Complexities at the intersection of tobacco control and trade liberalisation: evidence from Southeast Asia

Abstract

For more than two decades, public health scholars and proponents have demonstrated concern about the negative effects of trade liberalisation on tobacco control policies. However, there is little theoretically-guided, empirical research across time and space that evaluates this relationship. Accordingly, we use one major region that has experienced rapid and significant recent liberalisation, Southeast Asia, and examine key tobacco control-relevant outcomes between 1999 and 2012. While we find a modest increase in regional trade in tobacco products in some countries, the effects on tobacco affordability and consumption are very mixed with no clear link to liberalisation. We argue that widespread penetration of the region by transnational tobacco firms is likely mitigating the effects of trade liberalisation. Notably, tobacco control policies have also generally improved across the region, part of which is likely the result of successful regional and global efforts by civil society, governments and intergovernmental organisations. The results suggest that scholars and public health proponents should move the focus away from narrow economic aspects of liberalisation toward specific issues that are more likely to affect tobacco control, such as intellectual property rights protections and investor–state dispute settlement.

 

Discussion and conclusions

The very mixed results above across key aspects of the trade and tobacco nexus suggest that there is no clear-cut link between trade liberalisation and a decline in tobacco control and/or an increase in tobacco consumption in Southeast Asia. One popular proposed solution to mitigating trade liberalisation’s effects on tobacco control is a total exclusion of tobacco from future economic agreements. While there are some obvious benefits to this proposal, it is not clear that it is politically viable or that it will have particularly large positive effects for public health.

In terms of tobacco exclusion’s political viability, the broader task of affecting trade negotiations successfully is challenging, not to mention the additional burdens of returning to hundreds of previously negotiated economic agreements.61 In each case, proponents would have to convince the appropriate political actors that a policy of tobacco exclusion is necessary and appropriate. These actors almost surely include governments’ trade officials and negotiators, but probably also legislators and/or other major political actors. Many of these actors will have strong preferences and/or vested interests that preclude supporting such initiatives. Moreover, in a consensus-based context such as ASEAN, such efforts would have to occur successfully across all members.62 A high-ranking trade official in the Philippines noted that no key trade or finance officials in ASEAN countries are openly supportive of this proposal (interview, 8 April 2013). With literally thousands of products and hundreds of discrete issues up for negotiation in most agreements, prospects for change of this nature are dim.

Tobacco exclusion may even be problematic in some circumstances by perpetuating market structures that serve strong pro-tobacco interests (eg, by preserving the market share of a particularly politically strong TTC). It is no mistake that in two major recent economic agreements, the Pacific Island Countries Trade Agreement (PICTA) and the South Africa–European Union Trade, Development and Cooperation Agreement, it was a major TTC operating in favourable domestic conditions pushing governments for an exclusion policy (personal communication with South African treasury official, 23 April 2013).

If one of the ultimate goals is to affect price positively (and thereby reduce consumption), tobacco excise taxes are typically a superior strategy to trade barriers such as tariffs because they are non-discriminatory, can be made specific to quantity or unit, and can even be designed to account for inflation and income growth.51 Tariffs as a tobacco control tool may have the perverse consequence of permitting domestic tobacco manufacturers to thrive, while having limited or no effect on price, affordability and/or consumption. While it is true that decreased competition generally leads to higher prices, it remains the prerogative of the domestic industry to set prices to optimise their goals. For example, a protected domestic firm or industry might set certain products at lower prices to encourage initiation of use and then raise prices only after solidifying its consumer base through the products’ profoundly addictive nature.63

Similarly, if one of tobacco control proponents’ ultimate goals is to counteract aggressive marketing by the tobacco industry, it might be more prudent to pursue FCTC-compliant bans on tobacco advertising, promotion and sponsorship. These bans do not discriminate between domestic and foreign products, but rather, address all tobacco products and thereby prevent domestic firms from taking advantage of a potentially privileged status in a domestic market.64,65 However, such bans might preserve market shares forcing firms to compete more aggressively on price.66

Without doubt, there remain enormous challenges at the economic policy–tobacco control nexus: the extant case study evidence cited above suggests strongly that there are very serious challenges to public health. But the public health community must identify better the precise causal mechanisms, and develop some viable and sophisticated solutions. Simply arguing the trade liberalisation is bad for tobacco control and that excluding the tobacco sector from economic agreements is the solution is a suboptimal strategy in terms of how it addresses the challenges and its likelihood for effective implementation. As all ASEAN countries negotiate the evolving Regional Comprehensive Economic Partnership with regional neighbours (Australia, China, India, Japan, Korea and New Zealand) and some ASEAN members consider their membership in the even more comprehensive Trans-Pacific Partnership (TPP), the impetus to find the most feasible and effective balance among health and economic commitments could not be larger. Public health proponents’ concern about the TPP appears founded as even a US Trade Representative proposal to include a safe harbour for tobacco control regulations is reportedly no longer under consideration (as of late 2013).67

Instead, the public health community must target efforts toward the largest, most pressing and potentially problematic substantive problems. For example, the Uruguay labelling and Australia plain packaging challenges demonstrate clearly that investor–state dispute settlement provisions in BITs pose genuine risks to tobacco control, not least of which because wealthy TTCs have the opportunity to bully small or even larger countries in the unpredictable setting of international arbitration. Similarly, the public health community must push negotiators firmly and unequivocally not to privilege the protection of intellectual property rights over governments’ moral and legal obligations to regulate for the broader public health. Economic agreements are not likely going away any time in the near or medium term, so the public health community needs to be better prepared to make appropriate and effective requests and demands.

 

 

 

Full paper can be accessed at http://tobaccocontrol.bmj.com/content/24/e2/e128.full
Complexities at the intersection of tobacco control and trade liberalisation_evidence from Southeast Asia (Drope and Chavez)

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