U.S. Federal Issues

Tobacco and Trade


Exclude Tobacco Products from Trade Agreements

The tobacco industry has a long history of using international trade agreements to force open new markets in low- and middle-income countries, sharply increasing tobacco use and the death and disease it causes. Increasingly, tobacco companies are also challenging measures to reduce tobacco use as violations of trade and investment agreements, threatening the authority of nations to protect the health of their citizens.

These tobacco industry tactics underscore the importance of excluding tobacco products from trade and investment agreements. Free trade is intended to make products more available to more consumers, but there is a global consensus in support of reducing tobacco use.

Trade and investment agreements should not promote or increase use of tobacco products, and they should not prohibit any nation from using its sovereign authority to protect public health by taking action to reduce tobacco use. International investment agreements provide protections for foreign investors, but they were not intended to put constraints on a state’s right to implement genuine public interest regulatory measures to protect the health of its citizens. The best approach is to exclude tobacco products entirely from trade and investment agreements; at a minimum, tobacco control measures should be protected from challenges by the tobacco industry under the Investor-State Dispute Settlement provisions.

Governments around the world must take these steps to protect their own authority to reduce tobacco use, and to thwart the tobacco industry’s efforts to use trade agreements to undermine tobacco control policies.

In a historic step forward for public health, the Trans-Pacific Partnership (TPP) agreement recently reached between the United States and 11 other countries includes a provision that prevents tobacco companies from using the TPP to launch legal attacks on tobacco control measures. Specifically, this provision will allow countries that are party to the TPP to elect to deny the benefits of Investor-State Dispute Settlement for any claim against a tobacco control measure. This would prevent claims such as those against Uruguay and Australia, described below, from being brought under the TPP. (This provision includes language specifically exempting tobacco leaf, and the TPP imposes no barriers to trade between the U.S. and the other TPP countries of tobacco leaf or tobacco products.)

Special Treatment for a Uniquely Lethal Product

The rationale for excluding tobacco products from trade agreements is strong and simple. Trade agreements are intended to promote and expand trade in beneficial products. Far from being beneficial, tobacco products are uniquely lethal and highly addictive. Used as directed, tobacco products kill 1 in 2 users.

Tobacco use is the leading cause of preventable death around the world. Without urgent action, tobacco products will kill one billion people in the 21st Century. Freer trade in tobacco products directly conflicts with the goal of saving lives by stemming this global epidemic.

The goals of liberalized trade include lowering the price of products and increasing the number of consumers for them. In stark contrast, public health measures seek to save lives by reducing consumption of tobacco products through policies such as higher taxes to increase prices, bans and restrictions on marketing, and large, graphic pack warnings that inform consumers about health risks of tobacco use.

Nations across the globe have made legally binding commitments to implement these and other measures to curb the tobacco epidemic by signing on to the world’s first public health treaty, the World Health Organization Framework Convention on Tobacco Control (FCTC). All 12 TPP countries have ratified or signed the treaty.

Big Tobacco Uses Trade Laws to Fight Health Protections

Tobacco companies and their allies have been using trade and investment agreements to challenge and undermine tobacco control policies. In recent years:

  • Indonesia sued the United States in the World Trade Organization over a ban on clove cigarettes, which is part of a U.S. prohibition on flavored cigarettes that appeal to youth.

  • Philip Morris International sued Uruguay under a bilateral investment treaty over its laws increasing the size of warning label on cigarettes and limiting the number of variations of each brand. Uruguay adopted these policies to counter the tobacco industry’s use of the deceptive terms "light," "low tar" and "mild."

  • Philip Morris International sued Australia over its new law requiring plain cigarette packaging under an Australia-Hong Kong bilateral investment treaty.

  • Philip Morris International's Turkish subsidiary has sued Turkey, claiming that a requirement that warnings cover 65 percent of the cigarette pack infringes on trademarks protected by treaties on intellectual property rights.

Tobacco is simply not like any other consumer product, and should not be treated as one in trade and investment agreements. What’s at stake is the authority of nations to take actions that literally would save millions of lives.

In March 2015, Bloomberg Philanthropies and the Bill and Melinda Gates Foundation announced the Anti-Tobacco Trade Litigation Fund, a new joint venture managed by the Campaign for Tobacco-Free Kids. This initiative provides financial and technical legal support to low- and middle-income countries that are facing claims, or threats of claims, against their tobacco control laws by the tobacco industry under international trade and investment agreements.