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Ukraine turmoil could be a setback for tobacco firms

Source: Reuters - Fri, 28 Feb 2014 15:53 GMT
Author: Reuters
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* Doubt over future of trade challenge against Australia

* Yanukovich pushed issue in WTO with industry support

* Anti-tobacco campaigners hope case will be dropped

By Tom Miles

GENEVA, Feb 28 (Reuters) - The fall of Ukrainian President Viktor Yanukovich could have an unlikely impact on a wider battle: the global fight by health campaigners to restrict tobacco marketing, which may later affect alcohol and unhealthy foods too.

Yanukovich's government took the lead in challenging Australia after it enacted tough restrictions on the packaging of cigarettes, a move that supporters said heralded a new global wave of public health legislation.

In March 2012, Ukraine launched a case at the World Trade Organisation to try to overturn the Australian law, a step seen by anti-tobacco campaigners as a stalling tactic by a government with little interest in the issue, and whose legal bills were being met at least in part by one or more tobacco firms.

Now Ukraine's change of government, and its empty coffers, puts the challenge against Australia into question.

"I think in the circumstances that are now created in Ukraine of course it may be very difficult to find money to continue this dispute," said a source at Ukraine's diplomatic mission in Geneva, home of the WTO.

The mission has not yet received new instructions from Kiev, but Ukraine's future trade policy is likely to focus more on concrete steps to help its ailing economy than on "theoretical" questions about tobacco, the source said.

However, if other countries helped to fund Ukraine it might continue, since the issue is important and may bear on future curbs on other products, such as alcohol, the source said.

Trade officials at Ukraine's Ministry of Economy were not immediately available to comment.

BUSINESS BACKING

British American Tobacco, which has in the past confirmed it helped support Ukraine's legal costs, declined to say if it had contacted Kiev ministries this week. However, it said it would continue to support the case.

"British American Tobacco remains committed to providing legal support to countries, such as Ukraine, as is customary for businesses to do in WTO disputes, in relation to regulatory matters that seek to undermine a business," the company said in an emailed comment on Friday.

A spokesman for Imperial Tobacco declined comment on the dispute, saying his firm had not helped fund or assist Ukraine in the challenge. A spokesman for Philip Morris International said it was not supporting Ukraine in any capacity. Japan Tobacco International did not immediately respond to a request for comment.

Ukraine is not the only country to have launched a WTO case on the issue, but it was the first and is the closest to entering formal litigation in the trade body that could eventually make or break the Australian law.

Honduras, Dominican Republic, Cuba and Indonesia have also filed complaints against the Australian "plain packaging" law that bans flashy logos and colours on tobacco products.

Australian cigarettes now come in drab brownish packets with brand names reduced to a small, standardised font which is dwarfed by graphic health warnings.

Other countries are thinking of following Australia's example with similar restrictions on tobacco, but many are awaiting the outcome of the WTO case before doing so.

Health campaigners were perplexed by Ukraine's WTO suit because it is a party to the key U.N. treaty on tobacco, the Framework Convention on Tobacco Control, and it was one of the countries that backed guidelines on how to implement the treaty, including enforcing plain packaging.

WHO spokesman Tarik Jasarevic said the WHO hoped Ukraine would now take a tougher line on tobacco and drop the WTO case.

"We want all countries to adopt anti-tobacco measures in line with FCTC and we would like that all court cases against countries adopting these measures are dropped," he said.

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