INDUSTRY GLOSSES OVER RED FLAGS IN TRADE AGREEMENTS

Dr Cressy and Mr Fortescue wrote ‘Just the facts: trade agreements do not undermine alcohol policy’ in critique of ‘The alcohol industry and trade agreements: a preliminary assessment’[1,2]. The writers misrepresent the substance of international treaties in several significant ways. They contend that the treaties are limited to rules to ensure that foreign firms receive equivalent treatment with domestic alcohol firms. In fact, not only is the non-discrimination rule interpreted more broadly than one might expect, more importantly the treaties contain other rules, including market access and domestic regulation, that have nothing to do with discrimination but have the potential to limit public health options whether the affected firms are local or foreign. Under the General Agreement on Trade in Services (GATS), no government action is in principle beyond scrutiny and challenge, including measures taken in the exercise of government-related powers at any level of government [3]. For example, GATS Article XVI (market access) prohibits limitations on the number of service suppliers. Consequently, commitments under ‘distribution services’ will have restrictions on regulatory measures to limit alcohol supply, limiting retail outlets and total volume or total sales. GATS prohibits ‘quantity-based restrictions’ even when they are applied equally to domestic and foreign products [4]. Trade proponents state that government services are carved out and that nothing in GATS forces privatization of publicly held companies. However, World Trade Organization (WTO) and regional/bilateral agreements exert tremendous pressure to privatize monopolies as incompatible with GATS principles of national treatment and market access [5]. WTO member nations voluntarily make specific commitments to open particular service sectors and specify conditions of trade but are obligated to ‘engage in successive rounds of negotiations with a view to achieving progressively a higher level of liberalization in trade in services’[3]. Interestingly, the United States, thinking that it only committed ‘recreation’, lost to Antigua when the WTO said that gambling was included and the European Union (EU) is now using that to force open US markets and challenge state monopoly control [6]. South Africa found that its health legislation intended to meet the health needs of the majority of the population conflict with legally binding commitments under GATS made by the former apartheid regime [7]. The EU and United States, with particular support from distilled spirits interests, promote regional and bilateral free trade agreements which contain greater enforcement provisions that enable foreign investors to challenge a government directly for alleged breaches of the treaty [3,8]. These investor–state dispute mechanisms bypass domestic laws and juridical authority which protect the public's health and general welfare and short-cuts ways in which governments normally resolve disputes between themselves [9]. This may have a chilling effect on governments seeking to formulate appropriate health legislation, including domestic regulation of alcohol or tobacco, as the North American Free Trade Agreement (NAFTA) enabled Philip Morris and R.J. Reynolds Tobacco Company (RJR) protected Canadian restrictions on cigarette labeling successfully using NAFTA provisions [7,8,10]. The writers point to non-commercial/unrecorded alcohol as the principal problem. Researchers agree that about a third of global alcohol consumption is unrecorded, much of it locally produced and non-commercial, particularly in low-income countries and in the former Soviet Union. Given the global level of unrecorded consumption, it is obvious that the industry has a keen interest in its reduction and replacement by their products [11]. Interestingly, the industry sponsored International Center for Alcohol Policies states that ‘[a]lthough the production of many noncommercial beverages meets high quality standards, much of what is included under this heading may be contaminated and toxic. The latter category poses a threat to public health—particularly in developing and transition countries . . .’[12]. In other words, drink their branded products which are not a threat to public health? The global burden of disease linked to alcohol is not confined to unrecorded/non-commercial alcohol consumption, but to the overall consumption and high-risk use [13]. The writers claim that because international drinks are generally more expensive, they are less likely to be misused. Therefore, limiting globally branded products through restrictions in trade agreements, they say, is unnecessary and will have little effect on alcohol problems. They also suggest that public health measures inappropriately target ‘internationally-traded products’. In fact, public health measures are focused upon reducing alcohol-related harm no matter the source of the alcohol. The problem is that when overall alcohol consumption rises, particularly heavy episodic drinking, alcohol abuse causes serious health and other social problems [13]. By stating that ‘National Governments are not prevented from introducing measures to tackle misuse of alcohol . . .’, the writers ignore powerful WTO treaties and hundreds of bilateral investment treaties. The critics suggest that treaty exceptions protect genuine public health measures. However, the preponderance of researchers on trade and public health are very skeptical about the health exemptions in trade agreements and whether they are adequate or weak, at best [5,8]. Both the 1994 General Agreement on Tariffs and Trade (GATT) (Article XX-b) and GATS (Article XIV-b) provide limited exceptions. To withstand a challenge, a government health measure must be ‘necessary’, effective, with no other alternative policy available that would be less restrictive to trade and be ‘actually necessary to achieve the specified legitimate objective’[8]. Business interests can promote their ineffective corporate responsibility campaigns as acceptable alternatives to evidence-based measures [14,15]. Governments negotiate trade agreements primarily in secret from the public but in close consultation with business interests, the dominant non-governmental presence at the policy-making table [14,15]. Governments consistently take every advantage of opportunities to foster the interests of their major industries. Following the prevailing neo-liberal free trade ideology, governments tend to prioritize trade with little or no consideration of the health implications and often work ‘hand-in-glove’ with corporations to ‘pry open key markets’ and resist direct health and other non-governmental organizations (NGOs) presence lest they ‘dilute business influence’[5,10,16]. To date, most of the focus of corporations in the trade arena has been the low-hanging fruit of reductions in tariffs and protection of geographic indications for their products [17]. However, what we attempted to demonstrate in the review is that the treaties give the alcohol industry powerful tools to thwart barriers to trade, including public health measures. While claiming to only promote brand loyalty and encourage current drinkers to switch to their products (sounds like the tobacco industry), their goal is to maximize sales, consumption and profits world-wide. The industry is riding a global confluence of global factors. Expanding globalization brings economic growth and the capability of more people to purchase alcohol. Products are more widely available and relatively inexpensive. They target potential markets using slick marketing appeals to the growing youth population in developing countries with widespread mass communication and media penetration which portray alcohol only in highly positive ways. In most of the world, there is weak alcohol control policy and prevention infrastructure. Global pro-market liberalization and business-friendly trade agreements will only add fuel to a ‘perfect storm’ of alcohol-related problems [5,6,12,18]. Trade agreements between governments treat alcohol products as conventional ‘goods’ (e.g. orange juice or bread) and presume that expanding commerce in these products is always beneficial [14,19]. However, alcohol is definitely no ordinary product and thus needs to be addressed with a public health perspective in trade agreements. None.

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