Former top U.S. trade officials-turned tobacco industry advocates Carla A. Hills and Julius L. Katz are holding the latest smoking guns in the battle between national sovereignty and the new world trade order.
The two warned Canadian officials in May 1994 that their country will be exceeding its authority under international trade agreements if Parliament approves proposed legislation ordering cigarette companies to use plain packaging for cigarettes sold in Canada.
Stripping cigarette wrappers of their eye- catching and distinctive colors and trade-marks and instead requiring white packaging and black lettering has been suggested as a way of further reducing cigarette smoking in Canada, which has some of the world's toughest anti-smoking laws.
Katz, deputy U.S. trade representative under President Bush, told a parliamentary committee in Ottawa on May 10 that the proposal would rob cigarette makers of one of their most valuable assets-their trade- marks. Under a variety of international trade agreements, passage of such legislation could lead to the imposition of trade sanctions or fines costing the country hundreds of millions of dollars.
"Investors will lose highly valuable as sets as a result of plain packaging, since by its very nature such a requirement prevents the use of essential design, color and lettering that are used to create a distinctive product package," Katz told the committee.
Hills, U.S. Trade Representative under Bush, wrote in a legal opinion for R.J.Reynolds and Philip Morris that the Canadian proposal would be "a blatant violation" of the terms of the North American Free Trade Agreement (NAFTA), the new' General Agreement on Tariffs and Trade GATT) and the Paris Convention for the Protection of Industrial Property.
In her written opinion, Hills said that cigarette packaging qualifies as a trademark and that, under those agreements, it could not be infringed upon without compensation. Generic packaging also presents its own problems, Hills wrote, because that would make it very hard to tell cigarette packages apart.
"The proposal would seriously diminish the integrity of the trademark and substantially degrade the value of the distinctive packaging, or trade dress, in which the companies have invested heavily over the years," Hills wrote.
Proponents of the tobacco control measure have lined up some legal experts to challenge Hills and Katz's views. Professor Jean-Gabriel Castel of the Osgoode Hall Law School at Canada's York University said that Canada would be within its legal rights to try to reduce smoking by mandating plain packaging. "Canada would he justified in adopting plain packaging legislation developed to protect the life and health of its citizens and would not violate her international obligations in doing so,", Castel wrote in a May legal opinion for the Non-Smokers' Rights Association. Castel's argument centers on the health aspects of the plan, saying "it is only incidentally that the proposed legislation is related to the use of a trademark."
Castel said in his opinion that the trade agreements allow nations to adopt such packaging legislation as a health measure, not as a trade matter. Canada has the authority to ban cigarettes, a step that would eliminate the value of a trademark, he said. Since such a step is not considered expropriation, requiring plain cigarette packages for health reasons wouldn't be either, he argued.
Roger Simmons, chairperson of the Commons Standing Committee onHealth, the body that will likely handle Canada's plain packaging legislation, condemns Hills and Katz as "hired guns" who refused to address issues relating to the hazards posed by cigarettes.
Simmons says he is not persuaded by the two former trade officials. "I frankly don't make a lot of the submission," Simmons says. "It was much too self-serving. I understand the companies would try to drag out this one, but I'd be much more impressed if they came in and talked candidly about the impact on their sales, rather than using an intimidation approach."
GATT, a 1 00-plus nation trade pact, has already been approved in Canada, and Simmons claims that the tobacco advocates are mistaken in thinking that Canada can- not take steps to improve public health because of the world trade agreement. "The intention of GATT was never to let the tail wag the dog, never to let the corporations dominate the governments, "said Simmons, who voted for Canada to approve GATT.
But the new GATT is so thoroughly oriented to promoting commercial over non-commercial values that the potential outcome of a formal dispute, were one lodged with the new GATT against Canada, is unclear. The new GATT requires member counties to show that a regulation or law is the "least trade restrictive" means to achieve a particular environmental or consumer goal, or risk having it declared "GATT-illegal" by an international dispute settlement panel.
Under the new GATT's rules on technical barriers to trade, Hills noted in her opinion, Canada could only preserve its plain-packaging anti-smoking initiative by showing that there are no alternative ways to reduce child smoking rates without affecting the tobacco companies' trademark rights.
And Katz argues that trademarks are inviolable under the GATT and other trade agreements. The new General Agreement on Tariffs and Trade (GATT) and other international trade agreements require that "once granted, [trademarks] may not be encumbered," he told Multinational Monitor. "The reason for that is that the trademarks serve as an information point for consumers. If you encumber the trademark, you are preventing people from knowing what's inside the package."
Katz emphasizes that there is no public health exception to trademark protection. "People who reacted saying surely it's unreasonable not to be able to take measures for health reasons, didn't read the agreement," he says.
The governing Liberal Party has not yet submitted cigarette wrapper legislation to Parliament for consideration, and it may be several months before the measure is formally introduced. In its June, 1994 report, the Standing Committee on Health expressed its support for the concept of generic packaging. But it recommended waiting for the results of additional studies on the potential impact of the legislation before proceeding.
Heather Selin, a spokesperson for the Canadian Council on Smoking and Health, says that she remains convinced that Parliament would support the legislation, though a vote may not come until next winter. "They haven't suggested inaction," Selin says of the legislators' report. "I believe the evidence is sufficient, but there is still a lot of skepticism on the part of some committee members."
Selin's group recently gave the committee its own version of generic packaging. It would involve print describing the dangers of smoking that is larger than the print used for cigarette's brand name.
"These are powerful companies with a hell of a lot at stake, and of course they are going to go down fighting," Selin says. But, she adds, "In the end, it is the government that sets health policy and any government that negotiates that ability isn't going to stay in power very long,"
The Standing Committee on Health report said a generic packaging law would make smoking less appealing to non-smokers, particularly youngsters who are think- ing about starting to smoke.
The tobacco industry has frequently been criticized by politicians and smoking activists for targeting its advertising toward youngsters, for example through the "Joe Camel" cartoon character.
The cigarette packaging dispute is not the first argument arising from the reduced ability of nations to control their own markets under international trade agreements. A Danish recycling program, a U.S. ban on asbestos, a Canadian reforestation program, U.S. and Indonesian restrictions on the export of raw logs and U.S. fuel efficiency laws have all been attacked as non-tariff trade barriers under existing trade agreements.
The proposed new GATT, scheduled to soon be introduced for approval in the U.S. Congress, would reduce even further the ability of nations to set their own health, safety and environmental standards, experts say. The pact calls for the creation of a World Trade Organization (WTO), which activists say will be biased in favor of multinational corporate interests and against consumer and environmental concerns.
"The result [of adoption of the new GATT-WTO would be expanded control by multinational corporations over the international economy and an increased capacity to undo the most vital health, safety and environmental protections won by citizen movements across the globe, or at the least, to keep future advances at bay," consumer advocate Ralph Nader warned in recent Congressional testimonv.
From "MultinationalMonitor" June 1994