The World Trade Organization and
the Framework Convention on Tobacco Control (FCTC)
The WHO FCTC is the first international treaty on health and will set an important precedent that global health issues should be addressed on a global scale. In order to safeguard the effectiveness of the WHO FCTC, NGOs must be aware of the potential for it to be undermined by the World Trade Organization (WTO).
The WTO and the agreements it presides over are meant to remove trade barriers to promote greater competition, lower prices, and greater advertising and promotion to lead to greater consumption in many goods and services.
According to the World Bank Report, Curbing the Epidemic, Governments and the Economics of Tobacco Control, "cigarettes are no exception" such that free trade or trade liberalization has contributed to an increase in the consumption of tobacco in low and middle income countries. The World Bank Report cites a study that showed that the consumption of cigarettes per person was 10 percent higher in 1991 in Japan, South Korea, Thailand, and Taiwan than it would have been if those countries’ markets had not been forced open in the 1980s due to US threatened trade sanctions. For more information go to International Trade Agreements and Tobacco Control: Threats to Public Health and the Case for Excluding Tobacco from Trade Agreements
What is the World Trade Organization?
Following the devastation of World War II, the world’s economic, political, banking, and corporate leaders met to create a global economic system. From this beginning institutions such as the World Bank and the International Monetary Fund were created and the General Agreement on Tariffs and Trade (GATT) was born. Deregulation, privatization, and free trade or trade liberalization are at the heart of a centralized global economic system designed to merge the economies of all countries into a single economy. This model leaves no room for national regulations, tariffs, or laws that protect national interests by regulating multinational corporations activities within a specific country.
The formation of the World Trade Organization in 1995, through an agreement among 125 countries to promote trade among its member countries, was the culmination of a 50-year effort to create a centralized global economic system. Since 1995, the number of country members has expanded to 134 countries and China may become the 135th member. The WTO is based out of Geneva, Switzerland and has authority over a number of international agreements, including the GATT. The WTO facilitates trade negotiations as well as resolves and enforces trade disputes. Trade issues under the WTO are defined very broadly. Not only does the WTO have authority over issues related to trade of actual goods like cars, food, and cigarettes, it also has authority over non trade related activity such as foreign investment rules, intellectual property rights, and national regulatory mechanisms such as local laws, policies, and standards.
The WTO’s Dispute Settlement Body:
Any WTO member nation can challenge any other member nation’s laws if it feels that the law is hurting their profits. These trade disputes between countries are resolved through the WTO’s Dispute Settlement Body (DSB). The DSB is made up of a panel of corporate and trade lawyers and officials who are not required to have any education and training in social or environmental issues. Its not surprising that these issues are not taken into consideration in their rulings.
Rulings by the DSB can impose monetary penalties, trade sanctions, and other disciplines such as amending national, state, or local laws in alignment with the WTO ruling. A losing country has three choices: change its laws to come into compliance with the ruling, pay permanent compensation to the winning country for lost profits, or accept permanent trade sanctions chosen by the winning country.
To date there have been no rulings under the WTO on tobacco. However under GATT (which is now under the authority of the WTO), Thailand won a partial victory by having its tobacco advertising ban upheld so long as it applied to both domestic and international tobacco companies. The GATT ruling has been cited as a "precedent for countries to intervene to reduce tobacco demand on public health grounds while maintaining the principles of free trade". However discussion of the ruling leaves out the fact that Thailand’s ad ban was in response to the forced opening of its market through US threatened trade sanctions. And indeed it is unclear if, through the ruling, public health did in fact prevail as tobacco consumption is higher in Thailand than it would have been if its market had remained closed in the first place.
The WTO and FCTC Negotiations
During the first meeting of the working group in 1999, there was recognition by some countries that the relationship between the framework convention and relevant WTO treaties as well as other multilateral agreements needed further consideration. This was critical area for analysis given that WTO rulings generally put profits over the environment and health forcing governments to weaken laws or policies that were designed to promote health, save the environment, or support small scale economies.
The sixth and final negotiations on the Framework Convention on Tobacco Control took place from February 14th-28th 2003 in Geneva, Switzerland ended on a cautiously optimistic note.
During the 10 day negotiations there was much contention and disagreement on the proposed text with the US, Germany, and Japan adamantly opposing a comprehensive tobacco advertising ban among other things while the countries of Africa, Asia, the Caribbean and Pacific Islands held firm. The final text that the 171-member states agreed to be forwarded to the World Health Assembly for ratification in May 2003 required countries signing on to FCTC to:
The FCTC also includes language encouraging countries to go beyond the Convention – to treat the FCTC as “minimum standard” as well as 1) ban misleading descriptors such as “light” and “mild” on packs; 2) raise tobacco taxes significantly; 3) provide smoke-free air in public spaces and workplaces; 4) consider using litigation to hold the tobacco industry liable for its wrong-doings.
Unfortunately the final text did not include language that specifically states that health is given precedence over trade – it does have language in the preamble of the text that states that the countries signing onto the text are “determined” to give priority to States’ “right to protect public health”. Some NGOs feel that this may help should a country’s tobacco control law is challenged under the World Trade Organization or some other trade agreement.
Still the text was not safe from being challenged. The US delegation left the final negotiating session say they would search for flexibility, or additions to the draft before signing off on the treaty in May at the World Health Assembly.
True to its word, a few weeks before the May assembly the US sent a diplomatic letter to other governments in an attempt to reopen negotiations. The letter called for inclusion of “reservations “ in the treaty. Reservations allow a government to pick and choose what part of the treaty they want to sign onto. Rendering the treaty meaningless.
Amidst outcries from both international and domestic tobacco control activist, the US capitulated on the eve of the World Health Assembly and said it would vote for the treaty as it stands. On May 20, 2003, after three years of negotiations, 192 countries agreed to the adoption of the FCTC. The treaty will go into force when 40 countries have signed and ratified the FCTC. As of October 2004, as of today, 168 countries have signed the FCTC and 32 have ratified the treaty.
On May 10th, 2003 the US government signed onto to the FCTC. As of October 2004, the US government has yet to ratify the treaty. Go to www.tobaccotreatynow.org to sign onto a letter urging the US government to ratify the FCTC.
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Email: Mele Lau
Email: Susana Hennessey Lavery