Indonesia granted right to challenge Australia's plain-packaging laws

Helen Davidson
27 March 2014
theguardian.com
World Trade Organisation has now allowed five countries to appeal against cigarette labelling legislation
The World Trade Organisation has granted Indonesia the right to challenge Australia’s plain packaging laws in front of a panel of trade and legal experts, trade sources say.
Indonesia – and a number of other countries before it – are seeking to challenge the legislation which has required all cigarettes to be sold in Australia have uniform green packets with white labelling since December 2012.
The WTO’s decision makes Indonesia the fifth country – after Ukraine, Honduras, the Dominican Republic and Cuba – to be granted the opportunity to challenge plain packaging, which opponents say breaches trade and intellectual property regulations.
Indonesia had previously asked that a panel be established to hear the case – something that was granted to Ukraine in 2012 and Honduras in 2013 but not yet to the Dominican Republic or Cuba – after consultations in October last year failed to resolve the dispute.
However, the seemingly disunited assault on Australia’s laws is strategic, says Tania Voon, professor and associate dean (research) at Melbourne Law School and a former legal officer of the WTO’s appellate body secretariat.
Australia is understood to have declined its right to block Indonesia’s first request for a hearing, which Voon said is a sign it is keen to have the matter dealt with quickly.
“Normally it’s not this protracted,” Voon told Guardian Australia. Ordinarily a WTO dispute would be just months between stages, she said.
“I think it is because – the tobacco industry in particular – it benefits them to have uncertainty about the outcome. The industry is probably aware they are likely to lose the case.
“In the meantime the industry can say to other countries, ‘Hey don’t make these laws or we’ll challenge,’ ” she said.
Writing for Guardian Australia, former prime minister Julia Gillard said the cost burden in dealing with the disputes measured in the tens of millions of dollars, and called the challenges a “tactic”.
“The world also needs to take a dim view of trade manoeuvres that are really about protecting the remaining ground for big tobacco,” she said.
Reports have previously revealed the challenges launched by Ukraine – which has not exported tobacco to Australia since 2005 – and Honduras, are at least partly supported by British American Tobacco.
The tactic is succeeding, according to an unnamed Australian diplomat, who reportedly said the saga is having a “chilling” effect on other countries.
“Australia does recognise that there may be circumstances where prolonging formal dispute processes might be justified,” the diplomat said, according to a copy of a statement seen by Reuters.
“But it is not the case here. Not one of the parties has approached Australia to resolve the case through a mutually agreed solution,” the diplomat said.
Much of the holdup with Ukraine and Honduras is around the selection of the three-member panel. Voon predicts the director general of the WTO will be asked to decide. In a further complication, there are also restrictions against having panellists from nations which are party to the process, either as complainant, defendant, or a third party. The Ukraine and Honduras challenges each have 37 third parties.
“These are record numbers,” said Voon.
“The [countries] are saying they’re interested; in a formal sense there’s no way of telling whose side they’re on. There are some countries that are considering similar measures, like New Zealand, Scotland, Ireland, and India, and the outcome of these decisions will be significant for these countries.”
Should the complainants win, the WTO has no power to award damages but can order trade measures.
The WTO is not the only scene of a challenge to Australia’s laws. Tobacco giant Philip Morris is also using a bilateral agreement between Australia and Hong Kong to argue against plain packaging. In 2012 Australia won two cases in the high court against British American Tobacco and J T International.