Over at treadthemiddlepath Srikar has been examining the tobacco plain packaging dispute here, including the development narrative that I blogged about here. More broadly, Srikar’s post got me thinking that I have been neglecting trade and health in India of late.
Intellectual property and access to medicines is the trade and health issue drawing most attention in the EU – India free trade agreement (FTA) negotiations. This is not surprising given the prominent role India plays as a producer and exporter of generic medicines. Closer to home, however, there are numerous reports of the EU requesting preferential tariff rates on alcoholic beverages. Indian government websites suggest that applied tariff rates are currently 100% for imported beer and 150% for wine and spirits. Trade theory suggests that these tariffs protect the domestic industry from foreign competition. From a public health perspective, however, the question is whether lowering the tariffs is likely to stimulate harmful consumption and lead to negative health outcomes.
In the tobacco context, the evidence suggests that an association existed between trade liberalization (including lowering of tariffs) and increased prevalence of tobacco consumption in a number of countries. I summarized some of the studies examining this association in a report for WHO available here. Numerous explanations have been advanced for the correlation, including that competition increased, product prices were lowered, marketing increased and new sub-markets were targeted. Brand proliferation, whereby the entry of new brands stimulates demand, is another possible explanation. If this were to hold true for India and alcoholic beverages, we might expect to observe a sharp increase in the prevalence of consumption if India does lower its tariffs.
None of this is to suggest that India should protect its domestic alcohol industry in this way. However, if India does open its market to the EU, it is arguable that the country needs to be ready with other interventions to minimize the potential health impact of the move. These interventions include non-discriminatory excise taxes to stabilize the price of imported products and restrictions on marketing to prevent new brands from targeting specific groups such as women and children. Of course, this approach is likely to see the price of domestic products rise due to tax increases. This effect might then exacerbate a problem with unauthorized production (of sometimes toxic products).
Unfortunately, the complexity of the situation defies a prescription in a short blog post from halfway across the world. However, given the potential population health impacts, the issue deserves attention alongside access to medicines.