tobacco – Techdirt (original) (raw)

ATF Ran Illegal Mixed-Money Slush Fund For Years With Zero Oversight, Auditing, Or Punishment

from the no-one's-more-above-the-law-then-law-enforcement dept

The ATF isn’t restrained by oversight. It’s hardly restrained at all. It’s made a business of fake stash house sting operations, where downtrodden suckers looking for cash are persuaded to rob a ficitonal stash house of its fictional drugs. The problem is the government then bases its charges on the amount of nonexistent drugs sting victims were told the fake stash house contained. In no sting operation was the “amount” of drugs lower than 5 kilograms — the amount needed to trigger a 20-year minimum sentence.

Why is the ATF involved? Because every sting operation involves fictional armed guards, necessitating the use of illegally-obtained weapons by sting victims. Bang. More charges with lengthy minimum sentences.

When not pushing people into fake robberies, the ATF regulates alcohol, tobacco, and firearms. (Also explosives, but it makes the well-known acronym more than a bit clumsy.) To facilitate maximum price gouging by state governments, the ATF tries to break up untaxed cigarette sales.

It’s this simple work that has propelled an accountability-free explosion in the ATF, most of it traced back to a single office in Bristol, Virginia, fronted by a quasi-legitimate tobacco distributor. From there, an appalling amount of illegal activity was participated in by ATF agents and officials.

Matt Apuzzo has put together an amazing story for the New York Times, sourced from interviews and public records requests — one that will cause your jaw to drop lower the further you scroll down the page. As Apuzzo puts it, the operation began as a way to bust black-market cigarette sales. It ended up as something much more sinister: an ATF slush fund that mixed public and private money with zero oversight or statutory authority. If any agent needed anything — from vending machines with cameras in them to credit cards for unquestioned expenses — they went to Bristol. It was done in the government’s name, but plenty of agents personally profited from the operation.

The spending was not limited to investigative expenses. Two informants made $6 million each. One agent steered hundreds of thousands of dollars in real estate, electronics and money to his church and his children’s sports teams, records show.

Federal law prohibits mixing government and private money. The A.T.F. now acknowledges it can point to no legal justification for the scheme. But far from reining in the spending, records show that supervisors at headquarters encouraged it by steering agents from around the country to Bristol.

As the money mixed, the spending increased. ATF officials in Washington sent agents to Bristol to obtain equipment, supplies, and spending money in order to bypass red tape. So many vehicles were requisitioned through Bristol the office had to set up its own leasing company. Hotel bills and gas alone ran nearly $25,000 a month. And yet, the DOJ never looked into the ATF operation or its incredible amount of spending. With public and private funds overlapping, it would have been a nightmare to audit. How much of a nightmare, no one knows… because no one ever tried. Unbelievably, the “accounting” for the ATF’s oversight-less, mixed cash operation was left to a single bookkeeper using Quickbooks on her own computer.

As part of the sting, two informants helped pad the ATF’s secret account by purchasing cigarettes directly from US Tobacco at 3acartonandsellingthembacktotheATFfor3 a carton and selling them back to the ATF for 3acartonandsellingthembacktotheATFfor17 a carton. Rather than this being a losing proposition for the ATF, the difference in prices allowed the ATF to dump another half-million into its secret Bristol account.

The ATF office was basically housing gangsters with hearts of ill-gotten gold at this point.

[ATF agent Thomas] Lesnak said he set the prices, allowing his informants “customary and reasonable” profits. Mr. Carpenter and Mr. Small were paid $6 million apiece in less than two years, according to court documents. Such huge sums would normally require special approval. But since the money came from the secret account, the A.T.F. officially paid them nothing.

Those around Mr. Lesnak benefited, too. The old tobacco warehouse — a $410,000 repurposed candy factory — was given to his church, property records show. A half-million dollars from the secret account was donated to local law enforcement agencies. Thousands more went to Mr. Lesnak’s children’s school. Mr. Lesnak handed out Blu-ray players and Xboxes to his son’s baseball teammates, one player recalled. The donations, Mr. Small said, were made at Mr. Lesnak’s insistence.

