INTERNATIONAL TRADE DISPUTE SETTLEMENT BETWEEN AUSTRALIA AND INDONESIA UNDER WORLD TRADE ORGANIZATION DISPUTE SETTLEMENT BODY (WTO DSB) MECHANISM: AUSTRALIA‟S PLAIN PACKAGING ACT 2011 (2013 - 2017) By Anthoni Nicolas Tarigan ID No. 016201400018 A Thesis presented to the Faculty of Humanities President University in partial fulfillment of the requirements for Bachelor Degree in International Relations Concentration of Diplomacy Studies 2018
Transcript
INTERNATIONAL TRADE DISPUTE SETTLEMENT BETWEEN
AUSTRALIA AND INDONESIA UNDER WORLD TRADE
ORGANIZATION DISPUTE SETTLEMENT BODY (WTO DSB)
MECHANISM: AUSTRALIA‟S PLAIN PACKAGING ACT 2011
(2013 - 2017)
By
Anthoni Nicolas Tarigan
ID No. 016201400018
A Thesis presented to the Faculty of Humanities
President University in partial fulfillment of the requirements for
Bachelor Degree in International Relations
Concentration of Diplomacy Studies
2018
i
THESIS ADVISER RECOMMENDATION LETTER
This thesis entitled “International Trade Dispute Settlement Between Australia
and Indonesia under World Trade Organization Dispute Settlement Body
Figure 4.4 The Stages of Dispute Settlement Under WTO DSB, WTO ····· 113
xiii
LIST OF TABLES
Table 2-1: The Development of Tax Increase on Tobacco Products
especially cigarette and cigar in Australia
from 2007 to 2017 ······················································· 58
Table 3-1: Indonesian Export of Tobacco Products from 2012 until 2015
under HS Code 24, ITC Calculation Based on UNCT ·············· 68
Table 3-2: Smoking prevalence in Indonesia aged 15 years more by 2015 ··· 77
Table 3-3: The profit of tobacco per kg in major tobacco producer area in
Indonesia in 2016 (USD), World Bank 2017 ························ 81
Table 3-4: Indonesian Tobacco Import from 2011 until 2016,
ITC Calculation Based on UNCT ····································· 83
Table 3-5: The Tobacco Products Trade Relation between Indonesia and
Australia (2012 – 2016), ITC Calculation Based on UNCT ······· 84
Table 3-6: The average market share growth of brands segments in Australia
prior and after the implementation of Plain Packaging Act,
Neil Dryden 2015 ························································ 91
Table 4-1: The Development of the Australia – Indonesia Dispute Settlement
on Australia’s Plain Packaging Act 2011 under WTO DSB ······· 124
xiv
LIST OF ABREVIATIONS
WTO World Trade Organization
DSB Dispute Settlement Body
IPR Intellectual Property Rights
FCTC Framework Convention on Tobacco Control
NAFTA North American Free Trade Agreement
TRIPS Trade – Related Aspects of Intellectual Property Rights
WIPO World Intellectual Property Organization
ISCSID International Centre for Settlement of Investment Dispute
GATT General Agreement on Tariffs and Trade
ITO International Trade Organization
ITC International Trade Center
UNCT United Nation Commission of Trade
GDP Gross Domestic Products
MFN Most Favored Nations
GATS General Agreement on Tariffs and Service
AIHW Australian Institute of Health and Welfare
DALY Disability-Adjusted-Life-Year
WHO World Health Organization
IPRI Intellectual Property Rights Index
1
CHAPTER I
INTRODUCTION
1.1 Background of the Study
Tobacco has been a global issue for many years. Not only causing serious
illness and death, tobacco also causes indirect economic loss in some countries
such as the decreasing of health and productivity which then followed by the
increasing of medical expenses. The World Health Organization has recorded
around US$ 1.4 trillion global net loss annually caused by tobacco, which is far
outweighing the benefit from the tobacco production itself.1 The condition is even
worse in the developing countries to which most of tobacco users belong. In the
developing countries, most of the tobacco users are middle to low income class,
which mostly are the male workers.2 The worst and most happening scenario is
that they consume tobacco, they got serious illness, they lost their job, they will
be burdened with overwhelming medical expenses, and all their money or even
assets will be sacrificed.3 The stories could just end there, but it does not. They
have families depending on them, who are left abandoned with no choice but
living in poverty.4 This condition contributes a lot to the stagnancy of national
development which could have been way better.
Referring to the situation and seeing tobacco as one of the main preventable
death causes, many countries have tried to come hand in hand controlling the use
of tobacco to reduce the victim that reaches the average number of 7 million
people killed annually and other economic losses.5 World Health Organization,
through the Framework Convention on Tobacco Control (FCTC), acts as the
1 World Health Organization. (2017, May 30). Tobacco kills more than 7 million people per year
and is costing the world economy USD 1.4 trillion annually. Retrieved from
http://www.who.int/fctc/mediacentre/press-release/wntd-2017/en/ 2 World Health Organization. (2003, November). Gender, Health, and Tobacco. Retrieved from
http://www.who.int/gender/documents/Gender_Tobacco_2.pdf\ 3 WHO. (2004). Tobacco Increases the Poverty of Individuals and Families. Retrieved from http://www.who.int/tobacco/communications/events/wntd/2004/tobaccofacts_families/en/ 4 Ibid. 5 World Health Organization. (2017, May 30). Tobacco kills more than 7 million people per year
and is costing the world economy USD 1.4 trillion annually. Retrieved from
paragraph 3, 20, 22 paragraph 2(b), and 24 paragraph 3 as well as violated two
other agreements used in international trade, namely GATT and Technical
Barriers to Trade (TBT)10
.
The opposing countries then brought the case to the World Trade
Organization to seek for the solution under the Dispute Settlement Body (DSB)
with the case number DS467 with Indonesia as the main complainant. Despite the
aspect of the economic loss suffered by the tobacco industry in the country,
Indonesia believes that the agreements on trade as the main source of the
international law has a very crucial role in the practice of international trade and
all countries participating in the agreement shall implement the provisions under
all circumstances possible as regulated in the agreement.
On September 20, 2013, Indonesia through its representative submitted a
request for consultation with the Government of Australia to the World Trade
Organization concerning:11
1. Australia Tobacco Plain Packaging Act Number 148 Year 2011
concerning the discouragement of the use of the tobacco products
and for related purposes.
2. Australia Tobacco Plain Packaging Regulation 2011 under the
Legislative Instrument Number 263 Year 2011 as amended by the
10 World Trade Organization. (2017, October 3). Australia — Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging. Retrieved from https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds467_e.htm 11
Indonesia‘s Consultation Request to WTO Number WT/DS467/1, G/TBT/D/46
IP/D/34, G/L/1041, dated on 25 September 2013.
6
Australia Tobacco Plain Packaging Amendment Regulation Number
1 Year 2012 under the Legislative Instrument Number 29 Year
2012.
3. The Amendment of Trade Marks in the Tobacco Plain Packaging
Act 2011 concerning the amendment to the Trade Mark Acts 1995,
and for any related purposes.
4. All related measures implemented by Australian government to the
law as referred to in the point 1, 2, and 3 including the amendment
to replace and/or complement those regulations.
In the request submitted to the WTO, written also the main reason of
Indonesia‘s objection regarding the Australia Plain Packaging Act 2011, as
follow:12
a. Australia has failed to protect the trademarks registered outside
Australia as it is without imposing any change in the trademark or
even eliminating the trademarks as regulated in the TRIPS
Agreement Article 2 paragraph 1.
b. Australia has failed to provide the protection regarding the unfair
competition as the plain packaging is believed to create confusion
among the same tobacco products from other competitor industries
as regulated in the TRIPS Agreement Article 2 paragraph 1.
c. Australia has performed the less favorable actions towards other
nationals‘ intellectual property rights than towards its own national
intellectual property rights protection which should have treated
equally the same as regulated in the TRIPS Agreement article 3
paragraph 1.
d. Australia has created an obstacle to the registration of the
trademarks of the nature of the goods to which the trademark should
12
Ibid.
7
be applied as regulated in the TRIPS Agreement article 15 paragraph
4.
e. Australia, by implementing the Plain Packaging Act, has prevented
the owner of the trademark to enjoy the rights conferred in the
trademark as regulated in the TRIPS Agreement article 16 paragraph
1.
f. Australia, by implementing the Plain Packaging Act, has prevented
the owner of the trademark to enjoy the rights of being the ―well-
known‖ producer of the tobacco products conferred in the trademark
as regulated in the TRIPS Agreement article 16 paragraph 3.
g. Australia has unjustifiably harm the trademark by imposing special
requirements such as the uniformity of typeface, font, size, and
color, as well as the placement of the brand name in the tobacco
products which resulted in the inability of one trademark‘s
capability to distinguish it‘s the tobacco products of one enterprise
from the tobacco products of other enterprises as regulated in the
TRIPS Agreement article 20.
h. Australia has failed to provide the effective protection of the
trademark from the unfair competition regarding the geographical
indications as the plain packaging creates confusion of the origin of
goods as regulated in the TRIPS Agreement article 22 paragraph 2b.
i. Australia has diminished the level of protection toward the
geographical indications as regulated in the TRIPS Agreement
article 24 paragraph 3.
In the dispute settlement process, there have been other countries acting as
the third parties which are Brazil, Canada, China, Cuba, European Union,
Guatemala, Honduras, India, Japan, Republic of Korea, Malaysia, Mexico, New
Zealand, Nicaragua, Norway, Oman, Philippines, Russian Federation, Chinese
Taipei, Thailand, Turkey, Ukraine, United States, Uruguay, Zimbabwe,
8
Dominican Republic, Peru, Singapore, Argentina, Chile, Malawi, Nigeria, and
Ecuador.13
1.2 Problems Identified
Prior to Australia, there has not been any participating countries of FCTC
established a national law of plain packaging. There have been some countries
who tried to issue the Plain Packaging Act, however in the negotiation and
discussion process, some reasons have hindered the act to come in to force. In
1994, the Government of Canada tried to impose the plain packaging act;
however this act failed to come in to force.14
The reason behind the failure of
implementing plain packaging act of the Government of Canada was no other
than the concern on the trademark protection as well as the obligation of Canada
under the WTO and North American Free Trade Agreement (NAFTA).15
Short
after the Canadian Government, the United Kingdom also tempted to introduce
the plain packaging concerning the same issue, the trademark, as well as the
treaty of treaty within the European Union, however, UK has imposed the
regulation again in its national law today.16
Plain packaging act is like a deck of cards standing making line, once one
card in the front falls, the other card will also falling down, a domino effect. If
Australia wins the battle, many countries will have the tendency to impose the
same act as Australia, a homogenous plain packaging on tobacco products.
Different from some countries in the past, in the era after the winning of Australia
– if the DSB decided to win Australia – , the implementation of plain packaging
13 World Trade Organization. (2017, October 3). Australia — Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging. Retrieved from https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds467_e.htm 14
Freeman, B., Chapman, S., & Rimmer, M. (2008). The Case for the Plain Packaging of Tobacco
Products. doi:10.1111/add.2008.103.issue-10 15 Belluz, J. (2016, June 2). The US Hasn't Updated the Health Warnings on Cigarette Packs in 31 years. Retrieved from https://www.vox.com/2016/6/2/11818692/plain-packaging-policy-us-australia 16
Reuters. (2017, April 12). UK Supreme Court Denies Big Tobacco Appeal, Plain Packaging to
Go Ahead. Retrieved from http://www.reuters.com/article/britain-smoking/uk-supreme-court-
will be a lot easier and will have bigger possibility to become a national law
within a country.
Besides the tobacco product, there might be other health-harming products
will be subjected to plain packaging, such as alcohol and unhealthy food. Once
this condition occurs, there might be more conflicts in international trade. For
example Indonesia, Indonesian tobacco products will encounter some difficulties
in the Australian market as the plain packaging act has been imposed there. As
the revenge, Indonesia will impose the same regulation of plain packaging; say
for alcoholic beverages, which eventually will be affecting Australian wine. This
condition is will lead to nothing but a worse trade relations between both
countries.
The most important aspect that will be at stake in such condition is the
Intellectual Property Rights. Intellectual Property Rights was formed to protect
the creation of intellectual thinking of human mind to ensure the creator will
enjoy the privilege of his creation without ever worried that someone else will
take advantage of it.17
The implementation of plain packaging act seems has
destroyed the idea of the Intellectual Property Protection Law. The Plain
Packaging Act 2011 of Australian Government has flawed the idea of Intellectual
Rights Protection.
As have been explained above, there are two sides of the story. One cannot
say that the reason of Australia in imposing the plain is unjustifiable as it
concerns on ensuring the health of its citizens, which becomes the goal of all the
nations.18
Second, however the instrument of achieving the goal, in this case is
the plain packaging act, still needs to be questioned.
17
World Intellectual Property Organization. (n.d.). What is Intellectual Property?. 18 World Health Organization. (2017). Healthier, Fairer, Safer: the Global Health Journey 2007-2017. Retrieved from http://www.who.int/publications/10-year-review/healthier-fairer-safer/en/
10
1.3 Statement of the Problem
As have been elaborated in the previous paragraph, the topic and the
problem encountered in this research are:
Topic : This research is to analyze the case of international trade dispute
settlement between Australia and Indonesia upon Australia's
Tobacco Plain Packaging Act 2011 by World Trade
Organization and the crosscutting issues therein.
Question : 1. How did the implementation of Australia‘s Plain Packaging
Act 2011 violate the Intellectual Property Rights Protection as
regulated in TRIPS Agreement in its international trade
relations with other countries, especially Indonesia?
2. How does The World Trade Organization Dispute Settlement
Body oversee the trade dispute between Indonesia and Australia
on Plain Packaging Act 2011 (2013-2017)?
1.4 Research Objectives
The objectives of this research will mainly focus on providing of the
explanation and understanding of the following issues:
1. The issue of plain packaging.
2. The Intellectual property rights.
3. The dispute between Indonesia and Australia on the Plain Packaging
Issue as brought to World Trade Organization under its Dispute
Settlement Body.
4. The analysis on the crosscutting issues in this case and how those
issues relate to each other. How Australian Government step in
solving the problem of the nation but created the new problem for
other nations and how the WTO acts as the international patron of
the international trade in settling the issue through the Dispute
Settlement Body (DSB).
11
1.5 Significance of the Study
We are now living in the globalization era in which the international trade is
one of its phenomena. Goods, service, labor going in and out crossing national
borders will be our daily activity either we involve directly or indirectly. There
are also numbers of dispute occurring in the international trade, one of which is
the plain packaging issue which is believed to have violated the Intellectual
Property Rights Protection.
This research will provide insight on the process how the plain packaging
act has violated the intellectual property rights and how the victim countries deal
with it. By using some theories in international relations, this research will
provide the analysis of the dispute between Indonesia and Australia on the Plain
Packaging Act, whether the reason behind the implementation of the plain
packaging is fair enough or it abandons one important aspect while keeping the
other aspect. This is very significant with current issue as the plain packaging
issue is still in the air and has been becoming a longstanding debate since decades
ago.
1.6 Conceptual and Theoretical Framework
The research will be based on several theories and key concepts in
international relations. The theories and key concepts will be used to explain the
case and to draw a pattern of analysis to figure out and elaborate the answer
towards the research questions. The theories and key concepts that will be used
are as follow:
1.6.1 Plain Packaging
Australian government announced that effective per December 1,
2012 all the tobacco products distributed in Australia shall be in a
12
homogenous plain packaging.19
The action of the Australian government
was considered as a bold and brave action as many countries have tried to
impose the same act but did not succeed. The concept of plain packaging
has been introduced to the world previously by Toxic Substance Board of
New Zealand. In the September 1989, the Toxic Substance Board of New
Zealand submitted a recommendation to the Ministry of Health of New
Zealand that all tobacco products to be distributed in a single plain
packaging.20
The concept of plain packaging at that time was the white
packaging of tobacco products with black printed certain standardized
information to which neither logo nor symbol in any kind of the products
were allowed to be attached.21
However, the government of New Zealand
did not take any further step to implement the plain packaging act.
The Government of Canada has also tried to introduce the concept of
plain packaging in 1994.22
However, unlike the Australia, the Government
of Canada failed to impose a national law on plain packaging concerning
the issue of trademark and the obligations that Canada shall fulfill under the
WTO and NAFTA.23
Short after Canada, the Government of the United Kingdom tried to
introduce the concept of plain packaging to the national law. However, the
government then decided not to further implement the Plain Packaging Act
as it was seemed to violate the law of trademarks as well as the provisions
set under the European Union Treaty on the Functioning of the European
Union article 34. Lithuania has also tempted to impose the same act which
19 Freeman, B., Chapman, S., & Rimmer, M. (2008). The Case for the Plain Packaging of Tobacco
Products. doi:10.1111/add.2008.103.issue-10 20
Ibid. 21 Cancer Council Victoria. (2011, May). Plain Packaging of Tobacco Products: a Review of the Evidence. Retrieved from http://tobacco.cleartheair.org.hk/wp-content/uploads/2012/06/tcuccvbkgrndresrchplainpak190511reend_final2.pdf 22
Ibid. 23
Ibid.
13
was failed because the parliament did not approve the regulation to come
into force.24
In 2009, Uruguay introduced 3 regulations concerning on the
limitation of the usage of logo in the packaging of tobacco products yet not
eliminating it.25
Responding to this, the Philip Morris International Inc.
along with its subsidiary company, Philip Morris Product S.A. in
Switzerland, requested for arbitration with the Government of Uruguay
concerning the newly imposed regulations in to the International Centre for
Settlement of Investment Dispute (ISCSID). 26
Plain packaging has become one of the major threats for the future of
tobacco industry.
Tobacco plain packaging is defined as the standardized appearance of
any product made from tobacco, especially cigarettes, by prohibiting the
attachment of all brand imagery, including the company‘s logo and other
trademarks.27
The packages should be displayed in a standard background
color and the manufacturer companies are allowed to print the brand name
and the variant of the product only in a deigned size, font, color, and
position. Other governmental campaign, especially on health should remain
in the packages. Below is the example of plain packaging adopted by the
government of Australia.
24 Claro, F., & Matheson, S. (2015, March 28). The Effect of Non-IP Laws on IP Rights Focus on Recent Laws on Plain Packaging for the Tobacco and Alcohol Industry and Exhaustion of IP Rights. Retrieved from http://www.aseanipa.org/attachments/article/652/Felipe%20Claro%20and%20Sarah%20Matheson-ASEAN%20IPA%20plain%20packaging%20presentation.pdf 25
International Tobacco Control. (2014, August 20). Uruguay‘s Tobacco Control Policies
Reducing Smoking Rates, Encouraging Quitting, Finds Six-Year Survey. Retrieved from
http://www.itcproject.org/node/119 26 World Health Organization. (2017, July 18). International Tribunal Orders Tobacco Company to Pay Australia's Costs of the Arbitration over Tobacco Plain Packaging. Retrieved from http://www.who.int/tobacco/communications/highlights/international-tribunal-plain-packaging/en/ 27
Freeman, B., Chapman, S., & Rimmer, M. (2008). The Case for the Plain Packaging of Tobacco
Products. doi:10.1111/add.2008.103.issue-10
14
Figure 1-2: Before the implementation of plain packaging act and
after the implementation of plain packaging act in Australia, Tobacco
Labeling Resource Center 2013 .28
1.6.2 Intellectual Property Rights
Intellectual property is the creation resulted from human mind such as
the invention, literary, manuscript, artistic works, images and names used in
commercial activity.29
World Intellectual Property Organization (WIPO)
categorizes intellectual property into two types which are industrial
property and copyright. Industrial property refers to the patents for the
inventions, industrial designs, and geographical indications. While
copyright refers to the patent covering the literary works, films, music,
other artistic works, and architectural designs.
Intellectual property rights are the rights granted legally to the
creators and owners of patents, trademarks, and other copyrighted works at
a certain period of time.30
The rights can be either in form of economic
beneficial or any other privileges enjoyed by the creator as the result of
international organizations to become the base of global governance
considering the world‘s connectedness in the field of trade.41
Prior to WTO, the organization was named as General Agreement on
Tariffs and Trade (GATT) which was established in December 1945. The
United States invited all its allies to negotiate and formulate a multilateral
agreement concerning the tariffs reduction in the mutual trade relation
which later become the very initial of GATT establishment.42
Responding
to the initiative taken by the US, the Social and Economic Department of
United Nations recommended a resolution in February 1946 to encourage
the establishment of International Trade Organization (ITO). Previously, the
idea of ITO establishment has been discussed in the Bretton Woods
convention which is also known as the United Nations Monetary and
Financial Conference with the agenda of designing the world monetary
system after the defeat of Germany and Japan.
GATT was previously to be attached as provisions in the ITO,
however due to the longstanding discussion of ITO establishment, many
parties require the enforcement of GATT separately from ITO as it was
considered as an urgent matter at the moment.43
Responding to the issue, 8
out of 23 countries involved in the discussion agreed to sign Protocol of
Provisional Application of GATT to enforce the GATT provisions in the
meantime of the ITO establishment on October 30, 1947.44
Therefore, the
GATT came in to force in January 1, 1948.
In March 1948, the negotiation of ITO establishment has come into a
final negotiation. However, the United States congress has several times
rejected the charter of ITO establishment and finally withdrew itself from
41 VanGrasstek, C., & World Trade Organization. (2013). The history and future of the World Trade Organization. 42
Ibid. 43
Ibid. 44
Ibid.
