In EC-Trademarks and Geographical Indications, the United States argued that Article 12 of the European Communities measure 2081/92 was in violation of, inter alia, its obligations under Article 3.1 of the TRIPS Agreement.More specifically, the United States claimed that geographical indications of origin for agricultural products and foodstuff of other WTO member states outside of the European Union “can only be registered under the Regulation if that Member satisfies the conditions in Article 12, which require it to adopt a system for GI protection that is equivalent to that in the European Communities and provide reciprocal protection to products from the European Communities.”Thus, this measure gave nationals of other WTO member states treatment less favorable than that of EC nationals. According to the Panel, two elements are required to show that a Member acted inconsistently with its obligations under 3.1: “ the measure at issue must apply with regard to the protection of intellectual property; and the nationals of other Members must be accorded ‘less favourable’ treatment than the Member’s own nationals.”The Panel first defined the terms “protection”and “intellectual property”under the first element. After determining that element one was satisfied, the Panel turned to a more involved discussion of the second element.The Panel noted the important distinction that Article 3.1 applies to “nationals not products”, unlike its predecessor, GATT Article III:4,before moving to its discussion of less favorable treatment.The Panel turned to the GATT III:4 interpretation of the phrase “treatment no less favourable” to determine its meaning under Article 3.1.Using that interpretation, the Panel determined that the appropri-ate analysis was “whether the difference in treatment affects the ‘effective equality of opportunities’ between the nationals of other Members and the European Communities’ own nationals with regard to the ‘protection’ of intellectual property rights, to the detriment of nationals of other Members.”
After analyzing the measure at hand, the Panel determined that because of the equivalence and reciprocity requirements,4×4 grow tray “the Regulation accords treatment to the nationals of other Members less favourable than that it accords to the European Communities’ own nationals, inconsistently with Article 3.1 of the TRIPS Agreement.”Much like Article 2.1 of the TBT Agreement and Article 3.1 of the TRIPS Agreement, Article III:4 of the GATT seeks to prevent discrimination between WTO member states.The GATT was the predecessor to the TBT and the TRIPS Agreements, and it introduced the important “National Treatment” principle that is essential to a successful international trading system.The GATT was originally signed after the Second World War in 1947 by only 23 countries in order to create some uniformity in international trade.In 1994, “[t]he WTO replaced GATT as an international organization, but the General Agreement still exists as the WTO’s umbrella treaty for trade in goods . . . ”Because the GATT is the founding agreement of the WTO, there have been many disputes outlining the obligations of member states. One dispute, Korea–Measures Affecting Imports of Fresh, Chilled and Frozen Beef , is a useful example of how Article III:4 works. In Korea-Beef, the United States requested consultations with Korea relating to, inter alia, violations under Article III:4 of the GATT.Korea was regulating the retail sale of beef via a “dual-retail system” through the “Management Guidelines for Imported Beef.”This system specified that “imported beef may only be sold in specialized imported-beef shops.”88 The United States argued that this practice violated Korea’s national treatment obligations under Article III:4.The United States contended that because “imported beef does not enjoy the same competitive opportunity to be sold in the same manner and in the same stores in which Korean beef is sold, it is treated less favourably than domestic beef.”Korea disagreed, stating that its dual-retail system had “perfect regulatory symmetry” and amounted to neither de jure nor de facto discrimination.
Considering both arguments, the Appellate Body presented a three-element test for finding a violation of Article III:4.According to the panel, an Article III:4 violation is established when it is shown that the “imported and domestic products at issue are ‘like products’; that the measure at issue is a ‘law, regulation, or requirement affecting their internal sale, offering for sale, purchase, transportation, distribution, or use’; and that the imported products are accorded ‘less favourable’ treatment than that accorded to like domestic products.”Of the three elements, the United States and Korea were only disputing the final “less favorable treatment” element.The Panel found that a measure based “exclusively on criteria relating to the nationality or origin of products is incompatible with Article III:4.”However, the Appellate Body noted that providing different treatment to imported products does not necessarily violate Article III:4, provided the treatment is no less favorable.The Appellate Body found that differences between treatment of imported and domestic products are “neither necessary, nor sufficient to show a violation of Article III:4.”Further, “[w]hether or not imported products are treated ‘less favourably’ than like domestic products should be assessed instead by examining whether a measure modifies the conditions of competition in the relevant market to the detriment of imported products.”While examining the Panel Report, the Appellate Body found that the number of imported beef shops was drastically lower than the number of domestic beef shops.The Appellate Body disagreed with Korea’s argument, stating that the restrictive choice of only selling imported or domestic beef resulted in a “reduction of access to normal retail channels.”Therefore, the Appellate Body held that Korea’s treatment of imported beef was less favorable than the treatment of domestic beef, resulting in a violation of Article III:4.As previously noted, Article 2.1 of the TBT Agreement seeks to prevent member states from enacting measures that accord imported products less favorable treatment than like domestic products.Indonesia claims that Australia’s TPPA is in violation of Article 2.1.This, however, cannot be true, because the TPPA applies to all tobacco products sold in Australia.
