WTO Declines to Find Australia’s Tobacco Product Packaging Restrictions Inconsistent with Trade Rules
Last week, a WTO dispute settlement panel ruled that Australia’s plain packaging rules for tobacco products do not violate WTO rules. In April 2012, Honduras requested consultations with Australia at the WTO over Australia’s 2011 law banning logos, trademarks, and other distinctive packaging for tobacco products in favor of uniform-color packages with health-related warnings and images across the front of the packages and brand names printed in small, standardized fonts. Honduras challenged the law under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the WTO Technical Barriers to Trade Agreement, and the national treatment provision of GATT 1994. Similar challenges later brought by the Dominican Republic, Cuba, and Indonesia to Australia’s plain packaging law were consolidated with Honduras’s dispute and ruled upon at the same time. The WTO dispute settlement panel was composed in May 2014.
In its report, issued on June 28, 2018, the WTO panel concluded that Honduras, the Dominican Republic, Cuba, and Indonesia did not demonstrate that Australia’s plain packaging law and related regulations were inconsistent with the various WTO agreement provisions cited. Specifically, the plain packaging measures were not shown to be more restrictive than necessary to achieve a legitimate regulatory objective; to impede the registration, use, or enforcement of trademarks; to mislead with respect to or diminish geographical indications; or to devalue the Cuban Government Warranty Seal otherwise provided on Cuban-origin tobacco products.
Australia has defended the plain packaging requirements as an effort to prevent smoking. Hungary, Ireland, France, New Zealand, Norway, and the United Kingdom have implemented similar tobacco product packaging restrictions. Burkina Faso, Canada, Georgia, Romania, Slovenia, and Thailand have passed such laws, which have not yet been implemented. The complaining countries and industry members have pushed hard against plain packaging rules as an infringement on intellectual property rights and a dangerous precedent for banning branding on other consumer products in a manner that exceeds the public health benefit, if any.
Honduras has indicated that it intends to appeal the WTO panel decision on the basis of both legal and factual errors. While, under WTO dispute settlement rules, the WTO Appellate Body must rule on any appeal within 90 days, that deadline has not been met for several years. The current case backlog, the complexity of this particular dispute, and a stalled Appellate Body appointment process means that the dispute will likely take years to resolve.