Introduction to Trade and Health Benn M c Grady, PhD O’Neill Institute for National and Global Health Law Georgetown University Law Center

1 Political economy of trade policy Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

The theory of comparative advantage A theory that specialization results in consumer and producer surpluses when goods are traded States create these surpluses by specializing in the production of commodities, which they are best equipped to produce (as determined by the opportunity cost of production). This creates an efficient allocation of resources, resulting in increased production, making goods cheaper for consumers. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Ricardo’s classic example Portugal can produce both wine and cloth in fewer labour hours than Britain If wine and cloth trade at 1 for 1, Britain can obtain wine from Portugal for 80 rather than 110 and Portugal can obtain cloth for 80 rather than 90. Hence, each country is better off if Britain specializes in production of cloth and Portugal in production of wine. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law ClothWine Britain Portugal9080

Political economy Governments seek to open foreign markets for ‘export oriented’ firms by bringing down barriers to trade such as tariffs, quotas, discriminatory or unnecessary regulations etc). Governments seek to protect ‘import sensitive’ firms from foreign competition by creating barriers to trade such as tariffs and discriminatory regulation. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Basic Features of the Trade Regime Trade agreements compel states to lower barriers to trade (liberalize trade). Barriers include tariff and ‘non-tariff barriers’, such as regulations. Rules governing non-tariff barriers seek to prevent regulatory protectionism and unnecessary regulation. Trade agreements facilitate economic stability, predictability for business and economic efficiency. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The WTO, FTAs and customs unions The WTO Agreement is the central multilateral instrument governing trade (on an MFN basis) Free trade agreements (FTAs): require the elimination of substantially all restrictive regulations of commerce (such as tariffs) between the territories involved; are usually bilateral or regional in character; and include commitments above and beyond those in WTO law e.g. ‘TRIPS Plus’. Customs unions involve the formation of a single customs territory e.g. the European Union.

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The Impacts of Trade Policy on Health Some issues to study empirically: indirect impacts of trade liberalization on population health and health systems; trade in health-related products; trade in harmful products; trade in health services; and trade in foodstuffs. Trade agreements as legal constraints on domestic regulatory autonomy

2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The General Agreement on Tariffs and Trade (GATT) 1994

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The GATT 1994 Relevant provisions include: Article II (bound tariffs) Article III (national treatment) Article I (most-favoured-nation (MFN) treatment) Article XI (prohibition on quantitative restrictions) Article XX (General Exceptions) Illustrative disputes include: EC – Asbestos Brazil – Retreaded Tyres

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Article XX – General Exceptions Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures:... (b)necessary to protect human, animal or plant life or health;...

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Article XX – General Exceptions Does the measure fall within the range of policies considered to protect human health? The panel must ‘weigh and balance’ relevant factors in light of the importance of the regulatory goal. Are less trade restrictive alternative measures reasonably available? Is the measure applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction upon trade?

3 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The Agreement on Technical Barriers to Trade (TBT Agreement)

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The TBT Agreement Agreement applies to ‘technical regulations’ Definition requires An identifiable product or group of products Lays down product characteristics (either in negative or positive form) Must be mandatory Examples include: Product regulations Labeling requirements

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Non-Discrimination and Necessity Article 2.1 establishes a prohibition on discrimination, which is not subject to an exception. Article 2.2 requires that technical regulations be not more trade restrictive than necessary to achieve a legitimate objective.

Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Harmonization Art. 2.4 creates an obligation to use international standards as a basis for technical regulations. This is not required where those standards would be an inappropriate or ineffective means for fulfillment of the legitimate objective pursued. Art. 2.5 creates a rebuttable presumption of compliance with paragraphs 2 – 4 where a technical regulation is adopted, applied or prepared: for one of the legitimate objectives explicitly mentioned in Art. 2.2, and is ‘in accordance’ with relevant international standards.

Product regulation US ban on clove but not menthol cigarettes ruled to be violation of WTO law Canadian, Brazilian and EU restrictions on additives and flavors questioned in the WTO Committee on Technical Barriers to Trade (TBT Committee) Introduction to Trade and Health Trade, Investment and Non- Communicable Diseases

Plain packaging No branding other than brand and variant names in standard color, position, font size and style Standard brown background in matte finish Warnings cover 75% of front and 90% of back of cigarette packs Referred to in Guidelines to the WHO FCTC Implemented by Australia Challenged under Articles 2.1 and 2.2 of the TBT Agreement Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Objectives To improve public health by: (i)discouraging people from taking up smoking, or using tobacco products; and (ii)encouraging people to give up smoking, and to stop using tobacco products; and (iii) discouraging people who have given up smoking, or who have stopped using tobacco products, from relapsing; and (iv)reducing people’s exposure to smoke from tobacco products. To achieve these aims by: (i)Reducing the appeal of tobacco products (ii)Increasing the effectiveness of health warnings (iii)Reducing misleading packaging Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

4 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)

TRIPS overview TRIPS obliges WTO Members to ensure minimum standards of protection for intellectual property rights. WTO Members are obliged to permit registration of trademarks in certain circumstances. There is an exception for misleading trademarks e.g. ‘light’ and ‘mild’ on tobacco products. There is no obligation to permit use of trademarks and TRIPS is not violated simply because a regulation affects use of a trademark. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Article 20 The relevant part of the text states: The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Unjustifiable encumbrances Article 20 concerns only ‘unjustifiable’ encumbrances. The principles in TRIPS Article 8 emphasize that WTO Members may adopt measures necessary to protect public health. These principles guide what is ‘unjustifiable’ i.e. at the very least, necessary measures are justifiable. Measures not meeting the threshold of ‘necessary measures’ could also be justifiable. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Unjustifiable encumbrances Paragraph 4 of the Doha Declaration on TRIPS and Public Health states: We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all. In this connection, we reaffirm the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

Justifiable? So, is plain packaging a justifiable encumbrance? Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law