To keep his warehouse workers happy, records show, Mr. Lesnak handed out envelopes of cash — 500to500 to 500to700 a month, tax free. On an office casino trip, Ms. Davis testified, he provided money for gambling. Employees were given DVD players, televisions or freezers that arrived in the warehouse, records show.

The ATF’s operation finally ran into trouble when US Tobacco began taking an interest in purchases tied to the agency. Concerned it was being used to facilitate something resembling a criminal operation (but run by law enforcement personnel), US Tobacco began looking into activities at its Bristol warehouse. This led to one of the greatest moments of combined irony and schadenfreude in human existence.

The operation ran until Stuart Thompson, a bookish Manhattan native, took over as chief financial officer at U.S. Tobacco. He repeatedly pressed the warehouse manager to explain the unusual supply of Palermos. No market existed for that many cigarettes, he said.

On March 8, 2013, the warehouse manager called Mr. Thompson. “He started telling me that A.T.F. was doing operations in our warehouse,” Mr. Thompson recalled.

Company lawyers descended on the warehouse, seizing everything. A tobacco company had just raided the A.T.F.

Despite all of this, no one involved has been prosecuted. The DOJ still hasn’t attempted to audit the funds the ATF worked with, even while declaring the operation to be highly problematic. Everyone involved walked away unscathed. Even Agent Lesnak, who spearheaded the operation and set up the mixed-money slush fund, never received so much as an oral reprimand. I suppose the DOJ felt the 100 or so arrests resulting from the operation outweighed the illegal activity that went on for years under its nose.

The whole story is worth reading. It shows the ATF has the DEA’s mentality: nothing matters but the job. Any and all illegal operations are forgiven in advance (and often in arrears) because doing the government’s version of God’ work involves breaking laws like omelet eggs and keeping oversight as far away as possible from day-to-day activities.

Filed Under: atf, slush fund, smuggling, tobacco

Tobacco Carve-Out From ISDS Starts To Spread: Another Nail In The Coffin Of Corporate Sovereignty

from the crack-in-the-dam dept

One of the last pieces of horse-trading that went on in order to conclude the TPP deal involved corporate sovereignty, aka investor-state dispute settlement (ISDS), and tobacco. As we reported a year ago, a “carve-out” for tobacco was agreed, which was designed to assuage fears that tobacco companies would use TPP’s ISDS mechanism to challenge health measures like plain packs — something that Philip Morris attempted against both Australia and Uruguay. Now, it looks like the idea is spreading, as Simon Lester points out on the International Economic Law and Policy Blog:

> Whether or not the TPP ever gets ratified, the idea for a tobacco carveout seems to have taken hold. Via Tania Voon on twitter, I see that Australia and Singapore have agreed to amend their FTA to include a tobacco carveout.

The wording itself, inserted into the section on corporate sovereignty, is pretty simple (pdf):

> Section B: Investor-State Dispute Settlement > > ARTICLE 22 > > Tobacco Control Measures > > No claim may be brought under this Section in respect of a tobacco control measure of a Party

It’s worth noting that this is not just another carve-out, but a retrospective one, which creates an interesting precedent that might be followed elsewhere. After all, once the principle that tobacco companies should not be allowed to use ISDS to interfere with health programs is established, there’s no reason not to apply it more widely, to both future and existing trade and investment deals.

More generally, the appearance of this carve-out for tobacco raises a question Mike asked a year ago: if corporate sovereignty is such a bad idea for this industry, why not for others that can cause harm — like the extractive industries, for example? And once people start asking these kinds of questions, it’s not long before they realize that putting companies above national laws, and letting them sue governments in supranational tribunals, makes no sense at all for any sector. Calls to drop the entire ISDS system have been growing for a while; the latest move by Australia and Singapore is likely to make them louder.

