Concluding Remarks on the WTO Challenge

After reviewing voluminous evidence and claims submitted by the Parties to this dispute, as well as submissions made by third parties, the Panel reached the above-mentioned findings and upheld Australia’s TPP measures. The concepts of “trade-restrictiveness” and “unjustifiability” were particularly at the fore-front of the claims and Panel’s treatment of these two concepts were decisive on the compatibility of plain packaging in the context of WTO law. Under Art.2.2 of the TBT Agreement, the Panel concluded that plain packaging restricts trade indeed. Nevertheless, Australia was not found to violate this provision. Similarly, plain packaging was found to encumber the use of trademarks as prescribed under Art. 20 of the TRIPS Agreement, but the Panel found no violation of this article either because the adoption of them were found justifiable. The findings of the Panel related to both of these provisions give weight to purposes of plain packaging as stated in the Australian legislation. Acknowledging the legitimate interest of Australia in adopting measures with the purpose of reducing smoking prevalence, the Panel was persuaded that plain packaging can and does serve its purposes in contributing to this objective. In its analysis of both of the mentioned provisions, the legitimate interest of Australia in implementing plain packaging for reducing smoking prevalence, and consequently improving public health were considered important by the Panel. One may argue that, the Panel’s decision reflects the regulatory discretion held by the member states in adopting measures that have an effect on trade protected by WTO law, for purposes that serve societal interests such as improvement of public health.

The second objective pursued by Australia which is to perform its obligations under the FCTC were affirmed by the Panel as well. Even though Panel disagreed with Australia’s argument that FCTC and its guidelines constitute relevant international

100 standards as per the TBT Agreement, that finding did not ultimately lead to a negative decision against Australia. On the other hand, the WHO and the FCTC Secretariat were invited to submit additional documents concerning the guidelines and any preparatory materials considered by COP in the adoption phase. In its report, it indeed relied on the information provided by them, including the scientific and technical evidence. Notably, the Panel also referred to the relevant FCTC provisions and guidelines in various findings²⁹².

On the other hand, the Panel’s interpretation of Art. 20 of the TRIPS Agreement in terms of the rights conferred to trademark owners were highly anticipated. In fact, the complainants’ also argued that articles 15 and 16 implicitly required member states to allow trademark use. The Panel, however, did not agree with the complainants’ and tobacco industry’s argument that the provisions of the TRIPS Agreement obliges member states to provide trademark owners a right to use their trademarks, or a minimum opportunity to use them, neither expressly nor implicitly. According to the Panel, the exclusive right conferred by Art. 20 of the TRIPS Agreement did not extend beyond a negative right. Remarkably, the Panel put further emphasis on the fact that the use of trademarks is not entirely prohibited on tobacco packaging, although it prohibits the use of figurative trademarks that have been used on tobacco products. The use of simple and standardized word marks as required by the TPP measures were found to be sufficient for the trademarks to serve their functions such as indicating source and distinguishing the products.

292 A list of the references made to provisions of the FCTC and its guidelines can be found in Gruszczynski L./ Melillo M., The FCTC and its Role in WTO Law: Some Remarks on the WTO Plain Packaging Report, European Journal of Risk Regulation, 9(3), 2018, pp. 564-574, at p. 572.

101 As noted earlier, the Panel Report was appealed by Honduras and Dominican Republic. The appeals will be reviewed by the Appellate Body under Art. 17 of the DSU²⁹³. In its written communication concerning the appeals, the Appellate Body announced that it will be unable to conduct its review within the periods indicated under the DSU due to the “exceptional size and complexity of the consolidated proceedings” as well as “the considerable volume of the panel record and the size of the panel report, the number of issues appealed, and the many complex aspects of these appellate proceedings²⁹⁴”. On the other hand, United States’ ongoing blockage of member appointments to the Appellate Body is contributing to the delays in the Appellate Body’s functioning²⁹⁵. Therefore, it is still not clear when the appeals will be reviewed at the time of writing.

All in all, the Panel dismissed all of the claims made by the complainants concerning the TPP measures’ consistency with the WTO law. Concerning the conflicting balance between the legitimate interests of private right holders and WTO members right to regulate measures in the public interest, the Panel Report gives weight to states’

293 On 5 September 2018, the Appellate Body decided to consolidate the appeals of Honduras and Dominican Republic

294 WTO, Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging: Communication from the Appellate Body, WTO Docs WT/DS435/24, WT/DS441/25 (20 September 2018). Available at:

<https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/435-24.pdf> (last accessed 30.12.2019)

295 Voon T.: Third Strike: The WTO Panel Reports Upholding Australia's Tobacco Plain Packaging Scheme, The Journal of World Investment & Trade (20), 2019, pp. 146-184, at p. 6-7; Kaya T., Düz Paketleme, p. 1072.

102 regulatory discretion in adopting measures for the public interest. This outcome may assure the countries that are willing to regulate measures for the public interest while complying with its obligations under international trade agreements. However, the delay in the Appellate Body’s decision may result in the regulatory chilling effect to last a while longer.