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USNZ Council Gives False Comfort on Tobacco Controls

Friday 8 July 2011

By Jane Kelsey

USNZ Council Gives False Comfort on Tobacco Controls & Investment Rules

“The USNZ Council has tried to play down the risks of investment agreements to New Zealand’s regulatory options on tobacco control, but ignores three crucial issues”, said Professor Jane Kelsey from Auckland University.

The Council’s press release dated 6 July 2011 points to the exception in bilateral investment treaty between New Zealand and Hong Kong protects any measures taken to protect public health provided they are not ‘a means of arbitrary or unjustified discrimination’.

‘But companies like Philip Morris are not concerned about the legal outcomes of a dispute’, said Professor Kelsey.

‘Tobacco giants have bottomless coffers when it comes to bringing harassment and intimidation cases against governments that propose policies and regulations that aim of reducing tobacco consumption.’

‘The extent of “chilling effect” is impossible to verify, because these pressures and decisions usually take place behind closed doors. It is known that Canada backed off tobacco controls laws in 1995 in the face of a threatened dispute by another US tobacco firm under the North American Free Trade Agreement (NAFTA).’

A second, related concern is the demonstration effect that these disputes are intended to have on other countries as they consider introducing anti-smoking laws.

‘There is a growing list of these cases. Philip Morris has challenged tobacco display bans in Ireland and Norway under EU trade rules and last year launched a suit against Uruguay’s new tobacco control laws. These are clearly intended to send a message to other countries.’

Professor Kelsey further noted that New Zealand has investment obligations with other countries that Philip Morris could use in the same backdoor way they are using the Australia-Hong King and Uruguay-Switzerland agreements. Some of these treaties, such as the free trade agreement with China, give additional guarantees of ‘minimum standards of treatment’ that are the basis of many recent investment disputes, and have exceptions that are more open to contest.

As a final point, Professor Kelsey pointed out that British American Tobacco has argued for similar investor rights through the ACT-sponsored Regulatory Responsibility Bill, a version of which the Regulatory Standards Bill is now before a parliamentary select committee.

‘These companies are actively seeking out a range of legal avenues where they can protect their right to sell toxic products and restrict government moves to rein them in, including the proposed Trans-Pacific Partnership Agreement. The US NZ Council should not be pleading their cause.’


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