1990 Thai Tobacco case --- as precedent for WHA resolution

[James Love <love@cptech.org>]

1990 Thai Tobacco case ---  as precedent for WHA resolution

Catherine Gavin and Cecile Crettol have kindly put the GATT/US/Thai
tobacco case on the web.  This decision is a good read for anyone who is
trying to understand how trade disputes involving health are resolved,
and also, why it may be useful to get a WHO resolution that provides a 
role for the WHO in consulting on such disputes, particularly if the
resolution clarified the primacy of public health over commercial
interests.  It also illustrates the benefits of having consultations on
a broader range of issues than pharmaceuticals or intellectual property
issues only. The entire decision, which is long and complex, is at the
URL given below.   Here are a few key parts.

jamie love <love@cptech.org>

----------------
http://www.cptech.org/ip/health/country/gatt-thai.html

Thailand - Restrictions on Importation of and 
Internal Taxes on Cigarettes, a
GATT decision - November 7, 1990


Editor's note: 

The Gatt decision in the 1990 Thai tobacco case is important for several
different reasons. The GATT ruled against the Thai efforts to ban
imports of cigarettes. However, the GATT did establish a precedent by
consulting with the World Health Organization (WHO) on a trade issue
involving public health, and it did indicate that a ban on the
advertising of cigarettes, while potentially harmful to the interests of
importers who were not well
known, was justified for public health reasons. 

The entire opinion is given below. As an introduction, here are a few
key parts. 

>From paragraph 27 

     Since the health consequences of the opening 
     of cigarette markets constituted one of the 
     major justifications for Thailand's cigarette
     import regime, Thailand deemed it necessary 
     that the panel consult with experts from the 
     World Health Organization (WHO) on recent 
     experience in countries which had been made 
     to open their markets for cigarettes. This 
     showed that once a market was opened, the 
     United States cigarette industry would exert 
     great efforts to force governments to accept 
     terms and conditions which undermined public 
     health and governments were left with no 
     effective tool to carry out public health policies. 
     Advertising bans were circumvented and modern 
     marketing techniques were used to boost sales. 
     Hence, Thailand was of the view that an import 
     ban was the only measure which could protect 
     public health. Any other measure which allowed 
     imports in any amounts would not be effective. 

>From paragraph 34 

     Since May 1989 Thailand had resisted bilateral
     pressures, under Section 301 of the US Trade 
     Act, to open its market for cigarettes,
     and faced the imminent threat of retaliation 
     against Thai exports to the United States, 
     valued at US$166 million. Even though exports
     were the linchpin of Thailand's economic success, 
     such considerations had given way to health 
     concerns. In the course of these bilateral 
     pressures, the United States had made it clear 
     that its objectives were not limited to market 
     opening and national treatment on internal 
     taxation but covered other areas, such as a 
     unilateral reduction of Thailand's import 
     duty on cigarettes to zero, a low specific 
     rate of excise tax on cigarettes (which when 
     converted to an ad valorem basis, would work 
     to the advantage of higher-value American 
     cigarettes) and the right for manufacturers 
     of foreign cigarettes to advertise and conduct 
     point-of-sale promotion even though such a right 
     was denied to manufacturers of domestically-
     produced cigarettes. Thailand therefore sought
     from the Panel a recommendation as to whether 
     Thailand was required by GATT provisions to 
     grant such concessions to the United States. 
     Such a recommendation was necessary to protect 
     the credibility of the multilateral dispute 
     settlement mechanism. Thailand also sought 
     from the Panel confirmation of its understanding 
     that, in the event of its market for cigarettes 
     being opened, its obligations with regard to 
     the pricing, distribution, advertising, promotion
     and labelling of cigarettes were limited to 
     providing national treatment for foreign 
     cigarettes. 

>From paragraph 62 

     The United States also stated that the 1989 Report
     of the United States Surgeon General had concluded 
     that there was no scientifically rigorous study 
     available to the public that provided a definitive 
     answer to the basic question of whether advertising 
     and promotion increase the level of tobacco 
     consumption and that the extent of the influence of
     advertising and promotion on the level of smoking 
     was unknown and possibly unknowable. ("Surgeon 
     General, Reducing the Health Consequences of Smoking"
     512-12(1989).) . . . . 

>From paragraph 78. 

     A ban on the advertisement of cigarettes of both 
     domestic and foreign origin would normally meet 
     the requirements of Article III:4.
     It might be argued that such a general ban on 
     all cigarette advertising would create unequal 
     competitive opportunities between the existing 
     Thai supplier of cigarettes and new, foreign 
     suppliers and was therefore contrary to Article 
     III:4 [2]. Even if this argument were accepted, 
     such an inconsistency would have to be regarded 
     as unavoidable and therefore necessary within 
     the meaning of Article XX(b) because additional 
     advertising rights would risk stimulating 
     demand for cigarettes. 

Cecile Crettol, Catherine Gavin 

   [snip]

The entire opinion  see:
http://www.cptech.org/ip/health/country/gatt-thai.html

-- 
James Love, Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
202.387.8030; f 202.234.5176
http://www.cptech.org, mailto:love@cptech.org