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Filed Under: carve-outs, corporate sovereignty, isds, tobacco, trade deals

Defeat Of Philip Morris In Its Corporate Sovereignty Case Against Uruguay Likely To Open Floodgates For Tobacco Packaging Legislation

from the this-is-the-big-one dept

Last December, Techdirt wrote about Australia fending off an attempt by Philip Morris to use corporate sovereignty to overturn the country’s plain-packaging regulations. As we pointed out, this wasn’t proof that investor-state dispute settlement (ISDS) was no threat to national sovereignty, despite what some were claiming. Australia won on purely procedural grounds, not because the ISDS tribunal agreed that Australia had a fundamental right to regulate.

However, as the Techdirt article also mentioned, there is another tobacco case based on corporate sovereignty provisions in a trade deal — the one which Philip Morris brought against Uruguay. It’s fortunate that Uruguay decided not to roll over, but to contest the case — something it could only do because of funding from a foundation set up by former New York mayor Michael Bloomberg — because a tribunal has just found in its favor:

> The award released on Friday brings to a close a six year dispute between the global tobacco giant and Uruguay, with an arbitral tribunal upholding Uruguay’s right to do two things: prohibit tobacco companies marketing cigarettes in ways that falsely present some cigarettes as less harmful than others and require tobacco companies to use 80% of the front and back of cigarette packs for graphic warnings of the health hazards of smoking. > > Uruguay’s lawyers, the Boston-based firm Foley Hoag, praised the decision as having broad international consequences.

As that quotation from an article in The Mandarin suggests, this is a much more significant decision than the Australian one, because Philip Morris did not lose on procedural grounds this time. That establishes a crucial precedent for other countries that wish to introduce health measures affecting tobacco packaging. Several have been holding off from bringing in such laws until they knew what happened to Australia and Uruguay, and therefore what legal risks they would run. We can probably expect many more nations to move forward with new legislation now, not least because Philip Morris was also ordered to pay $7 million of Uruguay’s $10.3 million costs (pdf).

Uruguay’s regulations on cigarettes did not bring in plain packs of the kind adopted by Australia. Instead, the South American country currently limits how much of the cigarette packet can be used for branding, and also stops tobacco companies from making misleading claims that their products are “mild” or “ultra-light.” However, The Mandarin notes that Uruguay will:

> soon move towards all tobacco products being sold in generic packages, with even larger warnings of the harms caused by smoking, in an effort to further reduce smoking levels.

The latest defeat for Philip Morris clears the way for Uruguay to do that. Even more importantly, it also represents a high-profile failure of the tobacco company’s strategy of using the threat of ISDS litigation to apply pressure to nations not to bring in legislation. It’s hard not to think that the tribunal’s refusal to sanction this approach is due to a massive growth in public awareness and public antipathy towards corporate sovereignty, an area that not so long ago was a sleepy corner of trade law familiar to only a few specialist lawyers.

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Filed Under: australia, corporate sovereignty, plain packaging, tobacco, uruguay
Companies: philip morris

The TPP And The Tobacco Carve-out Bring Together Strange Bedfellows… While Highlighting The Problems Of The TPP

from the not-a-good-idea dept

It’s been rumored for years, but reports out of Atlanta suggest that it’s now confirmed that in order to finalize the Trans Pacific Partnership (TPP) agreement, everyone agreed to carve tobacco out of the corporate sovereignty system, better known as ISDS (investor state dispute settlement). These systems allow companies to sue countries for passing regulations that the companies feel harm their ability to profit — and tobacco companies have already filed ISDS complaints in a few countries that have pushed to put health warnings on cigarette packages.

While some health activists have cheered on this carve out — it appears that almost everyone else is pissed off. Not because they think that Big Tobacco should be shaking down countries that pass anti-smoking laws (though, there may be some of that), but because they recognize the problems that occur when governments can start to set up trade deals that “carve out” certain industries. It’s opening up a huge can of worms. Even some supporters of corporate sovereignty/ISDS are worried about what it means when one particular industry can just be excluded entirely from the process. Two of the biggest supporters of ISDS and TPP in Congress, Senators Mitch McConnell and Orrin Hatch, have both warned that the US should not carve out tobacco. Here’s McConnell a few months ago, standing up for those poor, poor tobacco farmers:

?It is essential as you work to finalize the TPP, you allow Kentucky tobacco to realize the same economic benefits and export potential other U.S. agricultural commodities will enjoy with a successful agreement.?

