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June 18, 2009

The WTO Wants You to Light up a Cancer Stick

Over at IELP, Simon Lester alerts us to a potential WTO case that Indonesia might bring against the recent U.S. bill to step up regulation on tobacco. Read the full post for details, but I thought Simon's closing comment was interesting:

I hate to sound defensive here, but I just want to emphasize to trade skeptics out there that this issue does not mean that countries can't regulate tobacco. It just means that they can't insert protectionist components into their tobacco regulation measures. 99.9% of these measures are fine under trade rules.  The main problem area is the part about (possibly) treating foreign products less favorably than domestic ones.

An insider in the tobacco debates tells Eyes on Trade:

In terms of what actually happened:

Everyone recognizes that flavorings are a way to appeal to kids.

Menthol historically in the US has been marketed to African Americans, so there is actually extra good public health reason to ban it.

The failure to ban was not because of so-called protectionist impulse, but political reality: It's too big a market to wipe out and get the bill passed. This is probably a combination of both manufacturer power and worries about protests from African-American smokers.

Of course, that political reality is no WTO defense at all.

An important point not mentioned in this post is that Philip Morris International now owns the third biggest kretek maker. PMI -- now a separate company from Philip Morris/Altria -- has alleged no interest in the US market but they are under no contractual limits, so far as I know. PMI's HQ is in Switzerland, but they remain registered as a NYSE company.

Tobacco and public health groups will be very worked up about this, should a [WTO] challenge emerge.

This observer's comment that "political reality is no WTO defense at all" is what's key here. God willing, over the next few years, we're going to see a lot of consumer and environmental protection laws going into effect. A lot of them will be messy, and a lot of them will be criticized by groups like Public Citizen. But I don't think there's an advocate here among us that doesn't realize that the political process is going to yield imperfect results that are still better than nothing. Maybe it's time for a "political reality" carveout from WTO obligations.

An update from Simon on a speech from Rep. Virginia Foxx (R-N.C.) had the member arguing that the U.S. should cowtow to WTO threats. Will this be the next case of the WTO chilling effect? Stay tuned.

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Comments

Don Juan of Austria

This is a great post, and shows why WTO apologists are so deceptive. Of course this kind of thing affects the ability of countries to regulate. It's either 100% or nothing, and no in-between. Without the WTO, the "in-between" would be allowed. So that is certainly an effect on regulation, and anyone who says it isn't is either lying or ignorant.

Safety Workwear Clothing Supplier

Informative and well written. It'll be interesting to see the developments in the coming years!

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