20
the ITO participation.45
Since the United States decided not to become the
member of ITO, the organization was failed to be established, as the US
economy was one of the strongest and most influential economies at the
time.46
The failure of ITO establishment as an international regulating body
on trade left GATT as the only regulations concerning the international
trade. GATT was not an organization, but it was just a set of multilateral
agreement to reduce the trade barriers, especially tariffs. However, in its
development, GATT acted as a de facto organization even though the
institutional provisions were very limited in the agreement. Even though
GATT was not a formal trade organization, it succeeded reducing the tariffs
in the international trade especially the foods coming from developed
countries.47
The success of GATT in regulating the tariffs barriers in the trade has
not made all the problems in the international trade solved. With the more
interconnected market, the new challenges appeared in the international
trade one of which is the non-tariff barriers. The negotiation in the
reduction and eliminating of non-tariff barriers seemed to be more
complicated than the negotiation on the tariffs barriers, and hence a formal
institution was needed to be established to accommodate this challenge and
future challenges that might appear in the international trade as the
countries around the world become more interdependent.
Responding to the situation, the minister of economic of Italy, Reanto
Ruggiero, in February 1990 suggested the establishment of an international
45
Ibid. 46 Ibid. 47
Ahmed, E., Islam, S., & Dona, P. D. (2015). The Effectiveness of The GATT Through Its Major Achievements and Failures as well as The Performance of the Creation of WTO. International Journal of Economics, Commerce and Management, 3(5). Retrieved from http://ijecm.co.uk/wp-content/uploads/2015/05/3586.pdf
21
organization on trade.48
Months later, Canada recommended the
establishment of the world trade organization with the name of ―World
Trade Organization‖ as the organization to accommodate and regulate the
world trade including all the matters related to it. The agreement of WTO
establishment was then signed in April 1994 and came in to force on
January 1, 1995. WTO has the function of increasing the life standard, the
increasing of the work opportunity, income growth and effective demand,
expansion of production, and the trade of goods and service.49
The
establishment of WTO was then considered as one of the biggest
achievement in the world global economy cooperation at that time.50
Since the WTO came in to force in January 1, 1995, the WTO has
been becoming the regulating body of the world trade, which means all the
member countries will have to obey certain rules and regulations enforced
by the WTO as well as fulfill their obligations. There are three
classifications of the obligations that the member countries must fulfill
which are:
1. A set of obligation that is binding the whole member of WTO
without exception. This obligation is also known as the multilateral
agreement.
2. A set of obligation that is binding certain member countries that has
chosen to ratify certain agreement. This obligation is also known as
the plurilateral agreement in which the participation is optional
based on the national interest of the member countries.
48 Van B., & Zdouc, W. (2017). The law and policy of the World Trade Organization: Text, cases and materials. Cambridge, United Kingdom: Cambridge University Press. 49 VanGrasstek, C., & World Trade Organization. (2013). The history and future of the World Trade Organization. 50 Ibid.
22
3. A set of obligation that is binding certain member countries that has
a special relation with other incumbent WTO member countries.
This obligation is also known as sui generis obligation.
The law of the WTO is a set of specified complex regulations. The
matters covered in the law of WTO are the matters of tariffs, import quota
and tax, intellectual property, food safety, and national security. In
achieving those purposes, there are 6 basic classifications of the WTO
principle law which are:51
1. Non-discrimination principle
2. The rules on market access including the transparency of the market
access
3. The rules on the unfair trade
4. The rules on conflicts between trade liberalization and other societal
values and interest
5. The rules on special and differential treatment for developing
countries
6. The rules on the institutional technicalities and the decision making
in dispute settlement
The basic principle of the WTO Law that will be used in the analysis
of this research is the non-discrimination principle. The non-discrimination
principle is adopting two main concepts which are the most favored nations
(MFN) and the National Treatment Principle.52
The MFN concept is the
concept of treating all WTO member countries equally, while the national
treatment principle refers to the equal treatment towards the foreigners and
locals products.53
Those concepts are applied in the trade relations between
51 Ibid. 52 Ibid. 53
World Trade Organization, 2012.
23
member countries of WTO both in goods and service trade, as well as
applied to the trade-related aspects of intellectual property rights.
The concept of Most Favored Nations (MFN) is the principle to
ensure the non-discrimination between trading partners among the WTO
member states.54
The MFN regulates that if one member country give A
treatment toward another member country, then the rest member countries
should get the A treatment as well. The most favored nation principle is
classified into three categories which are MFN under GATT, MFN under
GATS, and MFN under TRIPs.
1. Most Favored Nations (MFN) Principle under General Agreement
on Tariffs and Trade (GATT)
Member countries of WTO can be assumed as members of a
certain club that regulates all the members in the club to treat other
members equally in the best way they could.55
Therefore, it can be
guaranteed that all members of the club will experience the best
treatment from fellow members. Under the GATT, the members are
required to impose the regulations for either export or import no less
favorable than it imposes toward the one particular member it
considers as the best trading partner. The base of MFN in the GATT
is stated on Article I paragraph 1
With respect to customs duties and charges of any kind imposed
on or in connection with importation or exportation or imposed
on the international transfer of payments for imports or exports,
and with respect to the method of levying such duties and
charges, and with respect to all rules and formalities in
connection with importation and exportation, and with respect
to all matters referred to in paragraphs 2 and 4 of Article III,
any advantage, favor, privilege or immunity granted by any
54 World Trade Organization. (2012). Online Course of Introduction to WTP. Retrieved from https://ecampus.wto.org/admin/files/Course_588/CourseContents/N-INTRO-E-Print.pdf 55
Ibid.
24
Member to any product originating in or destined for any other
country shall be accorded immediately and unconditionally to
the like product originating in or destined for the territories of
all other Members.56
Based on the Article I:1 GATT above, all the WTO members
should treat their fellow members equally in the field as below:57
a. Custom duties
b. Any forms of charges implied to the activity of export and
import
c. Any form of charger implied to the international payment
transfer resulted from export and import activity
d. The method of imposing certain contribution such as the
duties and charges
e. The rules and other formal regulations applied in the activity
of export and import
f. National taxes and other national charges
g. National laws, regulations, and other national requirements
that might affect the sale, distribution, and use of particular
product.
Referring to the MFN principle, once one particular country of
WTO‘s member opens the market access for another WTO member
country, the rest of the member countries will automatically have the
same access toward the market without any further negotiations
needed. This MFN principle of WTO is also applied to the similar
product after certain process of assessment considering the physical
appearance and characteristic of the products, the end use of the
products, the preferences of the customers, and the classification of
the product in the tariffs law.
56
GATT Agreement Article 1 Paragraph 1, from www.wto.org accessed on 20 November 2017. 57
immediately and unconditionally to the nationals of all other
Members.”60
Further explained in the article that the particular person can
obtain the rights or the privilege concerning the intellectual property
through several ways namely:
a. From international agreements of intellectual property
b. Granted based upon the consideration of the provisions in
the Bern Convention 1971
c. Rights that are not regulated under this regulation
d. Other international agreement related to intellectual
property rights protection that came into force before the
enforcement of WTO Agreement that is justifiable and
indiscriminative towards other members
The MFN Principle under the TRIPS Agreement will help the
author to figure out the answer toward the research question. The
intellectual property rights, the one that is believed to be abandoned in
the decision of WTO, is supposed to be defended based on the MFN
principle under the TRIPS.
1.6.4. National Interest
The term of national interest refers to the self-interest of each nation
state.61
It refers to how the countries around the globe envision the defense
and security of the countries as well as exercising their power beyond their
national boundaries.62
National interest in the traditional approach is related
to the primary interest of high politic, the geographical politic, the military
power, and all matters related to the hard power of the countries in order to
60
TRIPS Agreement Article 4, from www.wto.org accessed on 20 November 2017 61
Coicaud, J.-M, & Wheeler, N. J. (2008). National interest and international solidarity: Particular and universal ethics in international life. New York: United Nations University Press. 62
Ibid.
27
secure the sovereignty of the state.63
While in the modern approach,
national interest also priors the secondary needs of the countries, such as the
economic prosperity and other low politics, in the interaction of countries.64
The concept of the national interest derives from the big theory of realism
in which defined that the countries are interacting each other aiming
nothing but the struggle of power and to expand influence in order for the
countries to survive.65
Hans J Morgenthau is one of the figures in the
realism theory and national interest concept. Morgenthau argues that the
national interest, the needs of the countries, shall be in the heart of the
politics of the nation in the international interaction with other countries.
Morgenthau in his writing of In Defense of the National Interest to examine
the United States of America‘s national interest wrote:
Forget the sentimental notion that foreign policy is a struggle
between virtue and vice, with virtue bound to win. Forget the utopian
notion that a brave new world without power politics will follow the
unconditional surrender of wicked nations. Forget the crusading
notion that any nation, however virtuous and powerful, can have the
mission to make the world over in its own image. Remember that the
golden age of isolated normalcy is gone forever and that no effort,
however great, and no action, however radical, will bring it back.
Remember that diplomacy without power is feeble, and power without
diplomacy is destructive and blind. Remember that no nation’s power
is without limits, and hence that its policies must respect the power
and interests of others. And, above all, remember always that it is not
only a political necessity, but also a moral duty for a nation to always
follow in its dealings with other nations but one guiding star, one
standard for thought, one rule for action: The National Interest66
From the writing of the Morgenthau above, it is very clear to see that
the interaction of countries in the arena of international politic should be
63 Ibid. 64 Ibid. 65
Griffiths, M. (1992). Realism, idealism, and international politics: A reinterpretation. London: Routledge. 66
Pham, J. P. (2008). What Is in the National Interest? Hans Morgenthau's Realist Vision and American Foreign Policy. American Foreign Policy Interests, 30(5), 256-265. doi:10.1080/10803920802435245
28
based on nothing but the national interest. To achieve the national interest,
the practice of diplomacy and the foreign policy shall than be based on nine
principles as mentioned by Morgenthau in its book, Politics among
Nations.67
1. The diplomacy shall be practiced in the highest spirit, should be
practiced in the spirit of war, in which everyone would fight to
defend the sovereignty of the country.
2. The foreign policy formulation must be referred to the national
interest of the countries and it has to be supported with adequate
power.
3. The diplomacy should also look from the perspective of other
countries.
4. The countries, however, must be opened to compromise in the issues
that are not very vital to their national interest, to gain ―friends‖ in
the arena.
5. The countries should be willing to give up the shadow rights to
achieve that the real advantage in the interaction with other countries
in the international politics.
6. The countries should never put their self in the international politics
in the position from which the countries should back off without
losing the ―face‖ or from which that counties cannot move forward
without facing great risks.
7. The countries should never let the weak ally to make any kind of
decision for the countries.
8. The military power is one of the important aspects in the foreign
policy, it shall be used as the instrument to achieve the national
interest, not the master, or the ultimate goal of the national interest.
67 Ibid.
29
9. The government of the countries should be able to act as the leader
of the public opinion, the one who shapes the public opinion in the
form of what it desires to be, not the slave of the public opinion.
The concept of national interest will be used in this research to
analyze the motives behind each party in their interaction in the case. It will
help to explain the motives of Australia in imposing the Tobacco Plain
Packaging Act and the motive of Indonesia on complaining the regulation
on behalf of the intellectual property rights protection.
1.6.5. Diplomacy and Intellectual Property Rights
Diplomacy is simply explained as the way the states interact with other
states in the conduct of international relations.68
Diplomacy is used to
cooperate between allies as well as to resolve conflict without using force.
One country practices its diplomacy by communicating, bargaining, and
spreading influence, to win the heart of the targeted countries and to set
their opinion to like the particular one country.
In its practice, there are three main functions of diplomacy which are to
gather intelligent information, to manage the image of one country abroad,
and to extend the practice of foreign policy.69
The intelligent information
will be used as the main consideration to adapt the national interest and
policy toward the situation globally and the changes. The representatives of
the government abroad are the eyes and the ears of the national government
that gather information abroad. The image of a country abroad also depends
much on the diplomacy. Image of a country is very crucial in its relations
with other countries to gain the national interest. The foreign diplomatic
representatives will be assigned to supply the local media with the one‘s
68 Griffiths, M., O'Callaghan, T., & Roach, S. C. (2002). International Relations The Key Concept Second Ediction (2nd ed.). 69 Griffiths, M., O'Callaghan, T., & Roach, S. C. (2002). International Relations The Key Concept Second Ediction (2nd ed.).
30
news and avoid any negative publication about it. The diplomatic
representatives also negotiate with other countries regarding the national
interest such as the military, problem solving, and any other issues.
As the world becomes more borderless in the globalization era, the practice
of diplomacy is increasing as well. Countries are coming to build more
cooperation by lessening the boundaries and barriers between states. The
globalization era is also marked with the increasing of more advanced
technologies which is actually the booster of the globalization itself. The
emergence of those advanced technologies has also required the continuous
development in the Intellectual Property Rights protection. As the
technologies cross the borders from the origin country, the inventors need
the assurance that their invention is safe from any infringement and the
assurance that they will receive the incentives70
.
The process of diplomacy can be seen in the practice of the transfer of
technology. For the origin countries, which mostly are the developed
countries, the innovation on advanced technology has constituted the rising
in the share of income derived from the presence of their technologies in the
foreign market. Hence, they will use the presence of their technologies in
the practice of diplomacy in political economy as a key of negotiating in the
discussions and negotiations related to international trade. While for the
developing countries who are mostly the users of the technologies have to
find best practice of diplomacy to negotiate with the inventing countries so
that they would be able to afford the use of the technology71
.
The diplomacy is much related with this case. The intellectual property
rights agreement is a product of diplomacy in which countries gathered to
voice their national interest of protecting the invention of their nationals.
The international institutions were then formed to manage and control those
70 Salim, Z. (2016, May). Diplomacy of Sovereign State and Intellectual Property Rights [PDF Document]. Retrieved from https://www.welfaredot.com/uploads/1/0/6/9/10694452/1_-_diplomacy_of_sovereign_state_and_ipr.pdf 71 Ibid.
31
activities. The agreement was then formed as the main guideline for
countries to conduct the relations in the field. Same as the TRIPS
agreement, the diplomacy also resulted in the formation of The World
Trade Organization as the organization to manage the trade relations
between the member countries.
In the case of conflict, like this case, the diplomacy is also used in the
process of problem solving. The diplomacy can be seen in the action of
Indonesia in requesting for consultation with Australia facilitated by the
WTO to discuss the best possible solution for the problem. Both countries
then sent their representatives to discuss the solution representing each
national interest. The practice of diplomacy will be clearly exposed in the
discussion of this case.
1.7 Scope and Limitation of Study
This research will focus on the analysis at the international level as it
will try to analyze the interaction between the crosscutting issues of Indonesia
and Australia. This research will analyze how the Australia‘s Plain Packaging Act
has violated the IPR protection and the provisions of the agreements set under the
WTO from 2013 to 2017 well as analyze the role of WTO to oversee the case. To
answer the research question, this research will also strictly use the concept of
non-discrimination in the WTO principle in which the Most Favored Nation
(MFN) is explained. This research will also focus on using the TRIPS Agreement
and the provisions therein to answer the research question.
1.8 Research Methodology
The research will be conducted in qualitative method through literature
review and the interview towards some key persons in this case namely:
32
1. One of the lawyers representing Indonesia in the battle of this case
in WTO DSB, Mr. Duane Layton, to gain a more comprehensive
understanding regarding the case development in the WTO.
2. Director of PT. HM Sampoerna as subsidiary company of Philip
Morris International, Mr. Yos Adiguna Ginting or any related
department, to better understand the interest of Indonesia which
behind the appraisal of the IPR protection issue in the claim against
Australia.
The research will also rely on the data and documents released by
WTO, Indonesia, and Australia, as well as using related books, research
papers, journals, and any other supporting documents.
The author of this research would like to determine the variables to help
better analyzing the case. The dependent variable of this research will be the
interest of Indonesia on the case representing the tobacco industry in the
country, while the independent variable would be the Australia‘s Plain
Packaging Act 2011.
1.9 Literatures Review
1. Frankel, S., & Gervais, D. (2013). Plain Packaging and the Interpretation
of the TRIPS Agreement. Vanderbilt Journal of Transnational Law, 46(5).
Retrieved from https://www.vanderbilt.edu/wp-
content/uploads/sites/78/Gervais-Final-Review.pdf
This journal provides the insight of how the plain packaging is used to
reduce the tobacco consumption as well as the relation to the health and
cost issues. Australia‘s Plain Packaging Act 2011 is picked as the example
in this journal by explaining the strictness of the Act towards any
trademarks coverage in the tobacco products‘ packaging. The basis for the
discussion is the Trade – Related Aspects of Intellectual Property Rights
33
(TRIPS) Agreement of World Trade Organization (WTO). It is believed
that the promotion of the public health in a country is supposed to be
supported. However, the promotion of the public health itself should
comply with any applicable law and regulations binding the countries.
Other than the TRIPS Agreement, the authors of the journal also use the
Vienna Convention on the Law of Treaties (VCLT). Regarding the
TRIPS Agreement, the authors picked article 20 to be used in the
discussion. The authors believe that the dispute between Australia and the
developing countries on the Australia‘s Palin Packaging 2011 can be seen
as the debate about the protection of the trademarks whether or not the
rights of the owner of the trademarks are protected in other countries
based on the TRISP Agreement. At the end of the discussion, the article
concludes that the TRIPS Agreement should provide a clearer
interpretation to meet its objectives and purposes.
This article is very helpful in the writing of this thesis as it provides a
perspective of the relations between the Plain Packaging Act 2011
imposed by Australian Government and the TRIPS Agreement under the
World Trade Organization which has become one of the main focuses in
this thesis. This journal also helps in providing the perspective on how the
TRIPS Agreement should be interpreted in this case.
2. Chinmaye, A., & Dama, S. (2016). Plain packaging: TRIPping on trade
marks? Journal of Intellectual Property Law & Practice, 11(12), 910-918.
doi:10.1093/jiplp/jpv202
This journal, especially the in the article, discussed how the Plain
Packaging issue to reduce the tobacco consumption has provoked number
of debates. Same as the previous journal, this journal also picked the
Australia‘s Plain Packaging Act 2011 which came into force at the end of
2012 as the example in the discussion. It is stated in the discussion that the
34
Panel set by the WTO Dispute Settlement Body (DSB) is still composing
the final report. While waiting for the final report to be issued, which can
also be the final saying of WTO regarding this case if there is no appeal,
many European countries have tried to design similar law with the same
purpose, to promote public health. However, none can throw the judgment
towards any country at the moment. One cannot blame Australia for
imposing the regulation as the objective is to promote the health of its
citizen. However, it is also understood that the Plain Packaging Act
imposed by the Australian Government is not in line with the WTO
regulations and provisions and hence resulted in the protest of Indonesia
and other tobacco producing countries.
The legal obligation of WTO members under the TRIPS Agreement and
the Doha Declaration (2000) is used as the guideline in this discussion.
Those agreements are used to analyze whether or not the implementation
of Plain Packaging Act 2011 has been in line with the obligations of the
member countries. At the end of the discussion, by referring to the
Articles 16 and 20 of TRIPS Agreement, the authors then concluded that
the Australia‘s Plain Packaging Act 2011 imposed by Australian
Government is neither desirable nor justifiable under the Agreement. The
authors also believed that the purpose should be supported however; there
are many other ways that can be done to achieve such goal. For example,
the authors believe that the public smoking ban and the increased
cigarettes price has shown positive impacts to reduce the smoking. These
policies are acceptable and justifiable and should be more embraced
instead of creating new policy that is not in line with the applicable
agreements, rules, and regulations binding the countries.
This journal is very helpful in writing this thesis as this journal provide
other perspective on the Plain Packaging Act. This journal will help the
writer in analyzing the case and drawing a conclusion on the case between
Australia and Indonesia on the Plain Packaging. This journal also helps
35
strengthening the argument of the writer that says Australia has violated
the TRIPS Agreement by implementing the Plain Packaging Act 2011.
3. Horn, H., & Mavroidis, P. C. (2001). Economic and legal aspects of the
Most-Favored-Nation clause. European Journal of Political Economy,
17(2), 233-279. doi:10.1016/s0176-2680(01)00028-3
This journal provides the clear explanation of the Most Favored Nations
(MFN) that forbids the member countries to conduct any discriminative
behavior toward any member countries. This journal provides the insight
that the MFN principle is broadly used in the multilateral trading between
countries. This journal stated that many policy makers believe that the
MFN is very acceptable in the conduct of the trade relation and therefore,
as it has been constituted by WTO as one of its principles. The MFN
principle also appears in many WTO Agreements to show that this has
always become the guideline of the WTO member countries in conducting
trade relation. The Article 1 of the General Agreement on Tariffs and
Trade (GATT) is the main principle in this discussion.
Concluding the discussion the authors believe that the MFN principle is
very ideal for the trade relation among countries to prevent ant trade
dispute due to discriminative behavior. It is therefore all the member
countries under the World Trade Organization (WTO) are encouraged to
comply with this provision. This journal also provides the application of
the MFN in the trade relation between countries of how it is supposed to
be used.
The explanation of MFN is very helpful for the writer to finish the thesis.
Using the MFN as one of the main theories in the discussion, the example
of the MFN application is very helpful in understanding the concept. This
journal also helps the writer to draw the relation between the MFN and the
Plain Packaging Act 2011 to eventually draw a conclusion on how the
36
Plain Packaging Act 2011 has violated the MFN principle of WTO of
which all the member countries shall comply.
4. Griffiths, M., O'Callaghan, T., & Roach, S. C. (2002). International
Relations The Key Concept Second Ediction (2nd ed.).
This book provides the short introductory essays of international relations
key concepts. There are four areas of concepts that are covered in this
books which are the developing world, international law, Human Rights,
and strategic studies. The increasing of the interactions between actors in
International Relation has become the main motives of this second edition
book by adding 21 new concepts from previous edition. It is believed that
to understand the dynamics of the International Relations in nowadays
world, we must first understand the theory and that is why the book was
published.
The theories then can help us to understand the events in the international
world better. Starting from the interaction between actors, the roles of the
international institution in the interactions, such as the United Nations,
World Trade Organization, and International Criminal Court. The theories
also help us to better understand the issues in social, economies,
humanitarian, and other cross border issues.