And here’s Hatch actually making a fairly salient point about the carve out:

?Although I don?t support tobacco at all, I still think it was essential,? Hatch said. ?It?ll cost us some votes. And every vote is essential. And there are other things I am very concerned about. I?ve committed to read the bill, and I will read it, but right now I?m leaning against it.?

That doesn’t bode well for the agreement, given that Hatch was a huge supporter of the TPP. Another Senator, Thom Tillis, has pointed out that carving out one industry opens up the possibility of carving out others:

?I?ll not only vote against it, I?ll work hard to have it defeated if it goes in the final agreement…. Once you carve out someone from dispute settlement agreements, then who?s next??

And the tobacco carve-out, believe it or not, seems to be one thing that both big business and big labor agree on, though for entirely different reasons. The US Chamber of Commerce and the National Association of Manufacturers are totally against it:

we ask all of the TPP governments to reject the exclusion of products from the coverage of the TPP and its enforcement mechanism…. Such exclusions are unnecessary and would be highly damaging to the international rules based trading system and the prospects for the TPP.

And here was the AFL-CIO opposing the entire ISDS mechanism, and noting that the tobacco carve-out just highlights the problems of ISDS. Whereas Senator Tillis worried about “who’s next” to get carved out, the AFL-CIO is pointing out that maybe there should be a lot more.

Any industry-specific carve-out will not address the serious structural problems inherent in the system itself. Issues of broad public interest should not be viewed through the narrow lens of trade and investment at all, let alone decided by unaccountable private panels. Systems of justice should be transparent and accessible on an equal basis. ISDS is anything but: Only foreign investors can use it and there are no requirements that affected communities be allowed to participate or even have their view considered. In many cases, there often are not even requirements that hearings or decisions be made available to the public at all! Even in the case of clear legal error, it is almost impossible to reverse a decision.

Indeed, as Sean Flynn pointed out just last week, carving out tobacco really just enforces how dangerous corporate sovereignty really is:

The new exception validates, rather than assuages, the concerns of those who have been criticizing ISDS systems for many years. Without express carve outs, ISDS provisions do threaten common health and safety regulations.

The carve out does nothing to halt the disturbing recent trend of companies using ISDS provisions in trade agreements to enforce international intellectual property norms through ISDS tribunals. This is, indeed, the claim at the heart of the tobacco cases now being litigated in ISDS systems. The claim is that tobacco regulations requiring plain packaging violate the trademark rights of tobacco companies protected by the World Trade Organization agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The pharmaceutical company Eli Lilly has also claimed that the denial of a new use patent on an old (off-patent) medicine violates rights granted by TRIPS and the North Atlantic Free Trade Agreement (NAFTA).

Meanwhile, US trade officials are, of course, trying to tap dance around the fact that basically everyone absolutely hates this. The USTR has tried to pretend this isn’t a big deal because tobacco is “unique.”

The U.S. Government seeks to include this language because tobacco is a unique product ? it is highly addictive, always harmful to human health, and the single most preventable cause of death in the world. Recognizing these facts about tobacco through the TPP will represent an important step forward for public health in the international trade community.

It’s true that tobacco can be a serious health concern, but shouldn’t we be raising questions about why this procedure is no good for tobacco companies, but just dandy for every other industry — including some that produce harmful products? Or those like pharmaceutical companies who are jacking up prices to keep necessary medicines out of the hands of the poor?

Oh, and then there are those who are in complete denial, who are insisting that there really isn’t a carve-out for tobacco, even though there almost certainly is (we can’t say for sure, of course, because the documents are secret):

?TPP will not discriminate against any agricultural commodity nor will it exclude tobacco. On the contrary, TPP will provide protections to ensure that governments can implement tobacco control measures, while guaranteeing that tobacco has the same legal status as any other product,? a U.S. official told CQ Roll Call last week.

