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It is not acceptable to prioritise commercial considerations over the fundamental right to health and life.

Tabaré Vázquez, President of Uruguay.

International trade court ruled in favour of Uruguay and against Philip Morris in tobacco case

Tobacco giant Philip Morris filed in 2010 a lawsuit against the government of Uruguay over their tobacco-labeling rules. In July an international arbitrary panel sided with Uruguay when it reached its final decision. “A ruling of great importance for health policies worldwide, not the least for alcohol control policies”, comments FORUT.

Under international trade agreement multinational companies have the right to take national governments to court if governments introduce trade regulations that, in the opinion of concerned corporations, violate the agreements by introducing undue restrictions on free trade. The court in such cases is an international arbitrary panel of trade lawyers under the The International Center for Settlement of Investment Disputes’ (ICSID).

This right granted to multinational corporations has been fiercely disputed and challenged, not the least by NGOs that are concerned with the health, welfare and environmental consequences of unrestricted free trade. Many politicians have also raised objections, as such a mechanism could undermine the authority of national democratic institutions.

Sigaretter nøytral pakke.jpgThe government of Uruguay has for some years taken a lead in introducing restrictions on sale and marketing of tobacco products. One of these regulations require that 80 % of the front and back of cigarette packs carry graphic warning about the health risks of smoking cigarettes.

In 2010 the American tobacco producer Philip Morris filed a lawsuit against the government of Uruguay claiming USD 25 million as a compensation for losses for the company due to the Uruguayan restrictions. In 2015 a trade panel started handling the case and their decision from July 2016 is an important signal both to national governments and to multinational corporations.

It says that regulations like the Uruguayan tobacco legislation are acceptable within the international trade agreements and that Philip Morris shall pay the government of Uruguay USD 7 million in damages on top all fees and expenses related to the case.

“This is very good news for health, welfare and environment policies. It sends a clear signal to governments and multinationals, but also to NGOs, comments Dag Endal, International Programme Coordinator of FORUT.

“In spite of the fact that international trade agreements by definition shall promote and protect corporations, trade and profits, these agreements shall also take other concerns into account, like public health. There are provisions for this in most trade agreements, but court rulings like this Uruguay case helps making the health clauses clearer by drawing up the line of what is acceptable and not in practical terms. Now even smaller countries can feel more confident when introducing public health policies. The chances are now a smaller that governments risk expensive and difficult court cases with big and rich multinational corporations as their opponents, says Dag Endal of FORUT.

Tabare Vazcuez Uruguays president.jpg“The attempts of the tobacco companies have been roundly rejected,” said Uruguay’s President Tabaré Vázquez (picture left) in a TV address to the nation. “It is not acceptable to prioritise commercial considerations over the fundamental right to health and life”.

“It shows countries everywhere that they can stand up to tobacco companies and win,” Former New York City Mayor Michael Bloomberg, now anti-tobacco activist, commented in an emailed statement to the web site TriplePundit. “Governments should always be able to protect people’s health and safety, and we’re committed to helping them when tobacco companies try to stand in the way.”