Introduction to Trade and Health Benn M c Grady, PhD O’Neill Institute for National and Global Health Law Georgetown University Law Center [email protected].

Introduction to Trade and Health

Benn McGrady, PhDO ’Neill Institute for National and Global Health Law Georgetown University Law [email protected]

1 Political economy of trade policy


Benn McGrady, PhDO ’Neill Institute for

National and Global Health Law

The theory of comparative advantage• A theory that specialization results in consumer

and producer surpluses when goods are traded• States create these surpluses by specializing in

the production of commodities, which they are best equipped to produce (as determined by the opportunity cost of production).

• This creates an efficient allocation of resources, resulting in increased production, making goods cheaper for consumers.




Ricardo’s classic example

• Portugal can produce both wine and cloth in fewer labour hours than Britain

• If wine and cloth trade at 1 for 1, Britain can obtain wine from Portugal for 80 rather than 110 and Portugal can obtain cloth for 80 rather than 90. Hence, each country is better off if Britain specializes in production of cloth and Portugal in production of wine.




Cloth Wine

Britain 100 110

Portugal 90 80

Political economy• Governments seek to open foreign

markets for ‘export oriented’ firms by bringing down barriers to trade such as tariffs, quotas, discriminatory or unnecessary regulations etc).

• Governments seek to protect ‘import sensitive’ firms from foreign competition by creating barriers to trade such as tariffs and discriminatory regulation.




Basic Features of the Trade Regime• Trade agreements compel states to

lower barriers to trade (liberalize trade).• Barriers include tariff and ‘non-tariff

barriers’, such as regulations.• Rules governing non-tariff barriers seek

to prevent regulatory protectionism and unnecessary regulation.

• Trade agreements facilitate economic stability, predictability for business and economic efficiency.







The WTO, FTAs and customs unions • The WTO Agreement is the central multilateral

instrument governing trade (on an MFN basis)• Free trade agreements (FTAs):

• require the elimination of substantially all restrictive regulations of commerce (such as tariffs) between the territories involved;

• are usually bilateral or regional in character; and • include commitments above and beyond those

in WTO law e.g. ‘TRIPS Plus’.• Customs unions involve the formation of a single

customs territory e.g. the European Union.




The Impacts of Trade Policy on Health• Some issues to study empirically:

• indirect impacts of trade liberalization on population health and health systems;

• trade in health-related products;• trade in harmful products;• trade in health services; and• trade in foodstuffs.

• Trade agreements as legal constraints on domestic regulatory autonomy

2Introduction to Trade

and Health



The General Agreement on Tariffs and Trade (GATT) 1994




The GATT 1994

• Relevant provisions include:• Article II (bound tariffs)• Article III (national treatment)• Article I (most-favoured-nation

(MFN) treatment)• Article XI (prohibition on

quantitative restrictions)• Article XX (General Exceptions)

• Illustrative disputes include:• EC – Asbestos• Brazil – Retreaded Tyres




Article XX – General ExceptionsSubject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures:. . .

(b) necessary to protect human, animal or plant life or health;. . .




Article XX – General Exceptions• Does the measure fall within the range of

policies considered to protect human health?• The panel must ‘weigh and balance’ relevant

factors in light of the importance of the regulatory goal.

• Are less trade restrictive alternative measures reasonably available?

• Is the measure applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction upon trade?


and Health



The Agreement on Technical Barriers to Trade (TBT Agreement)




The TBT Agreement• Agreement applies to ‘technical

regulations’• Definition requires

• An identifiable product or group of products

• Lays down product characteristics (either in negative or positive form)

• Must be mandatory• Examples include:

• Product regulations• Labeling requirements




Non-Discrimination and Necessity• Article 2.1 establishes a prohibition

on discrimination, which is not subject to an exception.

• Article 2.2 requires that technical regulations be not more trade restrictive than necessary to achieve a legitimate objective.




Harmonization• Art. 2.4 creates an obligation to use

international standards as a basis for technical regulations.

• This is not required where those standards would be an inappropriate or ineffective means for fulfillment of the legitimate objective pursued.

• Art. 2.5 creates a rebuttable presumption of compliance with paragraphs 2 – 4 where a technical regulation is adopted, applied or prepared:• for one of the legitimate objectives explicitly

mentioned in Art. 2.2, and• is ‘in accordance’ with relevant international

standards.

Product regulation

• US ban on clove but not menthol cigarettes ruled to be violation of WTO law

• Canadian, Brazilian and EU restrictions on additives and flavors questioned in the WTO Committee on Technical Barriers to Trade (TBT Committee)


Trade, Investment and Non-Communicable Diseases

Plain packaging

• No branding other than brand and variant names in standard color, position, font size and style

• Standard brown background in matte finish

• Warnings cover 75% of front and 90% of back of cigarette packs

• Referred to in Guidelines to the WHO FCTC

• Implemented by Australia• Challenged under Articles 2.1

and 2.2 of the TBT Agreement




ObjectivesTo improve public health by:(i)discouraging people from taking up smoking, or using tobacco products; and(ii)encouraging people to give up smoking, and to stop using tobacco products; and(iii) discouraging people who have given up smoking, or who have stopped using tobacco products, from relapsing; and(iv)reducing people’s exposure to smoke from tobacco products.

To achieve these aims by:(i)Reducing the appeal of tobacco products(ii)Increasing the effectiveness of health warnings(iii)Reducing misleading packaging





and Health



The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)

TRIPS overview• TRIPS obliges WTO Members to ensure

minimum standards of protection for intellectual property rights.

• WTO Members are obliged to permit registration of trademarks in certain circumstances.• There is an exception for misleading

trademarks e.g. ‘light’ and ‘mild’ on tobacco products.

• There is no obligation to permit use of trademarks and TRIPS is not violated simply because a regulation affects use of a trademark.




Article 20• The relevant part of the text states:

The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.Introduction to Trade

and Health



Unjustifiable encumbrances • Article 20 concerns only ‘unjustifiable’

encumbrances. • The principles in TRIPS Article 8

emphasize that WTO Members may adopt measures necessary to protect public health.

• These principles guide what is ‘unjustifiable’ i.e. at the very least, necessary measures are justifiable.

• Measures not meeting the threshold of ‘necessary measures’ could also be justifiable.




Unjustifiable encumbrances • Paragraph 4 of the Doha Declaration on

TRIPS and Public Health states:We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all.

In this connection, we reaffirm the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.




Justifiable?• So, is plain packaging a justifiable

encumbrance?




Introduction to Trade and Health Benn M c Grady, PhD O’Neill Institute for National and Global Health Law Georgetown University Law Center [email protected].

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