In short, the whole tobacco carve-out situation is a microcosm of the problems with the TPP. You have a terrible idea (corporate sovereignty) mixed with a weak attempt to appease health activists (carve out tobacco), that basically fixes nothing and satisfies no one. And, now, the same Senators in Congress who demanded the fast track authority be granted, which ties their own arms behind their backs in terms of changing the agreement, are threatening to force this change, even though they’ve already given up the power to do so.

Filed Under: carve-out, corporate sovereignty, exemption, isds, mitch mcconnell, orrin hatch, tobacco, tpp, trade, winners and losers

Tobacco Industry's Interest In Trade Negotiations? Totally Redacted

from the public-interest? dept

The folks at Corporate Europe Observatory (CEO) sent a freedom of information request to the EU Commission, asking for details of meetings that trade officials held with the tobacco industry. This matters, because the tobacco industry is one of the major abusers of trade agreements, repeatedly making use of the “corporate sovereignty” ISDS provisions to effectively sue any country passing anti-smoking health laws — as was covered a few months back by John Oliver:

So, as new trade agreements are being negotiated — especially since the powers that be tell us these agreements are designed to protect the health and well being of the public — it seems that Big Tobacco’s efforts in these negotiations is pretty relevant. After numerous delays and confusing responses, CEO finally received a response. And it’s [redacted]. Well, not entirely, but basically anything useful is blacked out. Such as this lovely document, which is oh so revealing:

Democracy in action!

Filed Under: corporate sovereignty, isds, redacted, tafta, tobacco, trade deals, transparency, ttip
Companies: ceo, philip morris

Let's Do Business: How Lifting The Embargo Has Opened The Door For Cuban Trademark Suits

from the hola! dept

I’ll miss the Cuban embargo. The easing of relations that it brings with it will likely mean the end of the 1950s-style spy games and crazy plots — like the CIA plot designed to make a leader’s beard fall out. Instead, we’ve finally decided that the United States is open for Cuban business. And you know what that means: trademark lawsuits!

The U.S. Supreme Court recently ruled in favor of a Cuban state-owned company and refused to intervene in a dispute over the “Cohiba” trademark. This is the most recent development in the long-standing rivalry between General Cigar Co Inc., an American (and Scandinavian) company, and Cubatabaco, a Cuban company.

How fun! We finally open up the borders for some business with Cuba and one of the Castro companies decides it’s trademark time! Keep in mind, of course, that the state that owns Cubatabaco is a communist nation, but not so communist that they’ll refuse to use our capitalist tools to make that money. This dispute actually goes back nearly two decades, with Cubatabaco originally filing a trademark claim in 1997, which was eventually tossed in 2005 by the Second Circuit court, finding that any transfer of property, including a trademark, to a Cuban company would violate the embargo.

But now that the embargo is gone, Cubatabaco has refiled, with a lower court ruling that the Cuban company could challenge General Cigar’s mark with the USPTO even before the embargo was lifted — a ruling the Supreme Court has refused to send back for review. So there appears to be nothing standing in the way of a trademark challenge.

All that said, it’s difficult to see how valid a challenge is, actually, given several factors. First, the two companies as yet don’t compete in the same markets, due to the legacy of the embargo. Second, the word “cohiba” might not deserve a trademark held by anyone, given that it is simply a foreign word that means “tobacco” in Taino, a language of the Caribbean. That would be like getting a trademark on your beer brand, Cerveza.

However this turns out, welcome officially to business in the States, Cuba! Now that the embargo doesn’t keep property from transfering your way, it’s all trademark, patents and copyright from here on out!

Filed Under: cohiba, cuba, embargo, tobacco, trademark
Companies: cubatabaco, general cigar co

Health Impact Assessment: TPP Poses Risks To Affordable Medicines, Tobacco Control And Nutrition Labeling

from the matter-of-life-and-death dept

The TPP negotiations are still being conducted with a total lack of transparency — especially compared to TAFTA/TTIP, where public pressure has led to the release of a large number of documents from the EU, though not from the US. Despite that secrecy, the TPP negotiators seem to have no qualms about proclaiming the talks as nearly “done.” Since they have been saying something similar for years, skepticism is required, but it is possible that negotiations might be getting closer to the end game where all the really difficult issues need to be addressed.

