+44 (0)20 7799 6677

Big Tobacco’s £11bn UK attack could send EU-US trade deal up in flames

Jonathan Lindsell, 12 August 2014

Philip Morris International has threatened to sue Britain for an eye-watering sum over potential losses resulting from our proposed standardised brand-free cigarette packaging laws.

The American multinational has a 15.6% share of the international tobacco market, total assets of $38.2bn, and sued Australia on similar grounds along with Imperial Tobacco, Japan Tobacco and British American Tobacco (the ‘Big Four’). Australia won in 2012 after a painfully expensive legal battle in the Australian High Court, but now more tobacco lobbyists are attacking Australia through the World Trade Organisation.

How does this relate to the EU’s proposed trade deal with America, the Transatlantic Trade and Investment Partnership (TTIP)?

At the moment the EU wants its American and Canadian deals to include ‘Investor-State Dispute Settlement mechanisms’ (ISDS), the provisions which allow foreign companies to sue sovereign states for counterfactual lost earnings. ISDSs are the difference between the case Australia won, tried in its own courts, and the one it might well lose, in a deliberation consisting of three non-Australian WTO arbitrators. Recent history is littered with corporations beating nations through ISDS.

Marlboro, L&M, Benson & Hedges – all Philip Morris brands. PMI tried similar bully tactics against Norway when it banned the display of tobacco products in 2010. Crucially the case was tried in an Oslo District Court because the treaty through which PMI sued Norway – the European Economic Area agreement – had no ISDS. Norway made a public health defence. Norway won.

The tobacco giant told Westminster it wants to “protect its rights in the courts and to seek fair compensation” – but their threat’s intention is to stop the UK passing the plain packaging law at all. The proposal has already faced setbacks and delays. In their submission of evidence to the government’s proposal, PMI claimed: ‘Standardised packaging is a euphemism for government-mandated destruction of property…It is unlawful, disproportionate, and at odds with the most basic requirements of the rule of law.’ This shows scant regard for the principle of parliamentary sovereignty – if parliament passes this law, it cannot be ‘unlawful’.

Downing St has supported plain packaging since an independent assessor concluded it ‘very likely to have a positive impact on public health.’ Despite allegations that No.10 is delaying implementation due to the influence of spinning top Lynton Crosby, who once counted Philip Morris as a bumper client, David Cameron told the House that he’d pass the law before the 2015 election.

If this is the case, UK Euroscepticism may gain many new followers from anti-capitalist and pro-health groups. An £11bn price tag seems an absurd cost to a widely-agreed public health measure. Britain is behind the times in this respect: following public outcry Germany is already stalling the Canadian trade deal (CETA) because of worries about its ISDS.  TTIP would be derailed if CETA is blocked. Ordinary Germans and French are already demonstrating against the deals in large numbers, keen not to lose more sovereignty to multinational oligarchs – will Brits join in to protect the NHS and the UK’s self-government?


Keep up-to-date with all of our latest publications

Sign Up Here