This book is very helpful for the writer to finish the thesis. National
interest and diplomacy are two of the concepts used in the thesis. This
book provides the understanding in brief explanation of both concept.
Also this book provides the insight of the World Trade Organization as
the international organization and its role in the interaction of countries
and also in the time of conflict, like the topic of the thesis the conflict
between Indonesia and Australia upon the enforcement of Australia‘s
Plain Packaging Act 2011.
37
1.10 Structure of Thesis
1.10.1 Chapter 1 – Introduction
The introduction part of this research will provide the background of the
case, the reason behind the implementation of the Plain Packaging Act for
tobacco products by Australia and the reason why Indonesia then complained the
regulation. This chapter will also be the part to which the basic information of this
case will be attached such as the problem identification, statement of problem,
research objective, significance of the study, theoretical framework, scope of
limitations, research methodology, and the structure of the research.
1.10.2 Chapter II – The Development of Australia’s Control on
Tobacco Products Consumption: A ‘Tug of War” Game
The content of this chapter will cover the interest of Australia as the
independent variable of the thesis. It also will explain the urgency of health issue
that eventually implement the plain packaging regulation in the national law and
how the tobacco industries keep fighting every single step of Australian
Government.
1.10.3 Chapter III – The Development of Tobacco Industry in
Indonesia (2011-2016)
This chapter will discuss the interest of Indonesia in the case as the
dependent variable. This chapter will discuss how much the tobacco industry
matters to Indonesia and how much the Australia‘s plain packaging could
jeopardize the Indonesia‘s national interest in the tobacco industry.
1.10.4. Chapter IV – The Australia’s Plain Packaging Act 2011:
Problem Solving Leading to New Problem
This chapter will provide the analysis how the Australia‘s Plain Packaging
Act 2011 has abandoned the IPR in the international trade and whether or not it
38
can be considered as the green light for other nations to follow. This analysis will
be based on the WTO agreement on TRIPS and the Most Favored Nation (MFN)
concept as explained in the non-discrimination principle in the WTO.
1.10.5 Chapter V – Conclusion
This chapter would be the end of the discussion and provide the summary
of the discussion.
39
CHAPTER II
THE DEVELOPMENT OF AUSTRALIA’S CONTROL
ON TOBACCO PRODUCTS CONSUMPTION:
A ‘TUG OF WAR” GAME
II.1 Overview of Smoking in Australia
The relation between Indonesia and Australia in the tobacco industry has
started since long time ago. The smoking of tobacco was firstly introduced to
Australia through the northern-dwelling indigenous communities after visiting
Indonesian fishermen around the early of 1700s.72
The British culture of
consuming tobacco was then introduced to Australia during 1788 by the colonials
and spread widely around the area, including the indigenous community.73
During
the early of the colonial era, tobacco was one of the rare commodities to be found
in Australia. It was even restricted at first time. However, in the 1819, a
contemporary study showed that the around 80% to 90% of the male workers are
smoking the tobacco.74
The trend of smoking in Australia kept increasing until in the middle of 20th
century. Around three out of four men and one out of four women were regular
smokers at that time.75
This increasing number of smoker in Australia was mostly
influenced by the introduction of the tobacco commercials on the television
showing the image of tobacco and the sophistication of the European countries,
the lifestyle of the American, and the best way enjoying the sunshine in Australia
72
New South Wales Cancer Council. (2011, December 20). A Brief History of Smoking.
Retrieved from https://www.cancercouncil.com.au/31899/uncategorized/a-brief-history-of-
smoking/ 73
Ibid. 74
Ibid. 75
Australian Bureau of statistic. (2000, July 4). Australian Social Trends, 2000. Retrieved from
critiques will then be discussed in the classroom. This program targets
the upper primary school students and early of secondary school
students in Australia.
2. Tobacco – The truth is out there
This program encourages the curriculum standard in southern part of
Australia to include the prevention activities for he middle school
students.
3. Drug education K-12 teacher support package
This program encourages the teachers to be actively including the
tobacco issues in the student activities. The example of the issues can
be vary such as the passive smoking issues, the health effect of
smoking, smoking coping strategies, and many more. The target of
this program is the Prep-12 students.
4. School drug education and road aware
This program provide the supports for the school – teachers and
students –, parents, and the surrounding community involved in the
drug and smoking prevention programs. The support includes the
comprehensive information on the drugs and smoking and other
supports that are needed to implement the schools‘ policies on the
issue. This program targets all levels of school education
5. Cigarette Smoke is ‗poison‘
This program will provides set of strategies and tools that are needed
to prevent the increasing of smoking prevalence as well as
encouraging schools to provide decent environment for the students
who have smoked before and wish to quit. This program targets the
primary and secondary schools.
6. Healing time stages 2 and 3 of drug education for aboriginal students.
This program targets the aboriginal students by encouraging the drug
and tobacco education to the students. Stage 2 focuses on the passive
47
smoking and stage 3 focuses on the reason not to smoke and advocacy
skills.
7. Smoke free schools
This program targets the middle school by encouraging the free-smoke
schools as well as the guidelines to prevent the tobacco smoking.
8. Smokescreen
Smoking prevention program targets 7-10 years students.
9. Keep left youth smoking cessation guides for school nurse, a program
for the school staffs, especially the nurses, to provide the assistance of
smoking prevention.
10. Smart school grants that encourage schools to apply for up to $3,000
to support their smoking prevention innovation program.
b. Providing Advice and Treatment to Quit Smoking
Most people with smoking habit must have one moment in their
life in which they regret smoking and attempt to quit, so do the
Australians.104
However, to quit smoking is not as easy as it seems to be.
Therefore, to support the regret and the willingness of the people to wait
smoking, Australian Government believes that with the behavioral support
and drug treatment and keeps informing the smokers to quit might help
the smokers to eventually quit. There are several programs pioneered by
the Australian government to provide the advice and the treatment for the
smokers to quit, such as105
:
1. Increasing the capacity, ability, and the range of the smoking cessation
services, such as the Quitline106
especially for the communities with
high smoking prevalence and also the specialist treatment for certain
people suffering from chronic diseases due to tobacco smoking.
104 Ibid. 105 Ibid. 106
A contact service provided by the government to support those who tempt to stop smoking
(http://www.quitnow.gov.au/)
48
2. Enhance the capacity and the quality of the service, especially the
quitline, for the pregnant women in the country.
3. Enhance the quality of the service, especially the quitline, for the
aboriginal and Torres Strait Islander People. This also includes the
cultural training for the tele-counselors for them to understand the best
way to approach the communities in the area and to create partnership
with the local community to quit the smoking.
4. To continue promoting the Quitline services for the smokers through
any possible medias
5. To increase the coverage area of web-based communication programs
to encourage the smokers quitting the smoking habit as well as
providing most updated information regarding the dangers of smoking.
6. To support and improve the integration between Quitline and any
other institutional programs as well as non-governmental
organizations‘ programs in order to succeed the declining of smoking
prevalence.
7. To create a system that eases the interaction between doctors,
specialists, and the patients in order for the doctor to monitor the
development of the patients in quitting smoking. Through this system,
the doctor and the patient can also do consultations to make the
quitting easier.
8. To create policy for the social service organizations and the training
guideline on how to support the smokers to quit, especially the
organizations in the area of high smoking prevalence communities.
9. Increase the awareness of the citizens, related institutions, and
organizations to support and succeed the government‘s program.
10. Develop the appropriate and effective pharmacotherapies for the high
smoking prevalence communities.
As the member of FCTC, Australia is also responsible of some
obligations to succeed the mission of the organization to reduce the
49
smoking prevalence all over the world as discussed in the Fourth
Conference of Parties (COP4), including107
:
1. To design and implement an effective programs to promote the
campaign of the dangers of tobacco smoking in any possible places
such as the educational institutions, public areas, healthcare facilities,
work environments and sport facilities.
2. To provide the diagnosis and treatment for tobacco addiction and the
counseling service for the both smokers who attempt to quit smoking
and for the communities to prevent smoking.
3. To build healthcare facilities and rehabilitation center in order to
diagnose, give counseling, prevent, and give treatment toward the
tobacco addictions
4. To provide the accessible and affordable tobacco treatment and related
pharmaceuticals products.
c. Restriction of tobacco products‘ advertising
Compared to other English speaking commonwealth countries,
Australia is left behind in introducing the restriction on tobacco
advertisement on television and radio.108
In the early of 1960s, the founder
Australian Council on Smoking and Health, Dr. Nigel Grey along with
tobacco control advocates, Dr. Cotter Harvey, tried to bring the restriction
of tobacco products advertisement to the political agenda.109
However, the
agenda did not succeed for a long time that in 1971, the Cancer Council
107
World Health Organization. (n.d.). Fourth Session of the Conference of the Parties to the WHO FCTC. Retrieved from http://www.who.int/fctc/cop/sessions/fourth_session_cop/en/ 108 M.M. Scollo, & M.H. Winstanley [Editors]. Tobacco in Australia: Facts and Issues.
Melbourne: Cancer Council Victoria; 2015. Retrieved from:
the tobacco products advertisement on TV and radio was then finally
enforced.111
In 1988, the Minister for Health expressed his support for the
action to ban the tobacco advertisement on the magazine and
newspapers.112
This also gained the support from the government by
enforcing the Advertisement Act for Tobacco Products on December 28,
1989. The committee discussing this regulation actually brought the idea
of banning the tobacco products advertisement on the printed media,
cinemas, billboard, and illegalize all forms of sponsorship given by
tobacco industries to certain activities or in other words, to completely ban
the tobacco advisement on any possible media ion the country.113
However, the government refused to put those ideas and hence, the
advertisement of the tobacco products on cinemas, billboards, and the
sponsorship activities were still allowed.
After the enforcement of the advertisement prohibition act, there
was a new legislation tried to be formulated in Victoria around 1987 to
1990 to restrict the tobacco advertising on the sport and art activities.114
However, the accidental or incidental advertisement of tobacco products
has never been restricted in Australia. So, if the tobacco industry provided
sponsorship for any activities and got the promotional spot, then the
activities are aired on TV along with the promotional sport – the tobacco
companies –, it was allowed in Australia. This condition indeed still
110 Ibid. 111 Ibid. 112
World Health Organization, & Risseley, K. (n.d.). Report on Smoke-Free Policies in Australia. Retrieved from http://www.who.int/tobacco/training/success_stories/en/best_practices_australia_smokefree_policies.pdf 113 Ibid. 114
Grace, C. 11.3 Commonwealth (national) legislation. In Scollo, MM and Winstanley, MH
[editors]. Tobacco in Australia: Facts and issues. Melbourne: Cancer Council Victoria; 2016.
benefited the tobacco companies as the advertisements were still
obviously readable in the ―accidental or incidental‖ advertisement.
Therefore, the tobacco companies used to provide sponsorship for almost
all the important events of Australia, such as the football match, Australia
open, tennis, motor racing, and many more.115
Ever since, the health
authorities and many organizations are targeting the sport and art activities
for the next restriction of tobacco products advertising.116
In December 1992, a new law was enforced concerning the
Tobacco Advertising Prohibition, which outlawed most of the tobacco
sponsorship forms.117
The tobacco companies are only allowed to provide
sponsorship for international events. Further, the advertisement on the
billboard was no longer allowed either. However, the ‗accidental or
incidental‘ advertisement was still allowed if the TV station received
nothing in return from the advertisement.118
The tobacco companies did
not easily give up on the governmental regulation. Instead, the tobacco
industry focused on the non-traditional way of marketing, internet is one
of which.119
The industry also introduced the creative and attractive
packaging. The government, as the one who holds authority over the
country, then issued the new regulation to manage the display of the
tobacco products in retail store as well tried to review the internet and
other electronic media of campaign for tobacco products in order to make
them in line with the advertisement prohibition act. As the side effect,
Australia was known as one of the ‗darkest market‘ for tobacco product
just after Canada, in which illegal distribution of tobacco products were
anywhere to be found.
115 Ibid. 116 Ibid. 117 Tobacco Advertising Prohibition Act Number 218 year 1992, from www.legislation.gov.au accessed on 20 November 2017. 118 Ibid. 119 Australian Government Department of Health. (2017, June 23). Tobacco Advertising Prohibition Act 1992. Retrieved from http://www.health.gov.au/internet/main/publishing.nsf/Content/tobacco-advert
52
d. Providing sufficient health-dangers information for consumer of the
tobacco products
As mentioned before, many people during the time of protest
perceived that the tobacco industries have violated the consumer rights as
the have failed to provide the consumers with detailed and comprehensive
information regarding the tobacco products, especially contains and the
dangers of them. Therefore the government of Australia then mandated
the tobacco industries to attach the health warning on the tobacco
products‘ packaging.120
The warning aimed to provide the smokers the
information of the danger they will suffer if they decided to smoke the
cigarettes. The warning should also be put in the picture format in order to
help better understanding of the danger instead of plain text.121
The health warning was begun in the 1969, introduced by the
Australian legislation. However, the legislation was not directly
implemented by the tobacco industry right away. The tobacco industry
firstly implemented the health warning on the packaging of tobacco
products in 1973 with simple writing saying, ―Warning – Smoking is a
health hazard.‖ The warning was then developed to other sayings like
―smoking kills‖, ―smoking is addictive‖, ―smoking causes lung cancer and
heart diseases‖, and etc.122
The warning must take 20% of the front and
back of the packaging in the form of white text on black background.
However, the tobacco industries tried to put pressure on the
government regarding the regulation as that was considered as loss for the
120
Chapman S, and Carter SM. 'Avoid health warnings on all tobacco products for just as long as
we can': a history of Australian tobacco industry efforts to avoid, delay and dilute health warnings
on cigarettes. Tobacco Control. 2003;12(suppl. 3):iii13–22. Retrieved
comprehensive and stricter regulation on tobacco products, which is known as
Plain Packaging Act. The Plain Packaging Act was approved by the Royal on
December 1, 2011. By implementing the act, Australia is known as the bravest
and the strictest country on the tobacco product.145
The Act regulates that all
tobacco products, especially the cigarettes, sold in Australia has to be put in a
standardized packaging regardless the origin and the producer of the tobacco
products. The Act aimed to reduce the appeal of tobacco products for the citizens
as well as to increase the effectiveness of the health warning on the packaging.146
The main objects regulated in the Act are the retail packaging of
tobacco products, cigarette packs, and cigarettes cartoons.147
Retail packaging of
the tobacco products refers to any container and/or smaller containers in it for the
sale in retail stores in which the tobacco products are directly placed. It also refers
to any plastic packaging or wrappers covering the retail packaging or even
becoming the part of the tobacco products itself. While the tobacco products
refers to any manufactured tobacco that can be consumed by smoking, sucking,
chewing, and snuffing that are not registered in the Australian Register of
Therapeutic Goods as regulated in Therapeutic Goods Act 1989. The cigarette
pack term in the Act refers to the container of the cigarettes; cigarette carton is the
container of the smaller containers of cigarettes. While the container itself as
stated in the Act refers to any pack, carton, box, tin, bag, pouch, packet, tube, or
any other containers.
Below are the restrictions stated in the Plain Packaging Act 2011148
:
1. The restriction on physical feature
Below are the restrictions of the physical features on the retail packaging
of cigarettes:
145 McDermott, S. (2017, January 30). How Australia Is Stubbing Out Smoking. Retrieved from http://www.bbc.com/news/magazine-38733502 146 Tobacco Plain Packaging Act Number 148 Year 2011 on www.legislation.gov.au accessed on 20 November 2017 147 Ibid. 148
Ibid.
63
a. The inner and outer surface of the packaging must not include any
decorative ridges, embossing, bulges, or any other abnormalities of the
packaging shape, texture, and accessories other than permitted by the
Regulations. All glues and adhesives used in the tobacco products
packaging must be transparent and colorless.
b. The packaging of the cigarettes and the cartons must be made from
rigid cardboard only and have to be in rectangular shape with straight
edges. The other shape such as round shape, shaping the edges to other
than straight rectangular, and adding accessories in the packaging are
strictly prohibited. The cartons of the cigarettes products are allowed
to have perforated strip to open the cartoon and leaves grooves after
the cartons are opened.
c. For the cigarettes packs, there are dimensions as described by the
Regulations and have to be opened with flip top lid that hang at the
back top of the packs once it is opened. Should there be any lining
inside the pack must be made of foil backed by paper. The lining is
allowed to be printed in embossed dots or squares in a uniform size
but is not allowed to form any symbols, image, or any tobacco
promotion tools.
2. The restriction on the coloring and surface
a. The finish of the surface must be matt finish
b. The name of company and/or variant name of the tobacco products
must be written in Pantone 448C. The inner surface of the tobacco
packs must be white and the lining must be in silver color with white
back.
c. Color calibration marks are allowed to be shown in the packaging of
tobacco products.
d. The wrapper or plastics covering the tobacco products must also be
transparent and uncolored neither textured nor embellished.
64
e. For the cigarettes, they must be put in white as well as the filter must
be put in white too.
Figure 2.3 The example of surface and color appearance on tobacco
packaging based on the Act, Pizzeys Patent and Trademark Attorney
accessed in 2017.
3. The restriction of trademark
The trademarks of the tobacco products are also restricted based on the
regulation. The only trademarks allowed appearing on the packaging are
the brand, the name of company, and the variant name of the tobacco
products in a standardized writings as have ben explained previously.149
The variant name is allowed to appear on the packaging in order to
distinguish from other variant as they are all packed similarly. The
trademarks that are allowed appearing on the packaging are only allowed
to be printed on the front, top and bottom surfaces of the cigarette packs,
or in the front, or end surfaces of cigarette cartons.150
The covers and
wrappers of the tobacco packaging are not allowed to contain any
trademarks. The name of the brand, company, and variant must be written
Lucida Sans in 14 points size and 10 points size for the variant name.
149 Ibid. 150 Ibid.
65
Bolding or weighting the writing is strictly prohibited neither capitalizing
all words other than the first letter of each word. The color of the writing
must be Pantone Cool Gray 2C. The origin mark of the tobacco is allowed
to be printed on the bottom side of the pack and must not be visible to
eyes, but not related to:
1. Tobacco advertising or promotion, such as the websites
2. The quality of the cigarettes, such as the tar yield
3. Deceiving and misleading the cigarette‘s health effects
4. Representing the brand name or the variant name of the cigarette
products
The Act also prohibits the tobacco companies to put any special noise of
scent in the packaging to stand the brand out from other brands.
Figure 2.4 The example of writings on tobacco packaging based on the
Act, Pizzeys Patent and Trademark Attorney accessed in 2017.
Any violation towards the provisions set under the Act shall be subjected
to penalties. The violations that are subjected to penalties are:
1. The entities that sell, or offer for sale, or supply the tobacco products that
have been packaged in the retail packaging but does not comply the Act
requirements
2. Purchase the cigarettes products that does not comply the requirements of
Plain packaging Act
3. Producers that package the tobacco products in a non-compliant
packaging
4. Manufacturer any parts of the packaging that are not in line with the
requirements stated in the Act
5. Manufacturer to the tobacco products that appoint other entities to do the
packaging in non-compliant packaging
66
6. Retailers or stores that sell the tobacco products without packaging and do
not possess the contract with the purchasers.
The penalty for the violation is equal to A$ 220,000.151
The implementation of this law has attracted numbers of critics from
various groups, mainly the tobacco industry. The tobacco companies have even
launched proceedings in the High Court to challenge the government regarding
the regulations. The companies claim that the legislation has violated the
intellectual property rights protection of the tobacco products and hence have
created huge loss to the companies. The companies believe that plain packaging is
not even close to effective in order to control the tobacco consumption and
decrease the smoking prevalence.
151
Mackie, J. A. (n.d.). Australia: Tobacco Plain Packaging Act 2011 A Summary of The Provisions. Retrieved from http://www.pizzeys.com.au/Articles/Tobacco%20Plain%20Packaging%20Act%202011%20A%20Summary%20of%20the%20Provisions.pdf
67
CHAPTER III
THE DEVELOPMENT OF TOBACCO INDUSTRY IN
INDONESIA
III.1 The History of Tobacco In Indonesia
Tobacco has been long found in Indonesia. The beginning of tobacco
plantation in Indonesia is predicted to be during the colonialization. Was firstly
found in North and South America, Tobacco was brought to Indonesia in 1883 by
Van Den Bosch through the “Cultuurstelsel” program around Central Java and
Semarang.152
However, the first attempt to plant tobacco in Indonesia did not
succeed. In 1856, the colonial then attempted to plant the tobacco again around
the East Java, Besuki area. This time, the plantation of tobacco was equipped with
the research center, called Besokisch Proefstation153
. The existence of the
research center helped to analyze the cause of the failure of tobacco plantation in
the first attempt by figuring out the best media, fertilizers, as well as the best
treatment for the tobacco plantation, which then brought the tobacco plantation in
to a success. The plantation was then expanded to the Yogyakarta and Surakarta,
the central of Java. Tobacco farming during the colonialization identic with the
Cultuurstelstel system in which Indonesian workers were forced to work in the
colonials‘ tobacco farming for more than 40 years (1830 – 1870)154
.
The plantation of Tobacco outside Java was initiated by J. Nienhuys in
1863 in Deli Serdang, North Sumatera. In 1863, the research center to support the
tobacco plantation was built with the name of Deli Proefstation. Up until today,
those three areas are still the top producers of tobacco in Indonesia that produce
152 Markus, S. (2015). Petani tembakau di Indonesia: Sebuah paradoks kehidupan. Yogyakarta: Leutikaprio. 153 Ibid. 154 Ibid.
68
the high quality of tobacco acknowledged by many countries in the international
trade155
.