That makes the absence of any official release of the draft text pretty appalling. Assuming that the final text will be released if and when an agreement is reached, this will leave very little time for the complex provisions to be analyzed properly before the national votes take place in some TPP countries. Given what’s at stake — TPP is likely to have a big impact not just on trade, but also on many aspects of daily life — one group has decided to pre-empt that eventual release, and to analyze what information we have, notably from leaks. HIA Connect, based in Australia, describes itself as follows:

> A resource for health impact assessment (HIA) as a method and a process to ensure that public policies, projects, plans, and programs contribute to the health of the population and health equity.

HIA’s new report “Negotiating Healthy Trade in Australia: A Health Impact Assessment of the Proposed Trans-Pacific Partnership Agreement” (pdf) focuses on TPP’s likely impact on health in Australia, but many of its conclusions apply to other countries participating in the TPP negotations. Here’s a summary of its findings:

> A report released today by a large team of academics and non-government health organisations reveals that the Trans-Pacific Partnership Agreement (TPP) poses risks to the health of Australians in areas such as provision of affordable medicines, tobacco and alcohol policies and nutrition labelling. Many public health organisations have been tracking the progress of the TPP negotiations over the past several years and have expressed concerns about the potential impacts and lack of transparency.

As that makes clear, the academics and other experts who put together the report are concerned about a number of adverse effects that TPP is likely to have. Some are familiar, for example the impact on affordable medicines, or on the ability to regulate and restrict tobacco advertising — an area where Australia is already suffering thanks to corporate sovereignty provisions in other treaties. Others are new, but similar: some TPP provisions could limit the regulation of alcohol availability and alcohol marketing, and restrict alcohol control measures such as pregnancy warning labels. Food is another area where labeling restrictions in TPP could prevent governments from warning about the consumption of unhealthy ingredients.

Of course, supporters of TPP will doubtless say that all this is premature, and that nothing certain can be said until the final text is released — a point echoed by the authors of the report:

> “In the absence of publicly available current drafts of the trade agreement, it is difficult to predict what the impacts of the TPP will be,” said Dr Deborah Gleeson, one of the report’s authors. “In the study, we traced the potential impacts based on proposals that have been — or are being — discussed in the negotiations.

But as Gleeson goes on to point out, there’s a very easy way to remedy this problem:

> “The only way to properly assess the risks is to allow a comprehensive health impact assessment to be conducted on the final agreement before it gets signed by Cabinet.”

Given that people’s health and even lives may be at stake here, it is irresponsible for participating governments to withhold the draft texts — especially since they are allegedly so close to completion — and thus to prevent a proper health impact assessment of them being conducted well in advance of any final votes.

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Filed Under: affordable medicine, health, health impact, patents, tobacco, tpp

DailyDirt: Drugs Are Baaaad, mmKay?

from the urls-we-dig-up dept

If we really wanted to tackle drug problems, we might want to try alternatives to alcohol that might have antidotes. However, we’ve tried to outlaw alcohol before, and it didn’t turn out too well. Marijuana is beginning to become slightly less illegal (not on the federal level), and some studies show it’s not nearly as harmful a drug as some folks believe it is. Put down your bongs, stop giggling at that cartoon you’ve been watching all day, and check out some of these links on the effects of marijuana.

If you’d like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.

