Implications of Free Trade & Investment Agreements (FTIAs) for NZ’s Smokefree 2025 Policies Professor Jane Kelsey, School of Law, The University of Auckland, NZ

Focus of this presentation 1. Background to the report 2. Key observations 3. Example of Australia’s plain packaging law 4. Tobacco issues in the Trans-Pacific Partnership Agreement negotiations 9 August 2012

Background Maori Affairs Committee 2010 – FTIA issues invisible Cabinet papers & RIA – minimal FTIA content redacted Tobacco industry pressure raised profile of issue Complex and secretive area Report International Trade Law & Tobacco Control aims to identify legal pressure points, legal risks and chilling effect from current and proposed FTIAs 9 August 2012

Key observations (i) Smokefree goal needs more assertive policies Long phase-in has less legal risk, but not by 2025 Industry will challenge most potent, most vigorously Uses legal arguments & disputes tactically to ‘chill’ Industry helps countries fund WTO disputes WTO issues involve in goods, services, TBT, IP Interpretation of WTO public health exception is improving, but rarely succeeds as a defence 9 August 2012

Key observations (ii) Tobacco companies (esp PMI) aggressively using investor-state dispute powers in FTIAs Unpredictable, lengthy and invisible process Legal costs average $8m, sometimes $50m ISDS disputes aim to chill and deter 3 rd countries NZ has 6 agreements with ISDS New ‘comfort’ language does not protect public policy New NZ FTIAs must be consistent with FCTC Deeper and more extensive obligations increase risk 9 August 2012

Australia’s plain packaging law 3 legal challenges (i)4 tobacco companies constitutional challenge in Australian courts allege ‘taking of property’ (trademark) based on Australian law case has been heard decision awaited 9 August 2012

World Trade Organization dispute Brought by Ukraine, Honduras, Dominican Republic, maybe others Legal support from PMI and BAT Alleges breach of intellectual property rights (trademark, goodwill) technical barriers to trade (not evidence based or least burdensome option to achieve goal) NZ joined as third party Uneven WTO jurisprudence Australia & NZ oppose Thai alcohol labels on same basis Successful dispute means Aust must withdraw measure or face trade sanctions 9 August 2012

Investor-state dispute Philip Morris Asia launched dispute under Australia Hong Kong bilateral investment treaty Changed ownership of PM Australia to take advantage of treaty Alleges breach of –fair and equitable treatment –security and protection of investment –indirect expropriation Likely to rely on OIA, RIA, political statement & industry reports Private hearing, in Singapore, tribunal just appointed Ad hoc process, reasoning & outcomes unpredictable, no appeal Potentially large award of damages unless policy is reversed 9 August 2012

Tobacco & the TPPA 9 country negotiation of ‘21 st century’ FTIA US: Industry & tobacco states v tobacco control lobby USTR proposes middle ground ‘tobacco exception’ (i) defence against complaints adapts current exception (ii) only regulation by delegated agency, not legislation (iii) not apply to investment rules Not tabled cos tobacco industry kickback Concern that implies existing exception inadequate 9 August 2012

Exception not address A/NZ concerns Exception does not apply to investment rules Australia opposes any ISDS powers in TPPA US proposes more extensive IP rules, benefit tobacco Transparency & regulatory coherence chapters give rights for industry to influence domestic decisions, contrary to FCTC Art 5.3 Tobacco carveout not address other NCDs NZ must ensure new treaties are FCTC compatible 9 August 2012

Final observations Governments have the right to regulate tobacco as they see fit in the public interest But potential collisions with FTIAs Compatibility issues with Australia under TTMRA No tidy solution to competing priorities Expect enormous pressure & public campaigns by industry 9 August 2012

Smokefree by 2025 will require  Awareness and assessment of arguments  Commitment to policies  Strategic decisions about which fights to pick  Political will following Australia’s example 9 August 2012