world that, "The tobacco industry is using bilateral investment treaties to try to trip the governments from protecting the health of their citizens through strong tobacco control measures. Litigations brought against governments in national courts have been common especially against approval of large pictorial warnings on tobacco products' packages. This has been the case with claims that are filed against Uruguay's warning labels and branding measures. Australia's plain packaging is also an object of a dispute at the World Trade Organization (WTO)."

The issue of how international trade agreements and tobacco industry tactics are threatening existing tobacco control policies was also brought into focus at the 45th Union World Conference on Lung Health held in Barcelona.

Lawyer Mattew Allen said that a lot of information already exists on the adverse impacts of international trade laws on tobacco control. But it is highly technical and the tobacco industry takes advantage from this lack of understanding and wrongly argues that certain tobacco control laws breach international laws. He informed that the International Union Against Tuberculosis and Lung Disease (The Union) is in the process of developing a position paper with a view to, "put ease into legalese."

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Allen said that "While WTO agreements do give exceptions in their agreements (like in TRIPS where health objectives underlying tobacco regulation can be accommodated), the burden of proving the elements of necessity is on governments and what amounts to necessary is ultimately determined by trade experts in a dispute tribunal. Also Free Trade Agreements (FTAs) and International Investment Agreements provide the tobacco industry with avenues to challenge public health policies in different countries."

"So it is necessary to educate key decision makers on tobacco industry tactics. Governments must use flexibilities provided under WTO agreements to the advantage of public health policies. Governments must negotiate for provisions in these agreements that reinforce their ability to put forward tobacco control measures to protect public health; and must also engage with their health authorities during the negotiations."

Dr Gan Quan, Director at the China Office of The Union spoke about the implications of tobacco buyouts (also called tobacco transition payment programme) in USA, Australia and Canada, on tobacco control. He argued that, "Buyout (which eliminates price support and marketing quota and helps tobacco quota holders and producers transition to the free market) is a relief for small farmers' livelihood. But it is ineffective in reducing supply and consumption of tobacco in a global free trade context. Tobacco companies have profited the most from buyouts. Fewer farmers grew tobacco after the buyout. Transnational companies profitted from free trade of tobacco and tobacco products."

Pranay Lal from India office of The Union made a strong plea for eliminating all forms of subsidies given to the tobacco industry. In India a total of 52 different subsidies help the tobacco industry directly and indirectly. He lamented that the government of India supports tobacco farmers as well tobacco product manufacturers. ITC is a case in point that has benefitted from subsidies and has put mechanisms in place to control the total life of a cigarette, said Lal. It has diverse business interests, yet it still depends on cigarettes for 55% of its revenue and 80% of its profit, he added.

Lal explained that premium brands of cigarettes are paying less tax on total volume of sale as compared to cheaper ones by subsuming subsidies. "Subsidies make tobacco taxation inefficient and less responsive to meet public health gains. Eliminating subsidies saves money that can be used for other beneficial purposes. Hence it is important to eliminate all subsidies and correct prices to reflect market values; correct taxes for all inputs that go in the making of a cigarette; eliminate tobacco industry's access to public fund; and prevent capital flight of all tobacco companies from within a country and across domains especially for new licenses," he said.

Luk Joossens, an international expert on illicit tobacco trade, welcomed the new baby that FCTC now has -- The Protocol to Eliminate Illicit Trade in Tobacco Products. It is the first protocol to the WHO FCTC, and was adopted in 2012 at the 5th COP. The objective of the Protocol is the elimination of all forms of illicit trade in tobacco products (in accordance with the terms of Article 15 of the WHO FCTC) which poses a serious threat to public health by increasing the accessibility and affordability of tobacco products, thus fuelling the tobacco epidemic and undermining tobacco control policies. It also causes substantial losses in government revenues, and at the same time contributes to the funding of transnational criminal activities.

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11.6% of the global cigarette market is illicit resulting in a revenue loss of US$ 40.5 billion, with the burden of it falling mainly on low and middle income countries at 12.1% (revenue loss US$ 22.9 billion). The total revenue loss is higher than even the GDP of countries like Tunisia, Kenya, Paraguay, Georgia, Laos and Rwanda.

But Joossens lamented that despite 54 parties having signed the protocol only 4 (Nicaragua, Uruguay and Gabon and Mongolia) have ratified it. But at least 40 ratifications are necessary for the entry into force of the protocol which Joossens hoped would happen at the next 7th COP to WHO FCTC in Delhi, India (2016). The tracking and tracing system will be implemented 5 years after the entrance into force of the protocol for cigarettes and 10 years for other tobacco products. He favoured the obligation of unique, secure and non removable identification markings on all packages (packs, cartons, master cases) like the data matrix codes in force in Brazil since 2011on exported cigarettes.

"As transnational organized crime markets are global in scale, strategies to address them should also be global. The reality is that the illicit trade problem will not disappear without international action. Combating illicit trade is a global problem and the FCTC protocol might help to combat it. The most important provision is the tracking and tracing system which might have far reaching consequences for tobacco trade in near future. If we want effective tax regulation, we need to combat illicit trade," warned Joossens.

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