Filed Under: alcohol, drugs, marijuana, recreational drugs, smoking, tobacco, ultramarathon

John Oliver Highlights The Ridiculousness Of Corporate Sovereignty Provisions

from the good-for-him dept

Okay, I know that it’s become something of a cliche for blogs and news sites to repost John Oliver clips, but dammit, if the guy doesn’t keep on covering the types of stories that we normally cover around here. I mean, Stephen Colbert and Jon Stewart used to touch on related topics maybe once every six months or so, whereas Oliver seems to hit on a Techdirt-worthy topic basically every other week (so often we don’t get to all of them!). This past week, he did his big segment on the nasty games that Big Tobacco plays around the globe to market its products to just about everyone. Yes, in the US, most cigarette advertising is blocked, but Big Tobacco has just shifted to more vulnerable populations around the globe. That topic, by itself, isn’t directly in Techdirt’s wheelhouse — but in the middle of the segment, there’s a discussion about corporate sovereignty, and specifically the use by Big Tobacco of “investor state dispute settlement” (ISDS) provisions to allow the big tobacco companies to sue countries for daring to try to regulate cigarettes, advertising or packaging.

The segment on corporate sovereignty starts at around 6 minutes, right after showing examples of ridiculous tobacco commercials that are shown around the globe:

Now countries can try to counteract the influence of that kind of marketing, but if tobacco companies feel threatened, they’ll put them through legal hell. Let me take you on a world tour of how they attack laws intended to protect public health, because it’s kind of amazing.

Let’s start in Australia. In 2011, they passed a plain packaging law, and what that means is this. [Shows (fair use!) news clip describing required packaging of cigarettes with no branding, and scary health pictures]. Australia’s plain packaging law bans tobacco company branding from packaging and replaced it with upsetting photos, such as the toe tag on a corpse, the cancerous mouth, the nightmarish eyeball, or the diseased lung. Now, yes, I’m pretty sure I’d find a healthy lung disgusting, but, that thing does look like you’re trying to breathe through baked ziti, so [instructing staff] take it down! Just take it down!

Perhaps unsurprisingly, since this law was implemented, total consumption of tobacco cigarettes in Australia fell to record lows and… nightmares about eyeballs have risen to record highs. [Instructing staff] Take it down! Take down the demon eye!

To get these laws, though, Australia has had to run a gamut of lawsuits. First, two tobacco companies sued Australia in its highest court to stop them. The result, was a little surprising, as Australia’s attorney general let everyone know. [Shows clip of AG announcing not just the victory, but Big Tobacco having to pay the government’s legal fees.] Yes! Score one for the little guy! Even if that little guy is the sixth largest country in the world by landmass.

And the tobacco companies didn’t just lose. The judges called their case “delusive,” “unreal and synthetic” and said their case had “fatal defects.” ….

But Australia’s legal troubles were just beginning. Because then, Philip Morris Asia got involved. [Shows clips of a news report saying Philip Morris considering using ISDS provisions to take the Australian government to a tribunal claiming it lowered the value of the company’s trademarks].

That’s right. A company was able to sue a country over a public health measure, through an international court. How the fuck is that possible? Well, it’s really a simple explanation. They did it by digging up a 1993 trade agreement between Australia and Hong Kong which had a provision that said Australia couldn’t seize Hong Kong-based companies’ property. So, nine months before the lawsuits started, PMI put its Australian business in the hands of its Hong Kong-based Philip Morris Asia division, and then they sued, claiming that the “seized property” in question, were the trademarks on their cigarette packages.

And you’ve got to give it to them: that’s impressive. Someone should really give those lawyers a pat on the back… and a punch in the face. But, a pat on the back first. Pat, then punch. Pat, punch….

He then goes on to point out how Big Tobacco further got three other countries to file complaints with the World Trade Organization (WTO) against Australia, claiming the plain packaging law violates trade agreements: Honduras, Dominican Republic and Ukraine. Oliver then shows a clip noting that Ukraine does not have any tobacco trade at all with Australia, showing how ridiculous the WTO claim is.

Next, he shows how Big Tobacco is sending threatening letters to other countries, like Uruguay, Togo and Namibia for considering health regulations around tobacco products, even going so far as to totally misrepresent the total loss of its lawsuit in Australia, pretending that it was a victory. Oliver’s researchers got letters that Big Tobacco sent these countries, threatening “an incalculable amount of international trade litigation.”