Tobacco plantation continued to be growing ever since, a study records that
from 1980 until 2013, the average of tobacco farming growth is 4.12% from
141.225 hectares become 270.232 hectares with 7.92% average annual growth of
tobacco products industry of the same period.156
This has proven that tobacco
remains to be one of the most important commodities to Indonesia.
Similar as 2016, in the previous years the contribution of tobacco
commodities, including the tobacco-processed products were remarkable. Below
is the data of Indonesian tobacco export from 2012 to 2015.
Table 3.1 Indonesian Export of Tobacco Products from 2012 until 2015 under HS
155 Pusat Data dan Informasi Pertanian (Indonesia). (2009). Outlook komoditas pertanian hortikultura. Jakarta: Pusat Data dan Informasi Pertanian, Departemen Pertanian. 156 Ibid.
69
tobacco
substitutes and
"homogenised" or
"reconstituted"
Total 794,176,000 931,385,000 1,025,438,000 981,881,000
Tobacco farming is categorized into three which are Citizens-Owned Farm,
State-Owned Farm, and Private-Owned Farm. In 2015, the total of Citizens-
Owned Farm comprises 99.60% of total tobacco farm in Indonesia, State-Owned
Farm comprises 0.31%, and Private-Owned Farm comprises only 0.09%.157
Looking at the steady growth of the industry, Indonesian Government is
expecting the growth in the industry for at least 2.49% annually.158
In 2019, the
government is targeting the tobacco industry to produce 295.804 tons.159
This
target aims to comply with the ASEAN target of tobacco product availability in
2019, that reaches 490.427 tons production with the annual growth of 1.36%.160
III.2 Tobacco and Indonesian Economy and Social (2011 – 2016)
Since the first plantation of tobacco in Indonesia, tobacco sector and its
products remain to be one of the most important aspects for Indonesian economy.
In the Strategic Plan of Ministry of Agriculture, tobacco belongs to the 39
national flagship products. Based on Indonesia Bureau of Statistic in 2016,
tobacco industry contributes 0.94%, a 4.60% of contribution from manufacturing
industry to the GDP of the total Indonesian GDP of 117 trillion rupiahs.161
Total
export of Indonesian tobacco products in 2016, reached the amount of 109.9
157 Badan Pusat Statistik. (2016). Analisis Komoditi Ekspor 2010 - 2016 (06110.1721). Jakarta, ID: Author. 158 Pusat Data dan Informasi Pertanian (Indonesia). (2009). Outlook komoditas pertanian perkebunan. Jakarta: Pusat Data dan Informasi Pertanian, Departemen Pertanian. 159 Ibid. 160 Ibid. 161 Badan Pusat Statistik. (2016). Pendapatan Nasional Indonesia 2012-2016 (07130.1701). Jakarta, ID: Author.
70
thousand tons with the value of USD 959,7 million.162
Besides contributing huge
amount of rupiahs to the GDP, Indonesian tobacco industry also contributes to the
welfare of the people. Based on the data of Ministry of Industry, 4.28 million of
Indonesian citizens work in the manufacture and distribution sector of tobacco
products while 1.7 million Indonesian citizens work in the tobacco farming.163
This has become one of the solutions to the unemployment issue of the nation.
The tobacco industry still becomes one of the main concerns of Indonesian
government in the upcoming years by setting up a roadmap of tobacco industry
development in Indonesia within the period of 2010 – 2020. In 2010 – 2015, the
main concern of the government in the tobacco industry lied on the boosting
national income through the industry, ensuring the public health, and labor
absorption.164
In 2016 – 2020, the government puts the concern on the society
health and labor absorption, yet still maintains and increases the contribution of
the industry to the GDP through tax; the target is 2% of the total GDP and 5.1%
of national budget.165
One of the main factor the tobacco is still one of the biggest in Indonesian is
that the domestic consumption in very high. A study reveals that 65% of total
Indonesian men are smokers.166
The smoking prevalence in Indonesian women is
half compared to the men - 3% - due to the country‘s culture that perceives that
smoking women as something unacceptable in the society.167
162 Badan Pusat Statistik. (2016). Analisis Komoditi Ekspor 2010 - 2016 (06110.1721). Jakarta, ID: Author. 163 Kementerian Perindustrian Republik Indonesia. (n.d.). Kemenperin: Kontribusi Besar Industri Hasil Tembakau Bagi Ekonomi Nasional. Retrieved from http://www.kemenperin.go.id/artikel/17257/Kontribusi-Besar-Industri-Hasil-Tembakau-Bagi-Ekonomi-Nasional 164 Ibid. 165 Kementerian Pertanian Republik Indonesia. (n.d.). Road Map 2007–2020 Industri Hasil tembakau dan Kebijakan Cukai. Author. 166 Indonesia Investments. (2016, May 23). Tobacco & Cigarette Industry Indonesia. Retrieved from https://www.indonesia-investments.com/id/business/industries-sectors/tobacco/item6873 167 Ibid.
71
With the huge number of population, around 255 million, Indonesia is a
huge market for tobacco products as well, the second after China.168
The Tobacco
Atlas revealed that two-third of Indonesian men are consuming tobacco products,
mainly cigarettes.169
Further, the Tobacco Atlas also revealed that 53.7 million
Indonesian adult and 2.6 million Indonesian youth are smokers.170
This number
not only make Indonesia as the second largest market for tobacco products but
also the third largest consumer of tobacco products right after China and
Russia.171
This has made the tobacco industry has a firm standing and steady
growth in the country. The easy access to the cigarettes and other tobacco
products has made Indonesian smokers increasing every year.
Figure 3.1 The Total Production of Cigarettes in Indonesia 2011 – 2015,
Indonesia Investments.
168 Ibid. 169 The Tobacco Atlas. (n.d.). Country Factsheet: Indonesia. Retrieved from http://www.tobaccoatlas.org/country-data/indonesia/ 170 Ibid. 171 Ibid.
300
310
320
330
340
350
360
2011 2012 2013 2014 2015
Cigarrettes Produced (Million)
72
III.2.1 Major Players in Indonesian Tobacco Industry
There are many tobacco players in Indonesia. In 2016, PT HM Sampoerna
led the tobacco industry by having 29% of the market share, followed by Gudang
Garam with 23% market share, and Djarum with 13% market share.172
HM
Sampoerna and Gudang Garam have registered their companies as public
companies, while Djarum remains as private company. These three companies
have become the dominant players in Indonesian tobacco industry since decades
ago, therefore, it is hard for new companies to enter the market and compete with
these three companies.
a. PT HM Sampoerna Tbk.
HM Sampoerna was firstly established by a Chinese immigrant, Liem
Seeng Tee, in Surabaya manufacturing kretek cigarettes and distributes it
to market under the product of Dji Sam Soe.173
In 2015, PT HM
Sampoerna Tbk. along with its subsidiaries have employed around 29,500
employees plus Third Party Operations (TPO) – contract based employees
of total 41,900 people. In sum, the company has employed around 71,400
people.
PT HM Sampoerna has several products which are Dji Sam Soe – the
most well-known product of the company, A Mild, Sampoerna Kretek,
and U Mild.
b. PT Gudang Garam Tbk.
Same as PT HM Sampoerna Tbk., PT Gudang Garam Tbk. was firstly
established in East Java, specifically in Kediri, in 1958. Gudang Garam
has produced number of brands such as Gudang Garam Family, Surya
Family, GG Family, and the others.174
In 2016, the domestic sales of the
172 Euromonitor International. (2017, July). Cigarettes in Indonesia. Retrieved from http://www.euromonitor.com/cigarettes-in-indonesia/report 173 http://www.sampoerna.com/id_id/about_us/pages/the_history_of_sampoerna.aspx# 174 http://www.gudanggaramtbk.com/
73
company‘s products reached USD 5.4 billion, while the export sales
reached USD 2.1 billion.175
c. PT Djarum
PT Djarum was firstly established on April 21, 1951 by Oei Wie Gwan, in
Kudus, Central Java.176
PT Djarum is known with many brands, such as
Djarum Super, Djarum Super Mild, Djarum Super MLD Black Series,
In its Corporate Social Responsibility, PT HM Sampoerna conducts
several activities that include179
:
1. Delivering the information on the serious impact of smoking as it is
very dangerous for the health.
2. Encouraging and supporting the implementation of effective
regulations on tobacco product based on the principle to reduce the
negative impact of smoking.
3. Encouraging and supporting the implementation of regulations
concerning the minimum age to be allowed to purchase cigarettes and
other tobacco products, as well as cooperating with retail stores to
reduce the smoking prevalence in teenagers and children.
4. Cooperating with government and legal entities to support the
prevention of legal trade of tobacco products.
5. Supporting the actions of environmental sustainability by reducing the
natural resource exploitation, reducing the carbon emission, and waste
recycle.
6. Supporting the tobacco farmer in order to support the national tobacco
farming sustainability.
7. Through the Agricultural Labor Practices, the company is supporting
the practice of good labor treatment especially by avoiding the child
labor employment.
8. Supporting the local organization to increase the quality of life nearby
the company.
In 2014, the company spent around USD 2.3 million for the CSR program
while the Phillip Morris International added around USD 5.2 million for
the CSR program for all over Indonesia.180
Some of the organizations that
have been appointed by the company to assist the implementation of the
CSR programs are Yayasan Aksi Cepat Tanggap (YACT), Yayasan Bina
179 From www.sampoerna.com, accessed on 07 November 2017. 180 Ibid.
75
Swadaya, Yayasan INOTEK, Yayasan Bangunan Cemerlang Indonesia,
Social Transformation and Public Awareness, and Mondernisator.181
b. PT Gudang Garam Tbk.
In 2016, PT Gudang Garam Tbk. spent around USD 2.2 million in its CSR
activities. The CSR activities are based on the principle of Catur Darma; a
meaningful life for society is a happiness; hardworking, persistent, honest,
and having faith are the prices for success; the success is achieved through
the contribution of others as well, and; employers are the main business
partners.182
The values are then transformed into several CSR programs
such as:
1. Sports, Education, and Healthcare.
The company contributes to achieve the healthy life of the society as
well as boosting the education through several programs. In 2016, the
employees were involved in the local sport programs and blood
donation. The company also provides scholarship, support school
renovations, and provides free healthcare and treatment.
2. Creating Healthy Living Conditions
The company is actively supporting the creation of healthy living
conditions by providing the water tank, pump, and pipeline equipment
to provide the clean water for some of the local areas.
3. Creating Healthy, Safety, and Environment (HSE) in the working
environment.
4. Controlling the air pollution by conducting regular air quality test
every six months by a pointed laboratory.
5. Hazardous and Toxic Management.
6. Waste Management.
c. PT Djarum
181 Ibid. 182 From www.gudanggaramtbk.com, accessed on 07 November 2017.
76
PT Djarum is also committed in the CSR programs by establishing
Djarum foundation that conducts numbers of activities as described
below:183
1. Community Contribution
The community contribution is conducted through several activities
such as the free cataract operation to decrease the blindness of nearby
community, regular blood donation from the employees to help the
people, providing the fire-prevention and safety for rural area residents,
construction of the infiltration well and storage tanks in order to
achieve the clean water security during the dry season.
2. Djarum and Sport Activities
PT Djarum supports the sport activities for the healthy life through
opening the auditions to find talented athletes for badminton from all
over Indonesia and providing sponsorship for sport activities.
3. Djarum Awareness for Environmental Issue
Environmental issue has been one of the concerns for the company.
The company has initiated several programs such as the trees
plantation for around 2,150 km that is estimated to be able to absorb
around 2.6 million CO2 annually in order to provide decent air for
surrounding societies.
4. Djarum and Education
PT Djarum believes that education is one of vital factors in creating
future talents and therefore has put the education in its CSR agenda.
Djarum provides huge amount of scholarship annually, conducts
training, and sends Indonesian young talent to international
conferences and competitions, encouraging the young talents to care
toward the society around them.
5. Djarum and Culture
183 From www.djarum.com, accessed on 07 November 2017.
77
As the nation with various cultures, Djarum is committed to take part
in preserving the culture through several activities, such as building
Galeri Indonesia Kaya in one of the biggest shopping center in
Indonesia for the cultural events and exhibitions.
III.3 The Other Side of Indonesian Tobacco Industry: Health and
the Prosperity Issues
Despite the economic benefit enjoyed by Indonesia from the tobacco
industry, Indonesian Government cannot just eyes on the growth of the tobacco
industry and put aside the same importantly aspect of its citizens, the health and
the prosperity. Previously has been mentioned that 53.7 million Indonesian adult
and 2.6 million Indonesian youth are smokers.184
The number might sound good
for the tobacco industry but at the same time it increases the worries and the
problems for Indonesian Government. That big amount of smokers in Indonesia is
disaster for the country as it costs the health and the productivity of the citizens.
Beside the high smoking prevalence, there is a behind-the-stage story of the
tobacco industry that often left the workers in such poor condition and far from
prosperous.
Table 3.2 Smoking prevalence in Indonesia aged 15 years more by 2015, WHO
2017.185
Prevalence (%) Any smoked tobacco products Cigarettes smoking
Current
Smokers
Daily
Male 75.2 65.4 64.3 62.0
Female 2.9 1.8 2.7 1.7
184 Indonesia Investments. (2016, May 23). Tobacco & Cigarette Industry Indonesia. Retrieved from https://www.indonesia-investments.com/id/business/industries-sectors/tobacco/item6873 185 The data based on the repost of World Health Organization (WHO) on Global Tobacco Epidemic 2017
78
Total 39.0 33.6 33.5 32.9
Based on the data above, Indonesia belongs to the one of the highest
smoking prevalence countries. For the adult smokers who are also workers, the
productivity will be decreased as the health is decreasing as well. As mentioned
previously, most smokers belong to the middle and low income class of society, if
the smokers who work having their productivity decreased and health issues
increased, the economic burden will increase and it is therefore hindering the
economic growth of that particular segment of society. This will create a
systemized poverty in which that particular segment of society will find it hard to
quit the poverty as the tobacco consumption indirectly keeping them inside the
poverty line. Indonesia is also known for its demographic bonus.186
However, if
Indonesian youth have started to consume the smoked tobacco and cigarettes, the
demographic bonus will be jeopardized in a blink of eye as the cigarettes enter
their mouth. This is also such an unfortunate that one of the biggest assets in
Indonesia is damaged by the tobacco products.
The health issue caused by tobacco is not only about the health effect from
smoking and tobacco products consumption but also the health issue found
among the tobacco farmers which is known as the Green Tobacco Sickness.187
The tobacco farming is very risky for the health of the farmers. The farmers are
very fragile towards the sickness caused by the pesticide used in the cultivation
and the nicotine breathed from the tobacco leafs. The study revealed that in Brazil,
the sickness caused by these two factors is high. Among 130 farmers, 107 of them
are suffering from Green Tobacco Sickness symptoms such as the migraine, limp,
nausea, and many more especially in the male farmers.188
Meanwhile in Carolina,
18.4% of total 304 sample farmers are positive with GTS sickness with the skin-
irritation and skin-burnt symptoms. This number is not much different from the
186 http://www.thejakartapost.com/news/2014/04/12/ri-must-prepare-demographic-bonus.html 187 Nicotine Exposure and Decontamination on Tobacco Harvesters' Hands. (2005). The Annals of Occupational Hygiene, 49(5). doi:10.1093/annhyg/meh112 188Markus, S. (2015). Petani tembakau di Indonesia: Sebuah paradoks kehidupan. Yogyakarta: Leutikaprio.
79
case in Indonesia. If we take a look to the safety standard and implementation,
Indonesia is still far away behind those countries in general. If those developed
countries still suffer from the sickness caused by direct interaction with tobacco
plantations, it is highly predicted that the condition is worse in Indonesia. Many
Indonesian farmers do not even understand about the healthy standard and
procedures as most of the tobacco farmers are cultivating the tobacco from
generation to generation with minimum knowledge in such aspect.
The other ironical side of Indonesian tobacco industry is that despite the
growing of the tobacco industry, fact shows that the tobacco farmers are living in
a condition which is far away from prosperity.189
All these times, the media only
highlighted the gigantic tobacco industry that contributed a lot to the national
economy and oftentimes forgetting the behind-the-curtain story, to tobacco
farmers. Many Indonesian tobacco farmers admitted that the tobacco planting
would not generate very much income, they will only got the bonus of income in
the occasion when the price is quite high and the production is good due to
supporting weather. However, in most case, those two do not come along, either
the production is high but the price is not very profitable or the price is profitable
but the production is quite low.190
Of all total tobacco farmers in Indonesia,
72.2% of them live in poverty and most of them are low to not educated
farmers.191
Based on a study conducted in Bojonegoro, East Java in 2012, the farmers
receive only US$ 1.31 every day which amounted only US$ 34.15 per month,
while the living cost is way more than that.192
In 2015, the Human Right Watch
(HRW) Indonesia also revealed that there are many under-age children are
working in the tobacco farming and are underpaid. The children are usually from
8 to 12 years old with the daily wage of US$ 0.37 to US$ 1.48 based on the
189 Ibid. 190 Ibid. 191 Ibid. 192 Ibid.
80
period of working, the longer they work usually they get better pay.193
This has
added the point of the long ironic things list in Indonesian tobacco industry.
Imagine that the children who are supposed to study are working on the farm due
to financial limitation that eventually force them to work. In the long term, this
has created a systematic poverty. The parents are not able to send the children to
school but instead ask the children to work with them. Since the children have got
education, they will have less opportunity to get out of their poverty zone and
therefore their future will be not far away from being the farm worker. This
situation keeps going on from generation to generation and therefore the poverty
around the tobacco farming is quite hard to overcome. The government has
imposed the restriction to employ the child labor, however since the children and
the parents have no other options, the governmental regulation seemed to be
ineffective.
Below are some facts found in the Indonesian tobacco farming by the
World Bank:
1. Most of Indonesian tobacco farmers spend more on the tobacco
cultivation compared to the revenue gained from it.
2. The cost of tobacco farming in Indonesia is quite high compared to other
countries and also compared to other commodities.
3. Most of Indonesian tobacco farmers experience the lack of capital that
around 53% of the total farmers must apply for loans as they are about to
cultivate the tobacco.
4. It takes longer time to cultivate tobacco for the farmers compared to the
time needed to cultivate other commodities.
193 Human Right Watch Indonesia. (2016, May 25). Child Tobacco Workers Suffer as Firms Profit. Retrieved from https://www.hrw.org/news/2016/05/25/indonesia-child-tobacco-workers-suffer-firms-profit
81
Table 3.3 The profit of tobacco per kg in major tobacco producer area in
Indonesia in 2016 (USD), World Bank 2017.
Real Profit Perceived Profit
Bojonegoro -1.95 0.24
Jember - 0.7 0.07
Central Lombok -0.59 -0.15
Eats Lombok -0.88 -0.01
Lumajang -0.16 0.09
Magelang -0.32 0.27
Temanggung -0.14 0.28
Total -0.30 0.11
It is very ironic how the tobacco farmers reap no profit from the cultivation
but instead suffer from some lost despite the increasing of tobacco products
consumption. This has been going on in many years in Indonesia. Aside from
gaining no profit, the tobacco farmers are also facing several other problems such
as the availability of the high-quality seeds, the global climate change that
directly affecting the tobacco cultivation, and the limited land as many
landowners have started to shift their activities to other commodities that are
more profitable, as seen below.194
194 Markus, S. (2015). Petani tembakau di Indonesia: Sebuah paradoks kehidupan. Yogyakarta: Leutikaprio.
82
Figure 3.2 The growth of Tobacco Farming Area in Indonesia (2011-2016), Markus, S. (2015). Petani tembakau di Indonesia: Sebuah paradoks kehidupan. Yogyakarta: Leutikaprio.
The data above shows that the tobacco farming land in Indonesia is
fluctuating. Between 2011 and 2012, the growth was very significant reaching
18.1%. In the following year, the farming area was decreasing significantly of
28.66%, while in the other years the growth of the tobacco farming area has not
shown very significant changes, especially from 2015 to 2016 where the change
was only at the level of 0.07%. The stagnant growth of the tobacco farm is also
caused by the increasing of tobacco import in Indonesia.
In fulfilling the demand of tobacco, Ministry of Industry of the Republic of
Indonesia records that 40% of the total national demand for tobacco – 330,000
tons annually – are fulfilled through import activity.195
This also has become a
dilemma in the government, if the tobacco industry depends only on the domestic
production of tobacco, the demand would not be fulfilled. At the other hand, if the
government keeps allowing the industry to import the tobacco as the raw
materials, the domestic tobacco production will be threatened. Boosting the
195 Kementerian Perindustrian Republik Indonesia. (n.d.). RI Masih Impor Tembakau. Retrieved from http://www.kemenperin.go.id/artikel/13348/RI-Masih-Impor-Tembakau
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016
The Growth of Tobacco Farming Area (2011 - 2016)
83
domestic production is not also the best solution since the data shows that most of
the tobacco farmers suffer USD 0.63 loss per kilogram of tobacco that they sell.
This has made the government to once again reanalyze the national policy on the
tobacco products as there are many things to be considered.
Table 3.4 Indonesian Tobacco Import from 2011 until 2016, UN Commission
Trade.
