The WTO battle over plain packaging: what happens next?

I’ve heard all about the Australian High Court’s ruling upholding Australia’s plain packaging law. But what’s happening at the WTO?

In March this year Ukraine launched legal proceedings at the WTO over Australia’s plans to force tobacco companies to sell cigarettes in plain packs. Its representative in Geneva requested consultations with Australia, the first step in a legal dispute at the trade body. The Ukrainian government argues that Australia's Tobacco Plain Packaging Act 2011 and its Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 violate the TRIPs Agreement and GATT, the umbrella agreement covering trade in goods. Honduras and the Dominican Republic later requested consultations of their own.

Why Ukraine? Does it export a lot of tobacco?

No. It’s something of a mystery why the country would launch a complaint.

So what’s happened now?

A spokesman for the WTO has confirmed that Ukraine has stepped up its campaign against the Australian law. Last week it requested that an item be added to the agenda of the next meeting of the Dispute Settlement Body to set up a panel to hear its dispute. That meeting is due to take place on August 31 and agenda for the meeting is set to be published tomorrow.

Who has to agree?

Australia needs to agree to a panel being set up. It can only deny Ukraine’s request once however, so if, as is normally the case, it rejects the request at this month’s meeting, a panel will likely be set up following the September meeting of the Dispute Settlement Body.

What about Honduras and the Dominican Republic?

If they request a panel be set up, there’s a strong chance that it could be merged with the panel requested by Ukraine, as long as a long period of time hasn’t elapsed between the requests.

What’s the timetable?

Once a panel has been set up – which will be made up of three independent panellists – it has six months in which to report to the parties. One or both parties can appeal, and the appellate body has between two and three months in which to report back. If Australia’s law is ultimately found to breach WTO rules, and Australia refuses to change it, its goods could be the subject of sanctions from Ukraine, or the other two complainants, if they are successful.

What is Australia’s reaction to the Ukrainian request for a panel?

“Australia will strongly defend its right to regulate to protect public health through the plain packaging of tobacco products,” Craig Emerson, the country’s trade minister, said today. “The Government is confident that its plain packaging legislation is consistent with Australia’s WTO obligations.”