There’s even more in the video — though it would be great if Oliver also took on the fact that these kinds of ISDS/corporate sovereignty agreements are at the heart of key trade agreements currently being negotiated today by the US and much of the rest of the world in both the TPP agreement and the TTIP agreement.

It’s because of stories like this that we’re so concerned about these corporate sovereignty provisions. Defenders insist they’re necessary to stop countries from absconding with assets built by foreign companies and investors, but that risk tends to be fairly limited, compared to how these agreements are actually being used: to allow corporations to effectively step in and block regulations designed to protect the public.

Filed Under: australia, big tobacco, cigarettes, corporate sovereignty, isds, john oliver, tobacco, togo, uruguay
Companies: philip morris

USTR Hoping To Keep Corporate Sovereignty Provisions If It Excludes Big Tobacco From The Deal

from the horse-trading dept

We’ve been quite critical of so-called corporate sovereignty provisions in various trade agreements. These provisions — which trade negotiators prefer to call “investor state dispute settlement” (ISDS) rules (in part because they’re so boring when called that, no one pays attention to how pernicious they are) — basically allow companies to take governments to special tribunals, if new laws and regulations somehow interfere with their attempts to profit. A key example of how this is used under existing (via NAFTA) corporate sovereignty provisions is Eli Lilly demanding $500 million from Canada for daring to reject two of its patents because the drug in question didn’t actually prove to be useful. Eli Lilly claims that this undermined the company’s “expected future profits” and thus filed this suit, undermining the sovereignty of the country of Canada to determine what is, and what is not, patentable.

Another popular use of corporate sovereignty claims is the tobacco industry, going after countries that pass “plain packaging” laws (which say that all cigarette packaging needs to be without logos and trademarks and such). Whether or not you agree with such laws, the idea that big tobacco companies can take entire countries to these tribunals, demanding many millions of dollars based on laws those countries decided to pass, seems troubling. It’s especially been concerning to health officials who have long favored plain packaging regulations.

Apparently, the latest move to salvage corporate sovereignty provisions in the Trans Pacific Partnership (TPP) agreement has the USTR attempting to throw Big Tobacco under the bus by removing tobacco from the ISDS provisions. This is an incredibly cynical and political move, designed to try to quiet some of the health activists’ talking points about the plain packaging fights — while leaving the overall basis of these corporate sovereignty provisions wholly in place.

While I don’t always (or often) agree with the AFL-CIO, its response to this cynical attempt to carve Big Tobacco out of the deal is dead on:

The proposed carve-out will not stop multinationals like Veolia from suing the government of Egypt for raising the minimum wage. It won?t stop the pharmaceutical giant Eli Lilly from suing Canada over patent requirements or stop extractive company Pacific Rim Mining (a Canadian company that has since been bought by the Australian multinational OceanaGold) from demanding compensation when El Salvador refuses to let it pollute the local water supply by operating a gold mine.

Any industry-specific carve-out will not address the serious structural problems inherent in the system itself. Issues of broad public interest should not be viewed through the narrow lens of trade and investment at all, let alone decided by unaccountable private panels. Systems of justice should be transparent and accessible on an equal basis. ISDS is anything but: Only foreign investors can use it and there are no requirements that affected communities be allowed to participate or even have their view considered. In many cases, there often are not even requirements that hearings or decisions be made available to the public at all! Even in the case of clear legal error, it is almost impossible to reverse a decision.

In fact, the cheap attempt by the USTR to toss Big Tobacco under the bus to get a deal done really does more to underline the problems of corporate sovereignty positions, rather than to help smooth things over. If ISDS isn’t appropriate for Big Tobacco, why is it appropriate for Big Pharma? Or big mining companies?

The USTR has continued to push out-of-date regulatory concepts into modern trade agreements. These are clearly designed not with the public interest in mind, but with a focus on what’s best for the representatives of a few giant companies who are close to the USTR. Helping a few giant multinationals undermine regulations around the globe may be good for future job prospects in the industry, but it’s hardly the incentives we should want for public servants.

Filed Under: corporate sovereignty, isds, plain packaging, plain packs, tobacco, tpp, ustr