Last month the United States foreshadowed a proposal for a tobacco specific exception in the Trans Pacific Partnership (TPP) Agreement. I set out some details and commentary here, here and here. More recently, a draft version of the TPP chapter on investment protection was leaked. I have provided some commentary here, here and here.
As I noted in earlier posts, draft annexes on the international minimum standard and expropriation refer to customary international law. The annex on expropriation seeks to declare custom, whereas the annex on the international minimum standard seeks to clarify that draft Article 12.6 incorporates the international minimum standard (from customary international law) into the investment chapter.
This raises a question concerning the relationship between the tobacco specific exception and customary international law. I would argue that because tobacco control measures are measures to protect public health they fall within the police powers of sovereign states. The concept of police powers is derived from customary international law and reflected in paragraph 4 of draft annex 12-C, which recognizes that except in rare circumstances, non-discriminatory regulatory actions designed and applied to protect legitimate public welfare objectives, such as public health, do not constitute indirect expropriations.
With this in mind, how does the tobacco specific exception fit with the declaration of customary international law in draft Annex 12-C? It is difficult to answer this without seeing the proposed text of the tobacco specific exception. Nonetheless, one might expect that the exception should be read alongside paragraph 4 of draft Annex 12-C so as to reinforce the idea that tobacco control measures fall within the scope of a state’s police powers (as expressed in paragraph 4). This might alleviate concern about the USTR view that the tobacco specific exception would not protect against claims for compensation associated with indirect expropriation (because it would be worded “nothing in this agreement shall prevent . . .”).
Equally, the USTR view that the proposed exception would not provide protection against claims for compensation associated with indirect expropriation raises the question of whether the tobacco specific exception and draft Annex 12-C could be read together to suggest that tobacco control measures do not fall within the concept of police powers. Although this interpretation seems to be a stretch, the tobacco industry has not been shy about stretching the law beyond its limits in its lobbying of health officials. Hence, it might be worthwhile to clarify that the language in draft annex 12-C encompasses measures governed by the tobacco specific exception.
Of course, all of this would be easier to evaluate if the USTR would release the draft text of the tobacco specific exception. However, this recent USTR fact sheet on transparency in the TPP negotiations suggests that this is unlikely to happen.
Meanwhile, a number of former US Trade Representatives have written to the current USTR urging him not to propose a tobacco specific exception. (Hat tip to Simon Lester for pointing this out.) The letter probably merits a separate post (I will add it to the growing list). Nonetheless, one striking aspect of the letter is that the authors continue to portray provisions creating policy space as open to abuse by recalcitrant trading partners. The authors state:
While we are confident that the United States would not adopt or impose measures that restrict trade or investment without a sound basis to do so, we have witnessed over the years other governments attempting to justify their protectionist measures in the name of health or safety, especially in agriculture.
Although this is not a comment on the merits of the proposed tobacco exception, it seems that the authors must have missed the outcomes in US – Clove Cigarettes, US – Tuna and US -COOL. The comment seems typical of an outdated USTR orientation towards opening markets abroad without much concern for domestic regulatory autonomy. It is fair to say that times have changed somewhat since the authors of the latter left office.
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