Year Imported Tobacco (Tons) Imported Value (USD)
2011 106,570 507,188,000
2012 137,426 658,922,000
2013 121,218 627,301,000
2014 95,732 569,776,000
2015 75,353 412,328,000
2016 52,482 328,585,000
Even through the trend is showing downward, it turns out that the amount
of the import is still burdening the domestic tobacco production. Therefore, the
Indonesian Tobacco Farmers Association (APTI), representing tobacco farmers
all over the nation, is urging the government to limit the tobacco import and the
same time, the tobacco processing industry also raises their voice so that the
demand for the raw materials can be fulfilled to support the production.196
A coin of two sides is how to explain Indonesian tobacco industry in the
best way. On one side, tobacco products processing industry contribute a lot to
the national GDP. At the other side, the health and poverty issue are literally
killing particular segment of the citizens. Therefore, Indonesian government is
very dilemmatic in determining the clear stance on this issue. If the government
shuts down the tobacco industry both directly or through small steps, the country
will suffer the loss of income from the tax and millions of people will lose their
196 Hermansyah, A. (2017, October 31). Tobacco Farmers Urge Government to Control Import. Retrieved from http://www.thejakartapost.com/news/2017/10/31/tobacco-farmers-urge-government-to-control-import.html
84
job. It is better for them to have the job even though far from ideal and dream job
instead of having no job at all. However, keeping the industry operating means
that the government is seemed to be not in the side of the people in helping to
tackle health and economic issues. Therefore, even up until now, Indonesian
government is still working on finding the best solution for both Indonesian
citizens – tobacco farmers, consumer of tobacco products, and other citizens –
and the tobacco industry. The government believes that both should be protected.
Tobacco industry has been rooted in Indonesian culture since long ago and it is
considered as one of the heritage – therefore, the government wishes to keep it –
and the health and economic issues of the citizens are also other important aspects
that cannot be abandoned. Indonesian government chose to keep both of them in
the national agenda.
III.4 Indonesia – Australia Trade Relation on Tobacco (2012 -
2016)
Indonesia and Australia have good relation on the tobacco trade. It is
therefore the implementation of Plain Packaging Act is perceived as an
unfortunate by Indonesia as it could jeopardize the good trade relation that has
been established since long time ago. Australia is one of the lucrative markets for
Indonesian tobacco producers since the market is big and Australia does not
produce any tobacco products.
Table 3.5 The Tobacco Products Trade Relation between Indonesia and Australia
(2012 – 2016), ITC Calculation Based on UNCT.
Indonesia‘s export
to Australia
Indonesia‘s Export
to the World
Australia‘s Import
from the World
2012 1,435,000 794,176,000 320,719,000
2013 3,789,000 931,385,000 454,358,000
2014 5,468,000 1,025,438,000 638,583,000
85
2015 6,694,000 981,881,000 720,814,000
2016 8,750,000 1,009,506 766,401,000
From the table above, the trade relation between Indonesia and Australia in
the tobacco products shows an increasing trend despite the implementation of
Plain Packaging Act by Australian Government. From 2012 to 2016, Indonesia
shared 0.8% of total Australian import on the tobacco products.
Figure 3.3 Indonesia – Australia Trade Relation on Tobacco Products (USD)
2012 – 2016, ITC Calculation Based on UN Commission of Trade.
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2012 2013 2014 2015 2016
Indonesia - Australia Trade Relation on Tobacco Products (USD)
86
Figure 3.4 Indonesia – Australia Trade Relation on Tobacco Products (USD)
2012 – 2016, UN Commission Trade.
At the same period, the demand of tobacco products in Australia is
increasing despite the implementation of the Plain Packaging Act. This has
become the interesting point in this discussion. Australian Government has tried
to impose numbers of regulations and policies to support the smoking cessation in
the country and the Plain Packaging Act 2011 has been marked as the strictest
policy set by the government. At the very beginning of the Act‘s enforcement, the
smoking prevalence seemed to achieve its goal as the smoking prevalence showed
a decreasing point. However, as the time goes by, the decreasing of the smoking
prevalence moves very slowly and many argue that the decreasing of the smoking
prevalence might be caused by other factors. Therefore, the tobacco industry also
argues that the Packaging Act has not become the best solution to decrease the
smoking prevalence and therefore it shall not be kept.197
The Plain Packaging Act
has not been able to solve the smoking problem very significantly but it has
sacrificed the Intellectual Property Rights Protection as regulated in the TRIPS
Agreement and the WTO Basic Principles. The sacrifice is just not worth the
gain.
197 Direct Email Interview with Mr. Duane Layton on 17 October 2017.
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
2012 2013 2014 2015 2016
Australia's Import from the World on Tobacco Products (2012 - 2016)
87
III.5 Indonesian Government’s Stand on the Tobacco Industry in
the Country and its Relation with Plain Packaging
Referring to the situation above, Indonesian government is left in a
dilemmatic situation. To significantly cut the tobacco consumption and
production in the country to increase the health issue of the citizens or to miss the
additional – which is not small – tax income from the tobacco industry. Other
issue that might make the situation more complex is that if Indonesian
government then decides to cut the production or to stop producing tobacco – just
like Australia – millions of Indonesian will be left unemployed that will put more
people into the poverty life. Therefore, the dilemmatic situation has made
Indonesian government to have no clear stance on the tobacco issue; in the
meantime Indonesian government is trying to embrace both tobacco products
production and to find solution to tackle the health and poverty issues.198
This
also made Indonesia becomes one of very few countries that has not signed and
ratify the World Health Organization (WHO) Framework Convention on Tobacco
Control (FCTC) because one Indonesia ratify the convention, the tobacco industry
in the country will be threatened.199
To embrace both situations, Indonesian government has tried to impose
several regulations and policies in order to reduce the smoking number in
Indonesia. Cigarettes commercial advertisement for example, the government has
managed to regulate that all cigarettes advertisement that are aired on TV have to
be aired on the late night shows and are not allowed to be aired during the prime
time. The government has also imposed the policy on the tobacco packaging that
regulates the packaging to contain some images to give warning on health impact
of smoking.200
The government also imposes some tax on the tobacco products
198 Indonesia Investments. (2016, May 23). Tobacco & Cigarette Industry Indonesia. Retrieved from https://www.indonesia-investments.com/id/business/industries-sectors/tobacco/item6873 199 Ibid. 200 Ibid.
88
and cigarettes in order to make them less affordable for the citizens as explained
below:
Figure 3.5 Tax of one pack cigarettes product in 2016 as estimated by WHO (case
study: one of the most sold brand, Gudang Garam), WHO Report on Global
Epidemic Report 2017.
89
Figure 3.6 Tax of other smoked tobacco products other than cigarettes as
estimated by WHO in 2016, WHO Report on Global Epidemic Report 2017.
Figure 3.7 Indonesian Tax for other smokeless tobacco products as estimated by
WHO in 2016, WHO Report on Global Epidemic Report 2017.
90
The high tax imposed on the tobacco products are supposed to reduce the
smoking prevalence in many countries, including Indonesia. Yet up until now, the
smoking prevalence has not showed any movement downward in a significant
progress. The smoking prevalence is still high. Therefore, the government is still
figuring out the best way to reduce the smoking prevalence but at the same time
keeps the tobacco industry operating well.
Regarding the plain packaging, Indonesia has expressed its position in the
issue since the very first time the issue is raised.201
Indonesia is at no favor toward
the policy of putting all tobacco products, especially cigarettes, on a single
standardized packaging. Even though from the trade relations between Indonesia
and Australia on tobacco products above we can see that the export of tobacco
products to Australia is increasing despite the implementation of plain packaging
policy by Australian Government, Indonesia is still at no peace with the policy.
Indonesia believes that the issues are not only limited to trade volume and the
dollars but also to the other issues, especially Intellectual Property Rights.
It is believed that the consumers of tobacco products have the rights to
easily identify the producers of the cigarettes and other tobacco products that they
are consuming. The plain packaging has prevented such thing to happen since all
brands are put in the single standardized packaging. Further, the packaging is also
believed to be violating the intellectual property rights that under no
circumstances shall be violated, unless there are provisions or regulations allow
certain conditions to violate. In this case, there has been single provision or
amendment toward the agreements binding both Indonesia and Australia that
allows the member countries to violate the intellectual property rights protection
regulated therein.
201 Mahendra, D. I. (2015, June 5). Kemasan Polos Rokok, Indonesia Gugat Australia ke WTO. Retrieved from http://www.mediaindonesia.com/news/read/18090/kemasan-polos-rokok-indonesia-gugat-australia-ke-wto/2015-06-05
91
Other issue that has become the worry of Indonesia in the plain packaging
implementation in Australia is the trend of down-trading.202
Down trading is the
consumers‘ preference shifting from high quality to the most suitable price
products.203
The Plain Packaging Act has reduced the ability of tobacco products
manufacturer to compete in the quality especially for the premium brands.204
Therefore, the consumers are likely to shift their preferences to the other brands
that might possess low quality. The manufacturers will gain less benefit from
producing the premium products; most of them will then produce the lower
quality products. Below is the table explaining how the market share is shifting
from the premium brands to normal or even low price brands.
Table 3.6 The average market share growth of brands segments in Australia prior
and after the implementation of Plain Packaging Act, Neil Dryden 2015.
Products Average Market
Share Growth One
Year Prior to
Plain Packaging
Implementation
Average Market
Share Growth One
Year After the
Plain Packaging
Implementation
Change
Premium
Products
-4.9% -8.0% -3.2%
Aspirational
Premium
Products
-3.5% -5.3% -1.8%
Value For Money
(VFM) Products
-5.0% -8.9% -4.0%
Low Price
Products
11.2% 14.2% 5%
202 Direct Email Interview with Mr. Duane Layton on 17 October 2017. 203 The impact of tobacco plain packaging in Australia (Neil Dryden 2015) 204 Please note that there is no difference between the premium and normal products packaging in
the Plain Packaging
92
Figure 3.8 The average market share growth of brands segments in Australia prior
and after the implementation of Plain Packaging Act, Neil Dryden 2015.
From the table and the graph above, it is identified that the down-trading
trend is really happening in Australia due to the Plain Packaging Policy. Premium
brands lose 3.2% market share while the low price products gained 5% additional
market share.
Plain Packaging Act 2011 has made all the tobacco products especially
cigarettes to be put in a single standardized packaging. This has created the
confusion among the consumers since all the products look the same. This has
hurt the premium tobacco products since there is nothing to distinguish it from the
regular product and that is how it lost its market share or to be called as down-
trading.
This is one of the worries that Indonesia is facing in the implementation of
Plain Packaging Act. Therefore, Indonesia is avoiding this to go worse that could
threaten the domestic tobacco industry by requesting the consultation upon the
clash to the World Trade Organization (WTO) Dispute Settlement Body (DSB).
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
PremiumProducts
AspirationalPremiumProducts
Value ForMoney (VFM)
Products
Low PriceProducts
Prior Plain PackagingImplementation
After Plain PackagingImplementation
93
CHAPTER IV
THE AUSTRALIA’S PLAIN PACKAGING ACT 2011:
PROBLEM SOLVING LEADING TO NEW PROBLEM
Looking at the smoking problems in the country, Australian Government
tries to impose numbers of policies and strategies to reduce the smoking
prevalence. The recent policy is the implementation of Plain Packaging Act
which came into force in December 2012. The Australian Government believes
that after long milestones, it is the most effective way to achieve the goal of a
healthy citizen.205
While on the other side, the action taken by the government to
tackle the health problem turns out to create new problems. As mentioned in the
previous chapter, Indonesia and many other countries have brought the case to the
World Trade Organization to ask for consultation as they feel like being the
victim of the Australian Government‘s policy on the plain packaging. Explained
before the reason of Indonesia in bringing the case to the WTO, besides the
economic issue, some other issues are not less important. Intellectual Property
Rights for example, it is not over night to create such a comprehensive agreement
to protect the creation of human mind. It is neither taking low effort to make sure
that the agreement is well implemented in its binding member countries.
Governments of many countries have spent lots of money and efforts to socialize,
promote, and make sure the agreement is implemented in their countries so that
the innovation keeps going on without making the innovators feel like being
exploited.206
Australian Government in this case has just turned all that action in
to vain. This has created dispute in international trade between Indonesia and
Australia. As explained in WTO, a dispute arises when a member government
205 Australian Government Department of Health. (2017, October 23). Introduction of Tobacco Plain Packaging in Australia. Retrieved from http://www.health.gov.au/internet/main/publishing.nsf/content/tobacco-plain 206 Kapczynski, A. (2012). The Cost of Price: Why and How to Get Beyond Intellectual Property Internalism. Yale Law School. Retrieved from http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=5700&context=fss_papers
94
believes another member government is violating an agreement or a commitment
that it has made in the WTO.207
IV. 1 The Violation of Intellectual Property Rights by the
Australia’s Plain Packaging Act 2011.
As explained in the previous chapter, Intellectual Property Rights (IPR) are
the rights or benefits legally owned by certain people who are creators, owners of
patents, trademarks, and any other copyrighted works either in the form of
economy or other privileges in a certain period of time.208
The purpose of the
rights granted to the people is that to appreciate their work of intelligent mind and
therefore continues innovation is expected as the return. Governments all over the
world are making big efforts to ensure the Intellectual Property Rights granting
and protection are well implemented in their countries by referring to the TRIPS
Agreement. The intellectual property rights protection is very crucial for the
development of the countries‘ economy especially in the era of globalization and
free trade like nowadays. If the intellectual property rights protection is well
implemented, the atmosphere created will encourage the innovation and
development of products within the country and that way, the economy will
increase as the result.209
The good implementation of the intellectual property
rights protection will also convince the developed nations that their technology
will be save from any infringement in the case of technology transfer. The
technology transfer will help the developing nations for better production
activities and other manufacturing activities and eventually boost the economic
growth.210
Foreign direct investment and great cooperation on research and
development between developed and developing nations can be established also
as the result.
207 World Trade Organization, https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm accessed on 29 January 2018. 208 Idris, K. (2003). Intellectual property: A power tool for economic growth. Geneva: WIPO. 209 https://www.slideshare.net/AshutoshSharma28/ipr-and-economic-development 210 Ibid.
Despite all of the benefits that countries could have if the intellectual
property rights protection is well implemented, fact shows that protecting
intellectual property rights will never be an easy task. There are tons of challenges
faced by the governments in protecting the Intellectual Property Rights. Starting
from the crosscutting issues between the Intellectual Property Rights protection
and the greater good purpose to the infringement that occurs a lot in many
countries have made the task of intellectual rights property protection
challenging.
In the report of Intellectual Property Right Index (IPRI) 2017 issued by
Property Rights Alliance, the score of world‘s property rights in 5.63 out of 10,
only 3.45% increase from previous year.211
The same source also reveals that the
highest score of the intellectual property rights protection goes to New Zealand
with the score of 8.63, a 4.45% increase from last year‘s score.212
The best
improvement is performed by African countries, especially Ethiopia with 12%
increase of score compared to the previous year making the country to the 87th
position.213
On the other side, the worst score belongs to the Easter Europe and
Central Asia with the average score of 4.94, a decrease of 0.1% from last year‘s
score.214
Australia is one of the best IPR index by being in the 10th
rank in the world
and 4th
rank in the Asia Pacific region. Australia performs 0.31 point increase
from last year to the 8.24 point this year. Below is the detail of Australia‘s
Intellectual Property Index.
211 Property Rights Alliance. (2017). International Property Rights Index 2017. Retrieved from Property Rights Alliance website: https://ipri2017.herokuapp.com/ 212 Ibid. 213 Ibid. 214 Ibid.
96
Figure 4.1 The Overall IPR Index Score of Australia in 2017, IPRI 2017.
Focusing to the intellectual property rights, Australia performs 0.04 points
increase to 8.22 from last year‘s score.215
The patent protection is scored 8.667 in
20th
position of global score and 3rd
in the region.216
Meanwhile, the copyright
protection is scored 8.0 securing the 5th
global position and the 3rd
in the
region.217
At the other side, Indonesia is not as advanced as Australia in the
implementation of the intellectual property rights protection. Indonesian
Intellectual Property Rights Index is scored 5.17 – a 0.15 increase from previous
year.218
The score brings Indonesia to the 68th
rank in the world and the 14th
in the
Asia Pacific region. For the intellectual property rights protection alone,
Indonesia is scored 5.57 placing Indonesia in the 47th
position globally and 11th
regionally.219
For patent protection, Indonesia is scored 5.56 placing the country
in the 89th
rank globally and 15th
regionally.220
Meanwhile, copyright protection,
Indonesia seemed to have lost of works to do by having only 1.60 score, 99th
Figure 4.2 The Overall IPR Index Score of Indonesia in 2017, IPRI 2017.
Going back to the plain packaging issue, the implementation of such law by
Australian Government is believed to have tarnished the protection of intellectual
property rights protection as it clearly violates the TRIPS agreement as well as the
basic principles of WTO. The Plain Packaging Act 2011 came into force in
December 2012. During that time, the Intellectual Property Rights Index of
Australia experienced decrease in the score.
Figure 4.3 The Trend of Australia‘s Intellectual Property Rights Index (IPRI)
2010 – 2017 (prior to after the Implementation of the Plain Packaging Act 2011)
IPRI 2017.
221 Ibid.
7
7.5
8
8.5
2010 2011 2012 2013 2014 2015 2016 2017
The Trend of Australia's IPRI (2010 - 2017)
98
The graphic shows that the Intellectual Property Rights Index of Australia is
at the level of 8.192 in 2010, before the enforcement of Plain Packaging Act.
However, since the Act came into force the Australia‘s Intellectual Property
Rights Index showed an up-and-down trend but never reached the score in 2010
until 2017.
The Australia‘s Plain Packaging Act 2011 is believed by Indonesia as the
complainant country to have violated below agreements on the intellectual
property rights protection (TRIPS Agreement).222
1. TRIPS Agreement Article 2 Paragraph 1
This article of the TRIPS Agreement regulates that all member countries
involved in the agreement shall comply with the Paris Convention from
article 1 to 12 and article 19 in order to fulfill the provisions in the Part I,
II, and IV of the TRIPS Agreement. Part I of the TRIPS agreement is the
part concerning the general provisions and the basic principles of the
agreement. Part II of the TRIPS Agreement is the part concerning about
the standards, scope, and use of intellectual property rights. Meanwhile,
Part IV of TRIPS Agreement is the part concerning the acquisition and the
maintenance of the Intellectual Property Rights and Related Inter-Parts
Procedure.
The specific part of the articles that have been violated by the
implementation of the Plain Packaging Act is the Paris Convention Article
6quinquies (6.5) Point A Paragraph 1 and Article 10bis (10.2) Paragraph 1
stating that:
“Every trademark duly registered in the country of origin shall be
accepted for filing and protected as is in the other countries of the
Union, subject to the reservations indicated in this Article. Such
countries may, before proceeding to final registration, require the
production of a certificate of registration in the country of origin,
222 Indonesia’s communication to WTO DSB Panel Number WT/DS467/1, G/TBT/D/46 IP/D/34, G/L/1041 dated on 23 September 2013.
99
issued by the competent authority. No authentication shall be
required for this certificate.”223
“The countries of the Union are bound to assure to nationals of
such countries effective protection against unfair competition.”224
The implementation of the Plain Packaging Act 2011by Australian is
violating above provisions due to these following reasons:
1. The implementation of Plain Packaging Act 2011 has not fulfilled the
provision that requires the trademarks registered in origin countries to
be protected in any other countries as it is. This means that there is no
change and modification of the trademarks outside of the origin
country is allowed to be made. The Plain Packaging Act 2011is not
only modifying the trademarks of tobacco products from Indonesia but
it is even eliminating the major and most important part of the
trademarks, for example the color of the packaging, the designs, and
other trademarks that distinguish one particular brand from other
brands.
2. The implementation of Plain Packaging Act 2011 has not fulfilled the
provision that require the participating countries in the agreement to
provide the most effective way to protect the goods traded in the
countries from unfair competition. The regulation to standardize all
the packaging for tobacco products will create the unfair competition
as it creates the confusion of goods between brands. The standardized
packaging will confuse the consumers in choosing the brands
compared to pack the tobacco products in the packaging that is
different from one another. This has also created the disadvantages for
the producers as they find it is difficult to make their products stand
out from other products.
223 Paris Convention 1967 Article 6quinquies Point A Paragraph 1, from www.wto.org, accessed on 16 November 2017. 224 Paris Convention 1967 Article 10bis Paragraph 1, from www.wto.org, accessed on 16 November 2017.
100
2. TRIPS Agreement Article 3 Paragraph 1
The Article 3 Paragraph 1 of TRIPS Agreement regulates that all member
countries shall protect the Intellectual Property Rights in no less effort that
the countries where the Intellectual Property Rights originates as stated
below:
“Each Member shall accord to the nationals of other Members
treatment no less favourable than that it accords to its own
nationals with regard to the protection (3) of intellectual property,
subject to the exceptions already provided in, respectively, the
Paris Convention (1967), the Berne Convention (1971), the Rome
Convention or the Treaty on Intellectual Property in Respect of
Integrated Circuits. In respect of performers, producers of
phonograms and broadcasting organizations, this obligation only
applies in respect of the rights provided under this Agreement. Any
Member availing itself of the possibilities provided in Article 6 of
the Berne Convention (1971) or paragraph 1(b) of Article 16 of
the Rome Convention shall make a notification as foreseen in
those provisions to the Council for TRIPS.”225
The exceptions mentioned above are things that make the provisions are
not applied in the condition that would create the arbitrary or unjustifiable
discrimination between countries upon the same conditions and create a
blur of the international trade restriction as well as the implementation of
measures as follow.226
1. The necessity to protect public morals
2. The necessity to protect the human, animal, or plant life or health
3. Things that related to the activity of export and import of gold and
silver
4. The necessity to enforce or obey any laws or regulations that are
consistent with the Agreement such as the custom enforcement,
monopoly regulations, the protection of patents, trademarks,
copyrights, and the action to prevent the deceptive practices.
225 TRIPS Agreement Article 3 Paragraph 1, from www.wto.org, accessed on 16 November 2017. 226 GATT Agreement 1948 Article XX, from www.wto.org, accessed on 16 November 2017.
101
5. Things that are related to products of prison labors
6. Regulations that are imposed for the sake of the national treasures of
artistic, historic, or archeology valued protection.
7. Regulations that are related to the conservation of exhaustible natural
resources which are effective with the domestic law to restrict the
production and consumption.