This test is comprised of three elements, all of which must be satisfied to show a violation of Article 2.1.First, the Panel will ask whether the TPPA is a technical regulation. According to the definition set out in Annex 1.1 of the TBT Agreement, the TPPA falls squarely into this category.The first element of the test will likely be satisfied. The second element of the test requires the products being examined to be “like.”Based on the Appellate Body’s finding in Clove Cigarettes that the analysis must be “based on the competitive relationship between and among the products”, it is fair to say the imported and domestic products are like.Unlike Clove Cigarettes, Australia-Plain Packaging does not require an analysis of different types of tobacco products, as the TPPA applies to all tobacco products.Therefore, the second element of the test will likely be satisfied. In all likelihood, the only element of this test in contention is the third and final element. This element begs the question: are tobacco products imported to Australia accorded less favorable treatment than domestic tobacco products?The Appellate Body in Clove Cigarettes noted that Article 2.1 prohibits both de jure and de facto discrimination.Because the TPPA encompasses all tobacco products, it does not discriminate against imports, and therefore can only be de facto discrimination. Based on the Appellate Body’s analysis,greenhouse racking for a violation to occur, the TPPA must modify the conditions of competition in Australia to Indonesia’s detriment vis-à- vis the group of like domestic products.However, the Appellate Body stated that this analysis is not dispositive when the regulation is not de jure discriminatory.Because the TPPA applies to all tobacco products, it is not discriminatory on its face, and can only be de facto discrimination.Therefore, according to the Appellate Body, a further analysis is necessary.To determine whether this is truly a discriminatory measure, the Panel will analyze whether the impact on Indonesia “stems exclusively from a legitimate regulatory distinction.”Specifically, the Panel will look to “the design, architecture, revealing structure, operation, and application of the technical regulation at issue, and, in particular, whether that technical regulation is even-handed . . . ”The TPPA is even-handed in that it applies to all tobacco products. Its design and operation show this to be true, as domestic cigarettes are subject to the same packaging regulations as imported cigarettes.Further, Australia-Plain Packaging differs from Clove Cigarettes because of the TPPA’s blanket ban. Recall from the earlier discussion on Clove Cigarettes that the United States’ measure did stem from a legitimate regulatory distinction because menthol cigarettes were exempt while all other flavored cigarettes were banned.The TPPA simply cannot be placed into the same line of reasoning. It applies to all tobacco products, domestic and imported, unlike Clove Cigarettes where one like domestic product was not banned.The very reason the United States’ measure in Clove Cigarettes did not comply with Article 2.1 can be attributed to the fact that it did not apply to all flavored tobacco products.For the foregoing reasons, the Panel likely found that the TPPA satisfies the third element of the test and therefore is in compliance with Article 2.1 of the TBT Agreement.
The second factor requires an analysis of the trade restrictiveness of the TPPA.This factor is Indonesia’s best argument for an Article 2.2 violation. The TPPA is quite restrictive, and it is likely that Indonesia has made that fact known to the Panel. However, these factors are not dispositive, and a trade-restrictive measure is not an automatic violation of Article 2.2.Further, because the TPPA has a legitimate objective, as explicitly mentioned in the text of Article 2.2, the Panel is more likely to give this factor less weight.The third factor favors Australia. This factor looks at the “nature of the risks at issue and the gravity of consequences that would arise from non-fulfilment of the objective.”As with the first factor, this Paper will implicate the dangers of tobacco use.It is no secret that tobacco use is dangerous, and the Panel likely determined that the risks at issue are serious. If Australia was forced to repeal the TPPA and its progress was halted, tobacco use could gradually increase until it reached its prior average. The consequence the Panel will look to is returning to pre-plain packaging Australia, which does not seem as dire as other consequences to non-fulfillment of legitimate objectives. However, when considering a study completed by the Australian Government Department of Health that found a decrease of .55 percent in Australian smokers from 2012 to 2015, the consequences the Panel must consider are counted in lives.The latest census indicated that 24.8 million people live in Australia.Assuming the rate of decrease remains stagnant, 136,400 people are not using tobacco that would have before. This is a rough estimate based on presumptions, but it shows how great the consequences could be. For the foregoing reasons, the Panel likely found that the TPPA is not more trade restrictive than necessary to fulfill a legitimate objective.Because of the lack of WTO jurisprudence on Article 3.1, it is likely that the Panel turned to its analysis in EC-Trademarks and Geographical Indications for guidance. As discussed earlier, the two-element test for a violation of Article 3.1 is “ the measure at issue must apply with regard to the protection of intellectual property; and the nationals of other Members must be accorded ‘less favourable’ treatment than the Member’s own nationals.”Based on the Panel’s definitions of “protection”and “intellectual property”,it is unlikely that the first element will be in dispute. However, based on the language in its request for consultations, Indonesia plans to argue the second element.In EC-Trademarks and Geographical Indications, the Panel determined that the correct analysis of the second element involves a determination of whether the measure “affects the ‘effective equality of opportunities’ between the nationals of other Members and the European Communities’ own nationals.”Based on the Panel’s analysis, it is unlikely that the Panel found merit in Indonesia’s argument. Unlike the EC’s measure in EC-Trademarks and Geographical Indications, Australia’s TPPA does not alter the “effective equality of opportunities.” The language of the TPPA refers to the regulation of retail packaging for all tobacco products in Australia.It does not matter whether the tobacco products are made in Australia or imported from another country. The regulations apply to any tobacco product sold.Although the TPPA will treat Indonesia less favorably than before its enactment, the TPPA does not treat Indonesia less favorably than any other country, including Australia.