Dominican Republic Requests the Establishment of World Trade Organization Panel Over Australian Plain Packaging

Source from:  Yahoo! Finance  12/18/2012

Today, the Dominican Republic requested that the Dispute Settlement Body of the World Trade Organization (WTO) establish a WTO panel to assess the WTO consistency of Australia's plain packaging measures for tobacco products, which came into effect in Australia on 1 December 2012. Australia initially blocked the establishment of the WTO panel but cannot block the Dominican Republic's second request as per WTO rules.

Plain packaging represents a dramatic interference with trademarks, and a restriction on international trade. Luis Manual Piantini, Ambassador of the Dominican Republic to the WTO explains:

"We are proud of our tobacco products and especially our cigars which are among the highest-quality smoking products and appreciated by millions of connoisseurs around the world. We have strived to develop an industry that is a world leader, and do not wish to see it undermined by speculative measures that will work to undermine public health. We will fight to have the WTO rules applied fairly and objectively to our developing economy."

"The Dominican Republic shares Australia's public health goals but plain packaging will not be effective in achieving those goals. Its effect will simply be to commoditize the tobacco market, with declining prices, and increased consumption of tobacco and illicit trade as a result."

Full statement by the Dominican Republic:

1. Since the first day of this month, all tobacco products in Australia have to be sold in plain packaging, and have to meet other stringent requirements. Australia imposes these requirements through the Tobacco Plain Packaging Act 2011 and its implementing regulations.

2. The Dominican Republic held consultations with the Australian Government on these plain packaging measures on 27 September 2012. Unfortunately, these consultations failed to settle the dispute. In conformity with Article 6.2 of the DSU, the Dominican Republic, therefore, requests that the Dispute Settlement Body establish a panel to examine Australia's plain packaging measures in light of its WTO obligations.

3. At the outset, the Dominican Republic wishes to emphasize that it shares Australia's objective in seeking to protect human health. However, we are unconvinced that these plain packaging measures are an effective instrument for reducing consumption of tobacco products or indeed any other harmful product. Rather, the plain packaging measures appear to violate Australia's obligations under both the TRIPS Agreement and the TBT Agreement.

4. The plain packaging measures represent a dramatic regulatory intrusion into the appearance of products that may be sold lawfully in Australia, literally wiping design features off tobacco packaging and individual cigarettes and cigars. These design features include trademarks and geographical indications that Members have agreed to protect under the TRIPS Agreement, and which serve the valuable purpose for both producers and consumers of differentiating products that compete lawfully on the market in Australia.

5. Turning to the TBT Agreement, these plain packaging measures restrict international trade by eliminating competitive opportunities for tobacco products that are forced to appear in the marketplace in virtually identical retail packaging.

6. The WTO system ensures that measures restricting core intellectual property rights and international trade are permissible solely insofar they are effective in serving a legitimate objective. Australia's plain packaging measures do not meet this standard: they eviscerate the very function of trademarks and geographical indications and destroy competitive opportunities for tobacco products, with no credible evidence that they will reduce tobacco prevalence. Indeed, the evidence shows that the plain packaging measures will undermine Australia's goal to reduce tobacco prevalence. By commoditizing the market for tobacco products, the measures will inflict price competition, resulting in lower prices and higher consumption. Further, requiring products to be sold in similar plain packaging will facilitate illicit trade.

7. The Dominican Republic has requested that, rather than introduce these plain packaging measures, Australia employ tobacco control measures that would be truly effective in reducing tobacco consumption and also consistent with its WTO obligations. Unfortunately, Australia has proceeded to introduce its plain packaging measures.

8. The Dominican Republic believes that this dispute has potential repercussions for products besides tobacco that are considered harmful, such as alcoholic beverages and processed food and beverages. Many governments wish to control consumption of these products and could equally argue that consumption will fall if they strip design features, including intellectual property, from the retail packaging. Such dramatic interference with intellectual property, and restrictions on trade, cannot be premised on speculative assumptions regarding consumer behavior but must be rooted in robust scientific evidence.

9. In closing, the Dominican Republic wishes to reflect on the detrimental impact of Australia's measures on small and vulnerable developing economies that rely on the production and export of tobacco, and tobacco products, as part of their development strategy. In the Dominican Republic, tobacco has been an intrinsic part of our local culture and heritage for centuries.

10. In recent years, we have witnessed a considerable development success story in our tobacco sector. Through significant investments by our producers, we have transformed our industry from being an exporter of tobacco leaf to being one of the world's premium producers of processed tobacco products, in particular cigars. Indeed, today, the Dominican Republic is the world's largest exporter of cigars.

11. We are proud of these achievements, and conscious also of the value of such development to the employment and income of our population. We are concerned that plain packaging will eradicate this cornerstone of our economy, whilst failing to achieve Australia's health objectives.

12. For these reasons, the Dominican Republic requests the Dispute Settlement Body to establish a panel to assess the consistency of the plain packaging requirements with Australia's WTO obligations.

About the Dominican tobacco industry

While tobacco has been cultivated in the Dominican Republic for more than five centuries, the Dominican tobacco industry is a hundred years old. Tobacco export revenues represent 5% of total exports. Tobacco products represent 8.5% of fiscal revenue on merchandise taxation. There are around 5,500 tobacco producers, employing approximately 45,000 agricultural workers. Combined with the entire tobacco production chain, the industry generates around direct 118,000 jobs which supports approximately 350,000 people, according to information published by the Tobacco Institute of the Dominican Republic. The Dominican Republic is the largest exporter of cigars in the world. Enditem