8. The intergovernmental agreement upon certain commodity that are
agreed and approved by parties involved in the agreement
9. The regulations to restrict the export of certain materials that are
necessary to fulfill the need of domestic processing industry in the
time when the price of the materials is lower in the domestic than the
world‘s price. The action is considered as the government‘s
stabilization plan. The action is also justifiable as long as it is not in
contradiction with the non-discrimination principle in the Agreement.
10. Things which are essential to the acquisition or distribution of
particular goods or products in the moment of local short supply.
The Agreement is also setting up several exceptions to ensure the national
security of the member countries by emphasizing in Article XXI that the
Agreement understands the importance of national security and therefore
does not oblige the member countries to:227
1. Disclose certain information that might harm the national security
interests.
2. Prevent any actions deemed necessary to protect the national interest
on security.
3. Prevent member countries from fulfilling its obligations under United
Nations Charter to maintain the peace and security of both domestic
and international.
227 GATT Agreement 1948 Article XXI, from www.wto.org, accessed on 16 November 2017.
102
However, the Plain Packaging Act 2011 imposed by Australian
Government is believed to violate the Intellectual Property Rights
Protection even though the exception allows the member countries to
consider about the health issue. On the other side, the obligations of the
member countries seem to be outweighing the general exceptions of the
health issue. Furthermore, there is no further measure on what kind of
health issue shall be considered to be justifiable for member countries to
not fulfill their obligations under the TRIPS Agreement.
Indonesia believes that through the Plain Packaging Act 2011, Australia
has violated the Intellectual Property Rights by treating the tobacco
products less favorably than they are being treated in the home countries.
In the home countries, the tobacco products are allowed to be put in the
customized packaging by the companies as registered in the national law.
3. TRIPS Agreement Article 15 Paragraph 4
The Article 15 Paragraph 4 of the TRIPS Agreement regulates that all
trademarks applied in the goods and services shall not become any
obstacles or any barriers for the goods or services to be registered
regarding the trademark in other countries, as stated below:
“The nature of the goods or services to which a trademark is to be
applied shall in no case form an obstacle to registration of the
trademark.”228
The implementation of the Plain Packaging Act 2011 has violated the
provision by becoming the barrier and obstacle itself for tobacco products‘
trademarks to be registered in Australia since all the products must be put
in a single standardized packaging without any trademarks to be appeal.
4. TRIPS Agreement Article 16 Paragraph 1
The Article 16 Paragraph 1 of the TRIPS Agreement regulates that the
owner of a registered trademark to possess the exclusive rights from
228 TRIPS Agreement Article 15 Paragraph 4, from www.wto.org, accessed on 16 November 2017.
103
preventing the third parties from using the trademarks and gaining any
particular benefit from it. The provision is also regulating the similar or
identical trademarks to not create the confusion of the products and
therefore things to distinguish should be available, as stated below:
“The owner of a registered trademark shall have the exclusive
right to prevent all third parties not having the owner’s consent
from using in the course of trade identical or similar signs for
goods or services which are identical or similar to those in respect
of which the trademark is registered where such use would result
in a likelihood of confusion. In case of the use of an identical sign
for identical goods or services, a likelihood of confusion shall be
presumed. The rights described above shall not prejudice any
existing prior rights, nor shall they affect the possibility of
Members making rights available on the basis of use.”229
The Intellectual Property Rights Protection has been violated based on this
provision since the Plain Packaging Act 2011 itself has regulated that all
the tobacco products to be put in the single standardized packaging and
hence create the confusion among all similar packaging products. This
also indirectly allows the third party to have the benefits of the particular
trademark owner through the confusion itself. If the products are put in the
different packaging, one particular brand will be recognized easily by
consumers however, the standardized packaging has made the consumer
confuse and indirectly give the benefits for other brands. For example the
premium products, there will be no other specialties distinguishing from
low prices products. This condition has made the consumers taking longer
time to distinguish between premium and non-premium brands, therefore,
to shorten the time many consumers just take any brands as well as
shifting of preference and this create the loss for the premium products,
creating down-trading, as explained previously.
5. TRIPS Agreement Article 16 Paragraph 3
229 TRIPS Agreement Article 6 Paragraph 1, from www.wto.org, accessed on 16 November 2017.
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Article 16 Paragraph 3 of TRIPS Agreement regulates the application of
provisions in the Paris Convention 1967 that regulates the member states
to terminate the registration or the use of a trademark that indicates the
reproduction and imitation of a registered trademark, it is also prohibited
to register similar trademark to create confusion between similar
trademarks, especially towards he well-known trademark. Further in the
TRIPS Agreement is also explained that the trademarks have connection
with the owners of the trademarks in which the trademarks represent the
interest of the owner. The practice of creating similar trademark would not
only create confusion but also damage the interest of the owner of the
well-known trademark, as stated below in Paris Convention Article 6bis
(6.2) Paragraph 1 and TRIPS Agreement Article 16 Paragraph 3:
“The countries of the Union undertake, ex officio if their
legislation so permits, or at the request of an interested party, to
refuse or to cancel the registration, and to prohibit the use, of a
trademark which constitutes a reproduction, an imitation, or a
translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well
known in that country as being already the mark of a person
entitled to the benefits of this Convention and used for identical or
similar goods. These provisions shall also apply when the essential
part of the mark constitutes a reproduction of any such well-known
mark or an imitation liable to create confusion therewith. “230
“Article 6bis of the Paris Convention (1967) shall apply, mutatis
mutandis, to goods or services which are not similar to those in
respect of which a trademark is registered, provided that use of
that trademark in relation to those goods or services would
indicate a connection between those goods or services and all the
owner of the registered trademark and provided that the interests
of the owner of the registered trademark are likely to be damaged
by such use.”231
230 Paris Convention 1967 Article 6bis Paragraph 1, from www.wto.org, accessed on 16 November 2017. 231 TRIPS Agreement Article 16 Paragraph 3, from www.wto.org, accessed on 16 November 2017.
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These provisions above have been clearly violated by the implementation
of the Plain Packaging Act. The provision in the Paris Convention Article
6bis has prohibited the creation of the same or very similar trademark in
order to avoid the confusion between brands. However, the Act itself is
making a certain standardized packaging by eliminating most important
aspects of the trademarks and create all similar brands packaging, which is
actually highly avoided by the provision, and therefore create confusion.
This also has prevented the owner of the well-known trademark to enjoy
the benefits of the popularity of their products as all the products are
wearing the same uniform after the Plain Packaging Act came into force.
6. TRIPS Agreement Article 20
Article 20 of TRIPS Agreement regulates the use of the trademarks in
trade. The Article ensure that no special requirements or form shall be
encumbered to the registered trademarks in international trade. Such
action is believed to reduce the capability of the trademark to distinguish
the difference of one product from other products as mentioned below:
“The use of a trademark in the course of trade shall not be
unjustifiably encumbered by special requirements, such as use with
another trademark, use in a special form or use in a manner
detrimental to its capability to distinguish the goods or services of
one undertaking from those of other undertakings. This will not
preclude a requirement prescribing the use of the trademark
identifying the undertaking producing the goods or services along
with, but without linking it ti, the trademark distinguishing the
specific goods or services in question of that undertaking.”232
It is very obvious that this provision has been violated by the
implementation of the Plain Packaging Act. This provision regulates that
there shall no additional requirements be encumbered to the existing
trademark that could lessen the capability of the trademark to distinguish
the undertakings of a product from the undertakings of other products. The
Act is clearly the additional requirement in the practice of trade between
232 TRIPS Agreement Article 20, from www.wto.org, accessed on 16 November 2017.
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Australia and Indonesia – and other countries – that not only lessen the
capability of one particular product to be distinguished from other
products but also further eliminate most of it. This has become the fatal
violation of the Act towards the TRIPS Agreement.
7. TRIPS Agreement Article 22 Paragraph 2b
The Article 22 Paragraph 2b of TRIPS Agreement regulates the
geographical indication rights of products. This Article regulates that all
member countries involved in the Agreement shall provide law guarantee
that the geographical indication rights are protected in the practice of
trade. The protection of the geographical aims to protect the goods and/or
services from unfair competitions as explained in the Paris Convention
1967 Article 10bis (10.2).
”In respect of geographical indications, Members shall provide the
legal means for interested parties to prevent any use which
constitutes an act of unfair competition within the meaning of
Article 10bis of the Paris Convention (1967).”233
“(1)The countries of the Union are bound to assure to nationals of
such countries effective protection against unfair competition;
(2)Any act of competition contrary to honest practices in industrial
or commercial matters constitutes an act of unfair competition; (3)
The following in particular shall be prohibited:
- all acts of such a nature as to create confusion by any
means whatever with the establishment, the goods, or the
industrial or commercial activities, of a competitor; false
allegations in the course of trade of such a nature as to
discredit the establishment, the goods, or the industrial or
commercial activities, of a competitor; indications or
allegations the use of which in the course of trade is liable
to mislead the public as to the nature, the manufacturing
process, the characteristics, the suitability for their
purpose, or the quantity, of the goods.”234
233 Paris Convention 1967 Article 10bis, from www.wto.org, accessed on 16 November 2017. 234 TRIPS Agreement Article 22 Paragraph 2b, from www.wto.org, accessed on 16 November 2017.
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The geographical indication rights and the benefits derived from it has
been totally abandoned by Australia‘s Plain Packaging Act 2011. The
single standardized packaging makes it difficult for consumers to
distinguish the geographic indication of the tobacco products in Australia.
The provision also prohibits any kind of activity that leads to creation of
confusion between the products, meanwhile the Australia has conducted
such activity effectively since the Plain Packaging Act came into force.
8. TRIPS Agreement Article 24 Paragraph 3
Article 24 Paragraph 3 of TRIPS Agreement concerns on the same matter
as previous point that all member countries involved in the agreement
shall not diminish the protection of the geographical indications that are
regulated by the laws and other regulations or agreement existed prior to
the enforcement of the WTO Agreement, as stated below:
“In implementing this Section, a Member shall not diminish the
protection of geographical indications that existed in that Member
immediately prior to the date of entry into force of the WTO
Agreement.”235
As mentioned in the previous chapters, the geographical indications have
been popular term in the practice of international trade. Many products are
known of its originating countries. The Plain Packaging Act imposed by
Australian government has totally diminish the geographical indication
rights and benefits of the tobacco products. In a single standardized
packaging, the geographical indication seems to be absent even though
there is writing stating where the product came from, but compared to the
original packaging, there seem to be no geographical indication in the
plain packaging of tobacco products.
Besides violating those Intellectual Property Rights in the TRIPS
Agreement, the Australian Plain Packaging Act has also violated the basic
235 TRIPS Agreement Article 24 Paragraph 3, from www.wto.org, accessed on 16 November 2017.
108
principle of World Trade Organization of Most favored Nation especially in the
field of Intellectual Property Rights Protection, which states that:
“…With regard to the protection of intellectual property, any advantage,
favor, privilege or immunity granted by a Member to the nationals of any
other country shall be accorded immediately and unconditionally to the
nationals of all other Members...”236
Therefore, there was no country or institution has ever gone against
Australian objective to increase the health of the people. It is such an unfortunate
that the noble objectives have to be tarnished by the strategy of achieving the
objectives. The Plain Packaging Act 2011 is believed to violate numbers of
agreements relater to Intellectual Property Rights protection as well as the basic
principle of the WTO. The Most Favored Nation in Intellectual Property Rights
Protection regulates that all member countries must treat the intellectual property
rights exactly as they are being protected in the home country. The Plain
Packaging has not only treated differently but also seemed to be intentionally
abandoning the protection of the Intellectual Property Rights.
What makes the situation become more ironic is that there has no certain
prove that the Plain Packaging Act to be effective in reducing the smoking
prevalence in Australia. Indeed, the smoking prevalence is decreasing but there
are also numbers of other policies enforced in Australia that might contribute to
the decreasing of the smoking prevalence, one of which is the high tax. On the
other side, the identities of the industries that produce tobacco have been
destroyed. This is Act is very bias and one sided. It takes years to build the legacy
and the value of a brand. However, it only takes one single policy to destroy the
value of the brands. Therefore it is believed that the Australian Plain Packaging
Act has violated the international law that is believed to be the guideline of the
conduct of international trade.
236
TRIPS Agreement General Provision Article 4, from www.wto.org, accessed on 16 November
2017.
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IV.2 The Role of World Trade Organization in Settling the
Dispute between Australia and Indonesia on the Australia’s Plain
Packaging Act 2011 (2013 – 2017)
Based on the matter of perspective that the Australian Plain Packaging Act
2011 is deemed to have violated the TRIPS Agreement and the basic principle of
WTO, thus Indonesia brought the case to the World Trade Organization to seek
for the best solution of the case with the respect of applicable law and mechanism
on 23 September 2013. The World Trade Organization takes part in this case by
providing the media of consultation and discussion for the interested and
disputing parties through certain mechanism in seeking the best solution of the
dispute through the Dispute Settlement Body.
Under the Dispute Settlement Body, there are several legal bases that
become the precondition for the dispute to be than categorized as the dispute that
must be settled through the WTO Dispute Settlement Body. First and foremost,
the dispute occurs between two or more trading partners that are about to be
brought to WTO Dispute Settlement Body must be covered in one of the WTO
Agreements.237
The plain packaging is related to one of the WTO Agreements,
the TRIPS Agreement. Other than the TRIPS Agreement, there are other
Agreements in WTO that can become the legal basis for any dispute in the
request for consultation or dispute settlements in case any involving countries
have failed to perform its obligation under the agreements that bother other
countries, as below:
1. The General Agreement on Trade and Tariffs Article XXII and XXIII
Article XXII of the GATT states in the first paragraph that all member
countries shall firstly conduct consultation with the disputing member
country or countries by themselves by referring to the provisions in this
237 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 1, from www.wto.org, accessed on 17 November 2017.
110
agreement. However if such action has been done and there is no mutual
solution gained from the consultation, the second paragraph allows the
member country or countries to request for consultation to the WTO.238
While the Article XXIII of GATT regulates that the member countries can
request for consultation with other country if the action of the particular
other country has failed to carry out its obligations under the agreement,
applied other measures both relevant or irrelevant with the Agreement,
and any other acceptable situation239
2. The Agreement on Agriculture Article 19.
3. The Agreement on the Application of Sanitary and Phytosanitary
Measures Article 11.
4. The Agreement on Textiles and Clothing Article 8.10.
5. The Agreement on Technical Barriers to Trade Article 14.
6. The Agreement on Trade-Related Investment Measures Article 8.
7. The Agreement on Implementation of Article VI of GATT 1994.
8. The Agreement on Implementation of Article VII of GATT 1994.
9. The Agreement on Preshipment Inspection Articles 7 and 8.
10. The Agreement on Rules of Origin Articles 7 and 8.
11. The Agreement on Import Licensing Procurers Article 6.
12. The Agreement on Subsidies and Countervailing Measures Articles 4 and
30.
13. The Agreement on Safeguards Article 14.
14. The General Agreement on Trade in Services Articles XXII and XXIII.
Those Articles in the mentioned Agreements basically allow the member
countries involved in Agreement to request for consultation once he dispute
occurs.
238 Ibid. 239 GATT Agreement 1948 Article XXII & XXIII, from www.wto.org, accessed on 17 November 2107.
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The request of consultation consists of the complaint from the requesting
party. There are three types of complaints in the trade dispute settlement of WTO
DSB.240
The first type is the complaint on violation. The complaint on violation
submitted to WTO must consist the proofs of elimination or decrease of benefit
enjoyed by the complainant country as the result of the failure of the other
member countries to carry out their responsibilities set under the Agreements.
The second complaint is the non-violation complaint. The non-violation
complaint is the complaint that is challenging any further measures applied by
other member countries even though the measures are in line with the
Agreements as long as the measures eliminate or decrease the benefit enjoyed by
other countries, especially the complainant. The last type of complaint is the
situational complaint which refer to any complain based on any situation that
resulted in the elimination or decrease of benefits enjoyed by the complainant
country.
As the umbrella of the practice of trade beyond boundaries, the member
countries of WTO perceived that it is also necessary to form a dispute settlement
mechanism to help solve any upcoming problems occurred as the effect of the
enforcement of the Agreement. The dispute settlement system has been found
since the adoption of General Agreement on Trade and Tariffs (GATT). In the era
of GATT adoption, the dispute settlement is decided by the chairman of the
GATT Council by referring to the report of the working parties that represent the
interest of parties in the dispute. The working parties will then be replaced by
independent panels consist of three to five independent experts that have no
interest relation with the disputing parties. The independent panels shall then
submit a report to the GATT Council regarding the case and if the GATT Council
approved the report, the report shall then have the legal status that binds the
240 Stages of Dispute Settlement in WTO DSB, from www.wto.org, accessed on 17 November 2017.
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parties in the dispute and become the precedent of the next dispute on the same or
similar case.241
In WTO DSB dispute settlement system as adopted from the result of
Uruguay Round that shall be conducted through the mechanism in the picture.
Figure 4.4 The Stages of Dispute Settlement Under WTO DSB, WTO.
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1. Consultation
The World Trade Organization in the Dispute Settlement Understanding
(DSU) actually prefers if the member countries that have dispute to
discuss and consult by them regarding the dispute and to find the best
solution by referring to the provisions in the WTO Agreements.242
Therefore, for any dispute settlement under the WTO, the first stage will
always be consultation between disputing parties with the hope that
satisfactory solution would come as the output of the consultation and
therefore, further litigation will not be necessary.243
However, if the
consultation does not end up in satisfactory solution in 60 days, the
disputing parties may proceed to the next level by requesting the
adjudication by an established panel.244
However, during the adjudication
by the panel, the disputing parties are still encouraged to find the mutual
solution.
In submitting a request for consultation, the requesting member country
shall address the request to the responding countries and notify the WTO
Dispute Settlement Body. The submitted request to the WTO secretariat
will then be spread to the public and other members to notify that a case is
being built in the WTO DSB. The request of the consultation must provide
the reasons for the consultation and the legal basis for the complaint.245
The member country that the consultation is addressed to (responding
country) will be obliged to consider the request and be willing to make the
consultation.246
Normally, the responding country shall have to reply the
written request of consultation within 10 days and conduct the
242 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 3.7, from www.wto.org, accessed on 17 November 2017. 243 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.5, from www.wto.org, accessed on 17 November 2017. 244 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.7, from www.wto.org, accessed on 17 November 2017. 245 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.4, from www.wto.org, accessed on 17 November 2017. 246 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.2, from www.wto.org, accessed on 17 November 2017.
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consultation in 30 days.247
If the responding country is not able to meet
the criteria, the requesting country is allowed to directly proceed to the
panel adjudication. The consultation will be conducted in Geneva in a
very confidential forum.248
Therefore there are very limited information
shall be disclosed regarding the consultation including to the secretariat of
WTO. After the consultation, if no satisfactory and mutual solution was
formed, the requesting and complaining country is allowed to request for
the establishment of panel in minimum 60 days after the consultation.249
Beside the disputing member countries, other WTO member countries are
welcomed to join the consultation as third parties. Usually the member
countries requesting to be the third parties have something in common of
interest either with the complaining or the responding country regarding
the matter. The interested member countries must then submit a request to
join the consultation to the disputing member countries. The responding
member countries must agree upon the request. However the requesting
country is free to either accept or refuse the request of the joint
consultation. If the requesting member country then chose to refuse the
request of the third parties, the third parties shall not be allowed to be
involved in the consultation even though the interest of the third parties is
very high on the issue being consulted.
Regarding the trade dispute between Australia and Indonesia on the Plain
Packaging Act 2011, Indonesia submitted the request of consultation both
to Australia and the secretariat on September 25, 2013 with the number
WT/DS467/1,G/TBT/D/46IP/D/34,G/L/1041. In the request Indonesia
brought 4 points of Australia‘s considered-to-be violation to the
Intellectual Property Rights which are the Number 148 and 149 of the Act
247 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.3, from www.wto.org, accessed on 17 November 2017. 248 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.6, from www.wto.org, accessed on 17 November 2017. 249 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 4.7, from www.wto.org, accessed on 17 November 2017.
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2011, the Plain Packaging Act 2011 that is amended in the Tobacco Plain
Packaging Amendment Regulation 2012 number 1, any related measures
adopted by Australia regarding the plain packaging that are related to the
implementation of Plain Packaging Act 2011.250
Indonesia also
mentioned in the request for consultation several articles that are violated
due to the implementation of Plain Packaging Act 2011 as explained
previously.
On 30 September 2013, Guatemala submitted a request to be involved in
the consultation as the third party considering Guatemala‘s interest in the
case. Guatemala has two types of interests in the case. The economic
interest as Guatemala‘s export value of tobacco and tobacco products
reached USD 54 Million and also the health interest.251
On 2 October
2013, Nicaragua submitted the request to join the consultation considering
the interest of Nicaragua on the tobacco product. Nicaragua considered the
Act imposed by the Australian Government is threat to the tobacco
production and the employment in the sector as the cigars export is one of
the main export commodities from Nicaragua.252
On the same date with
the Nicaragua, with the interest to see the application of the TRIPS
Agreement provisions in the case, New Zealand submitted a request to
join the consultation.253
On the following day, with the interest on the
trade of the tobacco and tobacco products, Uruguay also submitted a
request to join the consultation.254
To add the third parties in the consultation, on 4 October 2013, European
Union also submitted the request to join the consultation bringing the
crosscutting issues of Intellectual Property Rights protection and health
250 Indonesia’s communication to WTO DSB Panel Number WT/DS467/1, G/TBT/D/46 IP/D/34, G/L/1041 dated on 23 September 2013. 251 WTO Document WT/DS467/2, dated on 30 September 2013. 252 WTO Document WT/DS467/3, dated on 2 October 2013. 253 WTO Document WT/DS467/4, dated on 2 October 2013. 254 WTO Document WT/DS467/5, dated on 3 October 2013.
