October 1, 2019

The World Trade Organization issued a favorable ruling for Australia rejecting complaints brought by tobacco exporting countries arguing that Australia’s tobacco plain packaging legislation violates trade rules. Citing econometric analyses conducted by Matrix Economics’ Dr. Tasneem Chipty, the WTO concluded that the legislation is a legitimate measure that is likely to achieve Australia’s public health objectives.

Plain packaging refers to the standardization of tobacco packaging through legislation that requires tobacco companies to remove branding from all tobacco packages. In 2012, Australia became the first country in the world to remove branding from all tobacco packages. Australia was challenged on three fronts: It faced a challenge, brought by British American Tobacco, Imperial Tobacco, Japan Tobacco, and Philip Morris, in the High Court of Australia. It was challenged by Philip Morris Asia under the Hong Kong-Australia bilateral investment treaty. It also faced a set of disputes at the WTO, brought by Honduras, the Dominican Republic, Cuba, and Indonesia.

Dr. Chipty served as an economic expert for the government of Australia in the WTO proceedings, where she studied changes in cigarette sales and smoking prevalence before and after implementation of tobacco plain packaging. Based on a series of econometric analyses, submitted over the course of six expert reports, Dr. Chipty found that the tobacco plain packaging measures had a negative and statistically significant effect on both smoking prevalence and cigarette sales, relative to what the prevalence and sales volume would have been without the packaging changes. Further, Dr. Chipty concluded that the effect of the packaging changes would likely grow over time, given the mechanism through which the public health community expected the policy to work. Matrix’s Principals Dr. Hiu Man Chan and Dr. Ryan Booth also worked on this matter on behalf of the government of Australia to develop evidence in response to the legal challenges surrounding Australia’s tobacco plain packaging legislation.

Honduras and the Dominican Republic have filed appeals before the WTO Appellate Body. The matter is pending at the appellate stage.

Additional information is available here:
Full panel report. (See: WTO Panel Report.)

WTO Disputes and Australia’s Tobacco Plain Packaging. (See related documents here: Department of Foreign Affairs and Trade, Government of Australia.)

Australia’s High Court upheld plain packaging legislation. (See decision here: High Court of Australia.)

Australia prevailed in the investment challenge by Philip Morris Asia under the Hong Kong – Australia bilateral investment treaty.  (See decision here: Permanent Court of Arbitration.)

The Supreme Court of the United Kingdom upheld plain packaging polices, citing heavily to Dr. Chipty’s work in Australia. (See decision here: BAT vs. Department of Health Judgement.)

EU High Court ruled that the new EU directive on tobacco products, which allows member states to introduce plain packaging, is valid. (See decision here: Court of Justice of the European Union.)