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protection.255
On 7 October 2013, Norway also submitted its request to
join the consultation as Norway was revising the tobacco policy to reduce
the smoking prevalence at the moment and thus the outcome of the
dispute shall be helpful to be a reference for Norway.256
On the same day
with Norway, by considering its interest in trade, Canada submitted a
request to join the consultation.257
Still on the same day, the Dominican
Republic also submitted the request for joining the consultation
considering its interest on trade as the major producer and exporter of
tobacco products.258
On 8 October 2013, Brazil and Honduras submitted a
request to join the consultation bringing the trade interest of both
countries.259
As the producer and exporter of tobacco products Ukraine
also submitted the request for joining the consultation on 11 October
2013.260
On 25 October 2013, to add the list of the third parties, Cuba
submitted the request of joining the consultation.261
On 28 October 2013, Australia accepted Indonesia‘s request for the
consultation as well allowing all the requesting member countries to get
involved in the consultation.262
The consultation was then held on the
following day, 29 October 2013, after the acceptance of Australia for the
consultation.
2. The Panel Stage
As mentioned previously, if the consultation between disputing countries
failed to make a mutual and satisfactory solution toward the dispute, the
complaining country shall then be allowed to request for the establishment
of panel for the panel adjudication on the case in minimum 60 days after
the consultation. Once the panel established and submits the adjudication
255 WTO Document WT/DS467/6, dated on 4 October 2013. 256 WTO Document WT/DS467/7, dated on 7 October 2013. 257 WTO Document WT/DS467/8, dated on 7 October 2013. 258 WTO Document WT/DS467/9, dated on 7 October 2013. 259 WTO Document WT/DS467/10 and WT/DS467/11, dated on 8 October 2013. 260 WTO Document WT/DS467/12, dated on 11 October 2013. 261 WTO Document WT/DS467/13, dated on 25 October 2013. 262 WTO Document WT/DS467/14, dated on 28 October 2013.
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to the WTO DSB and the DSB has the saying on the dispute, all the
disputing parties must obey the decision as the decision is legally binding
the parties.263
However, as mentioned before, even at this stage both
disputing countries are still allowed to conduct further bilateral
consultation to find a more mutual solution for the dispute.
The stage to establish the panel, the complaining country must then
submit a request for the panel establishment to the chairman of the WTO
DSB and the request shall then be circulated to all members of WTO. The
complaining country must also include the standard term of reference to
become of the considerations for the panel to examine the dispute or in
other words, the scope and limitation of the dispute to be examined by the
panel by still attaching the basis for the complaint and the measures being
complained.264
The complaining country must be very careful in
determining the term of reference for the panel‘s jurisdiction as the
request can be overruled by the panel or rejected by the responding
country. Different from the request for consultation, in the request for
panel establishment, the responding country can refuse the adjudication by
panel in the DSB meeting and DSB can also refuse the establishment of
the panel if the consensus chose so.265
However, the consensus of the DSB
can be overruled if it is against the request of the complainant country and
the complainant country insists to establish the panel as agreed by the
responding country.
In the panels‘ adjudication, other members beside the disputing members
are also welcomed to become the third parties and deliver their hearing on
the case even though they did not join the consultation as the third party
through notification to the panel by including their interest in becoming
263 World Trade Organization Dispute Settlement Understanding (WTO DSU), from www.wto.org, accessed on 17 November 2017. 264 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 7.1, from www.wto.org, accessed on 17 November 2017. 265 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 6.1, from www.wto.org, accessed on 17 November 2017.
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the third party.266
However, the WTO member countries have only 10
days deadline to become the third parties of the panel adjudication after
the panel established.
The panel in the dispute shall consist of three or five independent
members nominated by the DSB and agreed by the disputing members.267
The panels in the dispute must then perform their duties and
responsibilities independently without being associated to any government
or organization as well as the member countries are prohibited to
influence the panels of the dispute.268
Once the panel has been established, the panel may proceed to work by
first setting timeline for the adjudication. The disputing parties will then
exchange submissions regarding the preliminary issues on the case as
raised by the complainant country, such as challenging the request of the
complainant country for the panel establishment. If it happens to be no
preliminary issue on the case, the parties may proceed by submitting their
first documents on the adjudication, including the third parties. It is worth
noting that all the documents submitted are highly confidential. Only the
panel report will be circulated to all WTO members.
After the disputing parties submitted their first submission, the panel then
invited the parties to deliver oral views on the case.269
For the third parties,
there will be session specially made for them to present their views on the
case.270
After presenting the oral statements on the case, the disputing
parties may submit their rebuttals in about four weeks after the panel
meeting which is also known as the second submission. The parties will
266 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 10.2, from www.wto.org, accessed on 17 November 2017. 267 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 8, from www.wto.org, accessed on 17 November 2017. 268 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 8.9, from www.wto.org, accessed on 17 November 2017. 269 Working Procedure Appendix 3 paragraph 9, from www.wto.org, accessed on 17 November 2017. 270 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 10.2, from www.wto.org, accessed on 17 November 2017.
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then be invited to the substantive meeting to respond to the rebuttals but
still without the third parties. For the third parties, the panel will provide
other session to hear the views by providing the legal facts and arguments
as well as answering questions from panels and other third parties.
After all those processes done, the panel shall then make panel
deliberation to compose the panel report without the parties and still in a
highly confidential forum.271
During the moment the panel is also
prohibited to conduct any communication with one party without other
disputing party. The report of the panel shall consist of two parts that are
descriptive parts and the findings.
After the descriptive report draft is composed, the disputing parties will
then be invited again to provide their comments. This aims to make sure
all the arguments and complains of the parties have been included in the
descriptive report draft. Afterward, the panel will compose the findings
containing the decision whether the complaint shall be uphold or rejected
along with the considerations.272
After the descriptive report, findings,
conclusion, and recommendation are composed, the panel again
distributes the report to the disputing parties to be reviewed in a very
confidential way and the disputing parties are also still welcomed to argue
on specific points. The interim review of the disputing parties will then
become one of the considerations of the final panel report. Even though
the documents and all the talks are very confidential, the party or parties
often leak the draft of the report to the press.273
After the conclusion of the
interim review, the panel should then submit the final report to the parties,
normally within two weeks.
In the dispute between Indonesia and Australia on the Plain Packaging Act
2011, the consultation did not come with mutual and satisfactory mutual
271 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 14.1 & 14.2, from www.wto.org, accessed on 17 November 2017. 272 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 12.7, from www.wto.org, accessed on 17 November 2017. 273 https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c6s3p4_e.htm
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solution Indonesia requested the establishment of panel on 20 September
2013 with the document number of WT/DS467/15. The term of reference
for the panel shall refer to the Article 7.1 of the Dispute Settlement
Understanding.274
The request was the approved by the secretariat of DSB
that the panel was established on 26 March 2014 and on 5 May 2014 the
members of the panel were agreed to be consisted of three members
namely:
1. Mr. Alexander Erwin, as the chairperson of the panel
2. Mr. Francois Dessemontet, as the member of the panel
3. Ms. Billie Miller, as the member of the panel.
On 14 October 2014, the chairperson of the panel submitted the
notification of the timeline of the panel adjudication, of which stated that
the final report shall be distributed to the disputing parties by the first half
of 2016. On 27 October 2014, the panel submitted another communication
regarding the preliminary ruling in which Australia challenged the request
of Indonesia for the panel establishment due to the finding of the
ambiguity of the Indonesian complain point number 4, as stated below:275
Any related measures adopted by Australia, including measures
that implement, complement or add to these laws and regulations,
as well as any measures that amend or replace these laws and
regulations.276
Australia challenged the measures stated by Indonesia as it is ambiguous.
After several communications, the panel decided to go on with case.277
The development of the dispute between Australia and Indonesia is still at
this stage. The panel has not circulated the final report to disputing parties
and therefore, the WTO DSB has not had the final saying on this case.
The panel is targeting to circulate the final panel report by the end of third
274 WTO Document WT/DS467/15, dated on 6 March 2014. 275 WTO Document WT/DS467/19, dated on 27 October 2014. 276 Ibid. 277 Ibid.
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quarter of 2017.278
However, some media released the news that the panel
favored Australia to continue implementing the Plain Packaging Act.279
Even though the reports of the panel contains the findings, conclusion, and
recommendation, the report will not directly be adopted by disputing
countries as the solution to the dispute. The recommendation will only
turned into legally binding solution for disputing countries only when the
WTO DSB in its final saying on the case agree to adopt the
recommendation submitted by the panel, otherwise, the panel reports shall
never come into legal regulation.280
If there is no appeal from the
disputing parties, it is very much likely that the report of the panel will be
adopted by the WTO DSB, if one of the disputing parties decides to
appeal, further step must be taken by the WTO DSB in concluding the
final saying on the dispute.281
3. Appellate Review
After the final report of the dispute being circulated to the disputing parties,
the parties have the choices either to go on with the report or the file appeal
on the final report. If one or both disputing parties then decide to file appeal
regarding the panel‘s final report, there has to be review from appellate body.
If the disputing countries are not in the same position on the panel‘s report,
each of the party must be fast in either submitting appeal or requesting the
panel‘s report to be put in the agenda of DSB Meeting of which the panel‘s
278 Summary of the Dispute DS 467 up to 3 October 2017, from www.wto.org, accessed on 17 November 2017. 279 ABC News. (2017, May 5). Australia Wins Landmark Plain Packaging Case. Retrieved from http://www.abc.net.au/news/2017-05-05/australia-wins-landmark-wto-tobacco-packaging-case/8498750 280 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 11, from www.wto.org, accessed on 17 November 2017. 281 Articles 4 paragraph 8 and 7 paragraph 6 SCM Agreement, from www.wto.org, accessed on 17 November 2017.
123
report shall than be adopted into legal binding.282
For the party of the
disputing countries wish to file appeal regarding the panel‘s report, it has to
be done in 20 days after the panel final report is circulated or can also be in
60 days.
Both disputing parties are allowed to file the appeal but nor third parties. The
appeal is usually filed because one or even both disputing parties feel that the
conclusion and recommendation of the panel‘s report deemed to have
nullified or impair the benefits of the WTO Agreement enjoyed by the
member country if the panel then be adopted. The third parties that have
involved in the panel adjudication can participate in the appellate review
through:
a. Filling submission at no later than 25 days after the notice of appeal
regarding their views on the case as well as to appear at the oral hearing
in the appellate review or even to make oral statement in the review.283
b. Notifying at no later than 25 days after the appellate notice to the
Appellate Body Secretariat to appear in the hearing of oral statement in
the review as well giving oral statement but without filing submission.284
c. Neither filing submission nor making notification, but notify to appear in
the review and to make oral statement.285
d. Neither filing submission nor making notification but to appear in the
review and becoming the passive observer.286
The process of the appellate is not very much different from the panel
adjudication process. The Appellate Body shall also submit the report to the
282 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 16 paragraph 4, from www.wto.org, accessed on 17 November 2017. 283 Rules 24(1) and 27(3)(a) of the Working Procedures, from www.wto.org, accessed on 17 November 2017. 284 Rules 24(2) and 27(3)(a) of the Working Procedures, from www.wto.org, accessed on 17 November 2017. 285 Rules 24(4) and 27(3)(b) and (c) of the Working Procedures, from www.wto.org, accessed on 17 November 2017. 286 Rules 24(4) and 27(3)(b) of the Working Procedures, from www.wto.org, accessed on 17 November 2017.
124
DSB in two forms, descriptive and findings. The appellate review normally
takes no longer than 90 days, mostly in 60 days. If within 60 days of the
appellate process, the appellate report has not been able to be submitted yet,
the appellate body shall notify DSB the reason of the delay and the expected
finish date.
4. Adoption of Reports by Dispute Settlement Body
After the appellate review finished and the Appellate Body submitted the
report to the DSB, the DSB must adopt the report unless the consensus
decide not to adopt. Once the report is adopted by the DSB, all the parties
must automatically adopt the reports as well and legally bound in the
report.287
The time for the implementation by the disputing parties will then
be agreed between the parties and the WTO DSB. If one of the disputing
parties is not implementing the DSB final saying, the WTO will then have
two choices either to give compensation or to suspend member‘s WTO
obligation until the report then be implemented by the disputing parties.288
Table 4.1 The Development of the Australia – Indonesia Dispute Settlement
on Australia‘s Plain Packaging Act 2011 under WTO DSB
2013 2014 2015 2016 2017
Indonesia requested for consultation (25 September 2013)
Indonesia requested for Panel establishment (6 March 2014)
Adjudication
Panel announced expected issued of panel report (30 June 2016)
Panel announced delay of expected issued of panel report (21 September 2017)
Guatemala Submitted WTO DSB Panel
287 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 17 paragraph 14, from www.wto.org, accessed on 17 November 2017. 288 World Trade Organization Dispute Settlement Understanding (WTO DSU) Article 2 paragraph 2, from www.wto.org, accessed on 17 November 2017.
125
Request to be the Third Party in the Consultation (30 September 2013)
established Panel (6 May 2014)
announced delay of expected issued of panel report (6 December 2016)
Nicaragua Submitted Request to be the Third Party in the Consultation (2 October 2013)
Chairperson of the Panel announced the timeline of adjudication (14 October 2014)
New Zealand Submitted Request to be the Third Party in the Consultation (2 October 2013)
Panel issued Communication concerning the preliminary ruling proposed by Australia (27 October 2014)
Uruguay Submitted Request to be the Third Party in the Consultation (3 October 2013
European Union Submitted Request to be the Third Party in the Consultation (4 October 2013)
Norway Submitted Request to be the Third Party in the Consultation (7 October 2013)
Canada Submitted Request to be the Third Party in the Consultation (7 October 2013)
Dominican Republic Submitted Request to be the Third Party in the Consultation (7 October 2013)
126
Brazil and Honduras Submitted Request to be the Third Party in the Consultation (8 October 2013)
Ukraine Submitted Request to be the Third Party in the Consultation (11 October 2013)
Cuba Submitted Request to be the Third Party in the Consultation (25 October 2013)
Australia Accepted Indonesia’s Request for Consultation (28 October 2013)
Consultation (29 October 2013)
From the explanation above it is very obvious that WTO plays the very
crucial role in this dispute between Australia and Indonesia on the Plain
Packaging Act 2011 implemented by Australian Government. Australia is known
as the first ever country in the world implementing such regulation in the national
law. This has triggered number of countries to follow Australia to start making
similar regulation. This has been a growing threat to the Intellectual Property
Rights Protection as such regulation has violated the trademarks and geographical
indication of the tobacco products. It is important to understand that the final
decision on this dispute will become a landmark either for a stronger Intellectual
Property Rights Protection or for the new chapter of both the Intellectual Property
Rights Protection and Addressing Health Issue.
If the WTO DSB then finally decided to give the favor to Indonesia as the
complainant, the protection of Intellectual Property Rights will become stronger
than ever. Therefore all countries shall put aside all the plan to make and develop
the similar regulation. Otherwise, if Australia gains WTO‘s favor, there might be
many things as consequences following. One of which will be the increase of the
127
violation on the protection of Intellectual Property Rights. Many countries might
follow the step taken by Australia in securing their nationals health either on the
tobacco products or on other products. ―War‖ of regulation might also occur
when some other countries ―hurting‖ by this regulation impose the same
regulation on the Australia‘s export products that are considered as health-
harming, for example Australian wine and junk foods. Therefore, it will not be an
easy task for WTO to decide the best solution for the dispute.
128
CHAPTER V
CONCLUSION
At the very beginning of the implementation Plain Packaging Act 2011,
data showed that the smoking prevalence in Australia is decreasing. However, we
also cannot conclude that the decrease of the smoking prevalence was merely the
impact of the plain packaging act. It is also worth noting that during the
implementation of the Plain Packaging Act, the other programs of the government
were still enforced. However, at the other side of the policy, the tobacco industry
is hurt by this policy as the identity of the tobacco industry is being killed in this
packaging. The tobacco industry believes that the trademark and other identity are
things that were built over years or even centuries that have the value and pride of
the industry as well as giving certain benefits to the industry. Therefore, tobacco
industry believes that this Plain Packaging Act 2011 has violated the Intellectual
Property Rights Protection.
Many countries whose major commodities are tobacco are complaining
about Australia‘s Policy representing the tobacco industry in their countries.
Indonesia, as the front-liner, brought the case to the World Trade Organization to
invite Australia for the consultation to find possible mutual solution for the
problem in September 2013. The main concern of Indonesia‘s complaint is the
Intellectual Property Rights Protection violation that is believed to bring bad
impact to the tobacco industry in the country. Tobacco industry is one of the most
important industries for Indonesia. Besides the contribution of the GDP that
reaches 0.9% in 2016, the tobacco industry is also important for major Indonesian
societies. The tobacco industry has become the living of million people in
centuries as well as helping many people in need through the industry‘s Corporate
Social Responsibility Program.
The basis of Indonesian complaint towards the Tobacco Plain Packaging
Act 2011 is the Trade Related Aspect of Intellectual Property Rights Agreement
McDermott, S. (2017, January 30). How Australia Is Stubbing Out Smoking.
Retrieved from http://www.bbc.com/news/magazine-38733502
Nambi, I. V. (2009, December 13). Tobacco Company Dismisses Workers‘
Health Complaints. Retrieved from
www.newtimes.co.rw/section/read/14543/
135
APPENDICES
APPENDIX A – MINUTES OF INTERVIEW
MINUTES OF INTERVIEW
Date : Tuesday, 14 November 2017
Time : 10.30 – 11.15
Place : PT HM Sampoerna Tbk – Pacific Place Jakarta
Interviewer : Anthoni Nicolas Tarigan
Interviewee : 1. Mr. Yos Adiguna Ginting – Independent
Director of PT HM Sampoerna Tbk
2. Mr. Wilson Andrew – International Trade
Manager of PT HM Sampoerna Tbk
Topic of Discussion : The issue of Australia Plain Packaging Act
2011 on tobacco products and Intellectual
Property Rights from the perspective of the
player in the tobacco industry
1. How do you see Plain Packaging Act 2011?
We as the player in the sector can only respond to the question up to the
limit of how the Act can impact the industry as we do not have the
capacity to go directly fight the Australia on imposing certain regulation.
Regarding the Plain Packaging Act 2011, simply put, we as the legal
entity of the industry and has legal product wonder why we are not treated
with the basic principles for the legal products. Basically, the case is about
the trade dispute that is related to the intellectual property. In the plain
packaging we can see that there is no logo, colors, and other trademarks
attached. That has become the main complaint from us, it is not the health
warning or other features, it is just that we, as the company who legally
own the brand mark do not have the freedom to display our brand value to
communicate our identity to our customers. By the implementation of the
plain packaging, the customers will fail to easily identify the producers of
the brand. Assume that all the cars on the street are produced in the same
136
style and color, this will confuse the customers of the manufacturer, they
will not recognize which one is Hyundai, which one is what. The identity
is one of the most important features for the producers. All the producers
of all goods work hard to create an identity for the consumers to
distinguish one brand from others. Therefore the brand, the identity, plays
a very crucial role in the trade. Hence, we as the manufacturer of the
tobacco products hope that the government can defend the interest of the
industry in Indonesia.
2. If take a look of the trade data between Indonesia and Australia. The trend
shows an increasing number of the export from Indonesia to Australia
despite the implementation of this Plain Packaging Act 2011 (2011 – 2016).
Then what becomes the worry of the industry if the economically does not
hurt the industry?
Regarding that matters, we have to categorize based on the harmonized-
system (HS) code because we as the player in the industry, if one door
closes, we will try to enter through other doors. However, what matter is
that the step taken by the Australian government to make this product
become generic. We always ask the purpose of such action, what are the
alternatives to achieve the goals, and amongst all those alternatives, which
one is the most effective. Furthermore, even though the purpose is noble,
still we need to obey the applicable laws and regulations. This has become
our concern for so long, if the data shows that the export is increasing, we
can assume that the consumption is increasing as well. So if the
consumption is increasing, then the purpose is not fulfilled while the
industry has been hurt by the way the pursuance of the purpose. The
increasing of the export cannot also be assumed that the industry should
be fine despite the ban on the display of the brand. There is other thing
that matters, the value of the brand. The players in the industry have
struggled and strived over decades to make the brand highly valuable.
137
Take the example of cars, just piles of steels, however, why the products
of Mercedes Benz are way more expensive than other, say Hyundai, while
the function is the same – because of the brand. Same things go to other
products, fashion, and the others. Such kind of essence needs to be
considered. We have to analyze the goal again, the Australia stated that
the goal is to reduce the consumption however, fact shows that the
consumption increasing, we have to rethink about the way we achieve the
goals which in this case has violated numbers of agreements and hurt the
industry. This act can also harm the industry by creating the down-trading as
there is no display of the trademark, the players in the industry will have a
“price” war in which they put aside the matter of quality and emphasize on the
price. Since there is no distinguish from a premium to regular brand, the
customers for sure will prefer the cheaper price and this will hurt the producers
of premium products.
3. Based on your view, how is this issue best solved?
The noble purpose still needs to obey the applicable law and regulations. We
believe that there are many other instruments can be used to achieve this
purpose without violating the rules and regulations. We also hope that
Australian government to evaluate the rules and regulation and the impact
of its implementation, if the real condition is still far from the purpose,
may be the Act needs to be adjusted or even revoked and put other
instruments into force to achieve the purpose, such as the excise and tax.
This issue will become the precedent of many issues in the world to the
products that are considered as health-harming to be put into the same
treatment. Therefore, this issue needs to be solved very wisely.
138
WT/DS434/12, WT/DS435/17 WT/DS441/16, WT/DS458/15
WT/DS467/16
28 April 2014 (14-2591) Page: 1/2
Original: English
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS AND OTHER PLAIN
PACKAGING REQUIREMENTS APPLICABLE TO TOBACCO PRODUCTS AND PACKAGING
(WT/DS434)
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO
TOBACCO PRODUCTS AND PACKAGING (WT/DS435, WT/DS441, WT/DS458, WT/DS467)
PROCEDURAL AGREEMENT BETWEEN AUSTRALIA AND UKRAINE, HONDURAS, THE DOMINICAN REPUBLIC, CUBA AND INDONESIA
The following communication, dated 24 April 2014, addressed to the Chairperson of the Dispute
Settlement Body, is circulated at the request of Australia on behalf of all the signatories to this
procedural agreement.
_______________
Panels have been established at the requests of Ukraine (DS434), Honduras (DS435) and
Indonesia (DS467) to examine their respective complaints concerning Australia's plain packaging
requirements applicable to tobacco products and packaging (the "tobacco plain packaging
measure"). Dominican Republic (DS441) and Cuba (DS458) have each requested the
establishment of dispute settlement panels to consider their respective complaints concerning the
same matter. Those requests will be considered at the WTO Dispute Settlement Body meeting on
25 April 2014. In relation to the tobacco plain packaging disputes, Australia, Ukraine, Honduras,
Dominican Republic, Cuba and Indonesia (hereafter referred to as "the parties") have reached the
following agreement: Arrangements for the establishment of related Panels: Dominican Republic (DS441) and Cuba (DS458) will proceed with their panel requests at the 25
April 2014 Dispute Settlement Body meeting and Australia will agree to the establishment of those
panels at that meeting. At that point, five panels will have been established to examine complaints
related to the same matter (the tobacco plain packaging measure) within the meaning of Article
9.3 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). Arrangements for the composition of the Panels: Pursuant to Article 8.7 of the DSU, on 24 March 2014, Ukraine requested the Director-General to
determine the composition of the panel in DS434. On 26 March 2014, Australia requested the
Director-General to determine the composition of the panel in DS435. On 23 April 2014, Australia requested the Director-General to determine the composition of the
panel in DS467. On 25 April 2014, Australia will request the Director-General to determine the
The parties have agreed that a meeting with the Director-General on panel composition will take
place on 24 April 2014. In order to ensure that the views of all parties are taken into consideration
by the Director-General for the selection of panelists, the Director-General has been requested to
allow the full participation of all the parties in the meeting with him on 24 April 2014, irrespective
of the stage of the respective disputes. The Director-General will compose the panels in DS434, DS435, DS441, DS458 and DS467 on 5
May 2014, and the same panelists will be appointed in all these disputes, pursuant to Article 9.3 of
the DSU. The parties agree that following the composition of the Panels by the Director-General on 5 May
2014, all the requirements of Article 8 of the DSU will have been met. Without prejudice to their respective rights under the DSU, the parties agree to the harmonisation
of the timetable for the panel proceedings in DS434, DS435, DS441, DS458, DS467, pursuant to
Article 9.3 of the DSU. The parties will undertake best endeavours to agree on a timetable to
propose to the Panels. Miscellaneous:
The parties agree to continue to co-operate in all matters related to this agreement and not to
raise any procedural objections to any of the steps set out in this agreement. If during the
application of this agreement the parties consider that a procedural aspect has not been properly
covered by this agreement, they will endeavour to find a solution within the shortest time possible
that will not affect the other aspects and agreed steps contained in this agreement.
263), as amended by the Tobacco Plain Packaging Amendment Regulation 2012 (No.
1) (Select Legislative Instrument 2012, No. 29);
Trade Marks Amendment (Tobacco Plain Packaging) Act 2011, Act No. 149 of 2011,
"An Act to amend the Trade Marks Act 1995, and for related purposes"; and
Any related measures adopted by Australia, including measures that implement,
complement or add to these laws and regulations, as well as any measures that
amend or replace these laws and regulations.
The measures apply to the retail sale of cigarettes, cigars, and other tobacco products. The
measures establish comprehensive requirements regarding the appearance and form of the retail
packaging of tobacco products, as well as the tobacco products themselves. The measures also
establish penalties, including criminal sanctions, for the violation of these requirements. The
measures require, inter alia, the following:
with respect to the retail packaging of tobacco products, the measures (i) regulate the
appearance of trademarks and geographical indications, including by prohibiting the
display of design and figurative features, including those forming part of these
intellectual property rights; (ii) prescribe that the brand and variant names forming
part of trademarks appear on the front face, top and bottom of the package in a
141
WT/DS467/1 • G/TBT/D/46 • IP/D/34 • G/L/1041
- 2 -
uniform typeface, font, size, color, and placement1; (iii) prohibit the display of other
words (except for basic information, including country of origin and manufacturer contact details); and (iv) mandate a matt finish and drab dark brown color (Pantone 448C) for retail packaging;
the measures establish that individual cigarettes may not display trademarks,
geographical indications or any other marking other than an alphanumeric code for
product identification purposes;
the measures provide that individual cigars may carry: the brand name, variant name,
country of origin, and an alphanumeric code; these must be displayed in a uniform
typeface, font, size, and color on a single band in a drab dark brown color (Pantone
448C)2; and
the measures regulate other aspects of both tobacco packaging and tobacco products, such as the following requirements: (i) a retail package for cigarettes must be in a
prescribed size, form and material; (ii) cigarettes must be white3; and (iii) a cigar
tube must be cylindrical, rigid, and have an opening of at least 15 mm.
These measures regulating the plain packaging and appearance of tobacco products for
retail sale appear to be inconsistent with Australia's obligations under the following provisions of
the TBT Agreement, the TRIPS Agreement, and the GATT 1994:
Article 2.1 of the TBT Agreement, because the technical regulations at issue accord to
imported tobacco products treatment less favorable than that accorded to like
products of national origin;
Article 2.2 of the TBT Agreement, because the technical regulations at issue create
unnecessary obstacles to trade because they are more trade-restrictive than
necessary to fulfill a legitimate objective;
Article 2.1 of the TRIPS Agreement, which incorporates the provisions of the Paris
Convention for the Protection of Industrial Property, as amended by the Stockholm Act
of 1967 ("Paris Convention"), in particular, (i) Article 6quinquies of the Paris
Convention, because trademarks registered in a country of origin outside Australia are
not protected "as is"; and, (ii) Article 10bis of the Paris Convention, because Australia
does not provide effective protection against unfair competition, for example, creating
confusion between the goods of competitors;
Article 3.1 of the TRIPS Agreement, because Australia accords to nationals of other
Members treatment less favorable than it accords to its own nationals with respect to
the protection of intellectual property;
Article 15.4 of the TRIPS Agreement, because the nature of the goods to which a
trademark is to be applied forms an obstacle to the registration of the trademark;
Article 16.1 of the TRIPS Agreement, because the measures prevent owners of
registered trademarks from enjoying the rights conferred by a trademark;
Article 16.3 of the TRIPS Agreement, because the measures prevent owners of
registered trademarks that are "well known" from enjoying the rights conferred by a
trademark;
1 The brand name and variant must displayed in Lucida Sans typeface; no larger than 14 points for the brand
name and 10 points for the variant name; with only the first letter capitalized; in regular font; in the color Pantone Cool Gray 2C; and below the graphic health warning on the front surface of cigarette packs.
2 They must appear only once on the band and be displayed in Lucida Sans typeface; no larger than 10 points in size; in regular font; and in the color Pantone Cool Gray 2C. The brand and variant name should be placed horizontally along the length of the band so that they run around the circumference of the cigar.
3 However, a cigarette may include an imitation cork tip that is printed brown, and is placed over a filter
tip.
142
WT/DS467/1 • G/TBT/D/46 • IP/D/34 • G/L/1041
- 3 -
Article 20 of the TRIPS Agreement, because the use of trademarks in relation to
tobacco products is unjustifiably encumbered by special requirements, such as (i) use
in a special form, for example, the uniform typeface, font, size, color, and placement
of the brand name, and, (ii) use in a manner detrimental to the trademark's capability
to distinguish tobacco products of one undertaking from tobacco products of other
undertakings;
Article 22.2(b) of the TRIPS Agreement, because Australia does not provide effective
protection against acts of unfair competition with respect to geographical indications,
for example, creating confusion among consumers with respect to the origin of goods;
Article 24.3 of the TRIPS Agreement, because Australia is diminishing the level of
protection it affords to geographical indications as compared with the level of
protection that existed prior to 1 January 1995; and
Article III:4 of the GATT 1994, because the measures at issue accord to imported
tobacco products treatment less favorable than that accorded to like products of
national origin.
Indonesia reserves the right to raise additional claims or matters during the course of these
consultations, and in any future request for panel proceedings.
Indonesia looks forward to Australia's response to this request and to fixing a mutually
acceptable date for consultations.
__________
143
WT/DS467/2
30 September 2013 (13-5222) Page: 1/1
Original: English
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO TOBACCO
PRODUCTS AND PACKAGING
REQUEST TO JOIN CONSULTATIONS
COMMUNICATION FROM GUATEMALA
The following communication, dated 26 September 2013, from the delegation of Guatemala
to the delegation of Australia, the delegation of Indonesia and to the Chairperson of the Dispute
Settlement Body, is circulated in accordance with Article 4.11 of the DSU.
_______________
In accordance with Article 4.11 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (the "DSU"), the Government of Guatemala hereby notifies its desire to
join in the consultations requested by Indonesia concerning certain Australian laws and regulations
that impose trademark restrictions and other plain packaging requirements on tobacco products
and packaging.
The request for consultations to Australia from Indonesia, dated 20 September 2013, was
circulated to the WTO Members on 25 September 2013 as document WT/DS467/1, IP/D/34,
G/TBT/D/46, G/L/1041.
Guatemala has a substantial trade interest in these consultations, as it exports more than
US 54 millions of tobacco and tobacco products. Additionally, Guatemala has a systemic interest in
public health issues; in particular, how Members reconcile their obligations under the WTO
Agreements and the achievement of their own legitimate objectives.
A copy of this letter is being sent to the Chairman of the Dispute Settlement Body, with a
request that it be circulated to the Members. Looking forward to hearing from you at your earliest
convenience, I would like to take this opportunity to thank you for considering this request.
__________
144
WT/DS467/3
2 October 2013
(13-5293) Page: 1/1
Original: English
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO
TOBACCO PRODUCTS AND PACKAGING
REQUEST TO JOIN CONSULTATIONS
Communication from Nicaragua
The following communication, dated 27 September 2013, from the delegation of Nicaragua
to the delegation of Australia, the delegation of Indonesia and to the Chairperson of the Dispute
Settlement Body, is circulated in accordance with Article 4.11 of the DSU.
_______________
Pursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU), the Government of Nicaragua hereby notifies to Australia,
Indonesia and Dispute Settlement Body its interest to join the consultations requested by the
Government of Indonesia under Articles 4 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes, Articles 2.1, 3.1, 15, 20, 22.2(b), 24.3, and 16 of the
Agreement on Trade- Related Aspects of Intellectual Property Rights (the "TRIPS Agreement"),
Article 2.1 and 2.2 of the Agreement on Technical Barriers to Trade (the "TBT Agreement"), and
Article III:4 of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994") concerning
certain Australian laws and regulations that impose trademark restrictions and other plain
packaging requirements on tobacco products and packaging (the "measures").
Our country has a substantial trade interest in these consultations as manufacturer of cigars
which represent one of the most important exports to Nicaragua and the Australian measures will
undermine the competitive opportunities having also a negative impact in the production and
employment in this sector. Nicaragua respectfully asks that its substantial trade interests in these
consultations be recognized.
__________
145
WT/DS467/4
2 October 2013
(13-5295) Page: 1/1
Original: English
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO
TOBACCO PRODUCTS AND PACKAGING
REQUEST TO JOIN CONSULTATIONS
Communication from New Zealand
The following communication, dated 30 September 2013, from the delegation of New
Zealand to the delegation of Australia, the delegation of Indonesia and to the Chairperson of the
Dispute Settlement Body, is circulated in accordance with Article 4.11 of the DSU.
_______________
Pursuant to Article 4.11 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU), New Zealand hereby notifies the Governments of Australia and
Indonesia as well as the Dispute Settlement Body (DSB) that it wishes to be joined in the
consultations requested by Indonesia in the document circulated to WTO Members on 25
September 2013 entitled "Australia – Certain Measures Concerning Trademarks, Geographical
Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and
263), as amended by the Tobacco Plain Packaging Amendment Regulation 2012 (No.
1) (Select Legislative Instrument 2012, No. 29);
Trade Marks Amendment (Tobacco Plain Packaging) Act 2011, Act No. 149 of 2011,
"An Act to amend the Trade Marks Act 1995, and for related purposes"; and
Any related measures adopted by Australia, including measures that implement,
complement or add to these laws and regulations, as well as any measures that
amend or replace these laws and regulations. The measures apply to the retail sale of cigarettes, cigars, and other tobacco products. The
measures establish comprehensive requirements regarding the appearance and form of the retail
packaging of tobacco products, as well as the tobacco products themselves. The measures also
157
WT/DS467/15
- 2 -
establish penalties, including criminal sanctions, for the violation of these requirements. The
measures require, inter alia, the following:
With respect to the retail packaging of tobacco products, the measures (i) regulate the appearance of trademarks and geographical indications, including by prohibiting the display of design and figurative features, including those forming part of these intellectual property rights; (ii) prescribe that the brand and variant names forming part of trademarks appear on the front face, top and bottom of the package in a
uniform typeface, font, size, color, and placement1; (iii) prohibit the display of other
words (except for basic information, including country of origin and manufacturer contact details); and (iv) mandate a matt finish and drab dark brown color (Pantone 448C) for retail packaging;
the measures establish that individual cigarettes may not display trademarks,
geographical indications or any other marking other than an alphanumeric code for
product identification purposes;
the measures provide that individual cigars may carry: the brand name, variant name,
country of origin, and an alphanumeric code; these must be displayed in a uniform
typeface, font, size, and color on a single band in a drab dark brown color (Pantone
448C)2; and
the measures regulate other aspects of both tobacco packaging and tobacco products,
such as the following requirements: (i) a retail package for cigarettes must be in a
prescribed size, form and material; (ii) cigarettes must be white3; and (iii) a cigar
tube must be cylindrical, rigid, and have an opening of at least 15 mm. B. Legal Basis of the Complaint
These measures regulating the plain packaging and appearance of tobacco products for retail sale
appear to be inconsistent with Australia's obligations under the following provisions of the TBT
Agreement, the TRIPS Agreement, and the GATT 1994:
Article 2.1 of the TBT Agreement, because the technical regulations at issue accord to
imported tobacco products treatment less favorable than that accorded to like
products of national origin;
Article 2.2 of the TBT Agreement, because the technical regulations at issue create
unnecessary obstacles to trade because they are more trade-restrictive than
necessary to fulfill a legitimate objective;
Article 1.1 of the TRIPS Agreement, because Australia has failed to give effect to the
following provisions of the TRIPS Agreement;
Article 2.1 of the TRIPS Agreement, which incorporates the provisions of the Paris
Convention for the Protection of Industrial Property, as amended by the Stockholm Act
of 1967 ("Paris Convention"), in particular, (i) Article 6quinquies of the Paris
Convention, because trademarks registered in a country of origin outside Australia are
not protected "as is"; and, (ii) Article 10bis of the Paris Convention, because Australia
does not provide effective protection against unfair competition, for example, creating
confusion between the goods of competitors;
1 The brand name and variant must be displayed in Lucida Sans typeface; no larger than 14 points for
the brand name and 10 points for the variant name; with only the first letter capitalized; in regular font; in the color Pantone Cool Gray 2C; and below the graphic health warning on the front surface of cigarette packs.
2 They must appear only once on the band and be displayed in Lucida Sans typeface; no larger than
10 points in size; in regular font; and in the color Pantone Cool Gray 2C. The brand and variant name should be placed horizontally along the length of the band so that they run around the circumference of the cigar.
3 However, a cigarette may include an imitation cork tip that is printed brown, and is placed over a filter
tip.
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Article 3.1 of the TRIPS Agreement, because Australia accords to nationals of other
Members treatment less favorable than it accords to its own nationals with respect to
the protection of intellectual property;
Article 15.4 of the TRIPS Agreement, because the nature of the goods to which a
trademark is to be applied forms an obstacle to the registration of the trademark;
Article 16.1 of the TRIPS Agreement, because the measures prevent owners of
registered trademarks from enjoying the rights conferred by a trademark;
Article 16.3 of the TRIPS Agreement, because the measures prevent owners of
registered trademarks that are "well known" or might become "well known" from
enjoying the rights conferred by a trademark;
Article 20 of the TRIPS Agreement, because the use of trademarks in relation to
tobacco products is unjustifiably encumbered by special requirements, such as (i) use
in a special form, for example, the uniform typeface, font, size, color, and placement
of the brand name, and, (ii) use in a manner detrimental to the trademark's capability
to distinguish tobacco products of one undertaking from tobacco products of other
undertakings;
Article 22.2(b) of the TRIPS Agreement, because Australia does not provide effective
protection against acts of unfair competition with respect to geographical indications,
for example, creating confusion among consumers with respect to the origin of goods;
Article 24.3 of the TRIPS Agreement, because Australia is diminishing the level of
protection it affords to geographical indications as compared with the level of
protection that existed prior to 1 January 1995; and
Article III:4 of the GATT 1994, because the measures at issue accord to imported
tobacco products treatment less favorable than that accorded to like products of
national origin. C. Request for the Establishment of a Panel
Accordingly, Indonesia requests, pursuant to Article 4.7 and 6 of the DSU, Article XXIII of GATT
1994, Article 64.1 of the TRIPs Agreement, and Article 14.1 of the TBT Agreement , that the DSB
establish a Panel with the standard terms of reference as set out in Article 7.1 of the DSU.
Indonesia asks that this request be placed on the agenda of the meeting of the DSB scheduled for
26 March 2014.
__________
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6 May 2014
(14-2740) Page: 1/1
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO
TOBACCO PRODUCTS AND PACKAGING
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF INDONESIA
NOTE BY THE SECRETARIAT
1. At its meeting on 26 March 2014, the Dispute Settlement Body (DSB) established a panel
pursuant to the request of Indonesia in document WT/DS467/15, in accordance with Article 6 of
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
2. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Indonesia in document
WT/DS467/15 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.
3. On 23 April 2014, Australia requested the Director-General to determine the composition of
the Panel, pursuant to Article 8.7 of the DSU. This paragraph provides:
If there is no agreement on the panelists within 20 days after the date of the
establishment of a panel, at the request of either party, the Director-General, in
consultation with the Chairman of the DSB and the Chairman of the relevant Council
or Committee, shall determine the composition of the panel by appointing the
panelists whom the Director-General considers most appropriate in accordance with
any relevant special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in the dispute, after consulting with the parties
to the dispute. The Chairman of the DSB shall inform the Members of the composition
of the panel thus formed no later than 10 days after the date the Chairman receives
such a request.
4. On 5 May 2014, the Director-General accordingly composed the Panel as follows:
Chairperson:
Mr Alexander Erwin
Members: Mr François Dessemontet Ms Billie Miller
5. Argentina, Brazil, Canada, Chile, China, Cuba, the Dominican Republic, the European Union,
Guatemala, Honduras, India, Japan, the Republic of Korea, Malawi1, Malaysia, Mexico, New
Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, the Philippines, the Russian Federation, Singapore, Chinese Taipei, Thailand, Turkey, Ukraine, the United States, Uruguay, and Zimbabwe have reserved their rights to participate in the Panel proceedings as third parties.
__________
1 On 14 April 2014, Malawi notified its interest to participate as a third party.
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12 June 2015
(15-3051) Page: 1/2
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO
TOBACCO PRODUCTS AND PACKAGING
CONSTITUTION OF THE PANEL ESTABLISHED AT THE REQUEST OF INDONESIA
NOTE BY THE SECRETARIAT
Revision
1. At its meeting on 26 March 2014, the Dispute Settlement Body (DSB) established a panel
pursuant to the request of Indonesia in document WT/DS467/15, in accordance with Article 6 of
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
2. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Indonesia in document
WT/DS467/15 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.
3. On 23 April 2014, Australia requested the Director-General to determine the composition of
the Panel, pursuant to Article 8.7 of the DSU. This paragraph provides:
If there is no agreement on the panelists within 20 days after the date of the
establishment of a panel, at the request of either party, the Director-General, in
consultation with the Chairman of the DSB and the Chairman of the relevant Council
or Committee, shall determine the composition of the panel by appointing the
panelists whom the Director-General considers most appropriate in accordance with
any relevant special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in the dispute, after consulting with the parties
to the dispute. The Chairman of the DSB shall inform the Members of the composition
of the panel thus formed no later than 10 days after the date the Chairman receives
such a request. 4. On 5 May 2014, the Director-General accordingly composed the Panel as follows:
Chairperson:
Mr Alexander Erwin
Members: Mr François Dessemontet Ms Billie Miller
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WT/DS467/17/Rev.1
- 2 -
5. Argentina, Brazil, Canada, Chile, China, Cuba, the Dominican Republic, Ecuador1, the
European Union, Guatemala, Honduras, India, Japan, the Republic of Korea, Malawi2, Malaysia,
Mexico, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, the Philippines, the Russian Federation, Singapore, Chinese Taipei, Thailand, Turkey, Ukraine, the United States, Uruguay, and Zimbabwe have reserved their rights to participate in the Panel proceedings as third parties.
__________
1 On 1 June 2015, Ecuador notified its interest to participate as a third party.
2 On 14 April 2014, Malawi notified its interest to participate as a third party.
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WT/DS467/18
14 October 2014 (14-5863) Page: 1/1
Original: English
AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL
INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO
TOBACCO PRODUCTS AND PACKAGING
COMMUNICATION FROM THE CHAIRPERSON OF THE PANEL
The following communication, dated 10 October 2014, was received from the Chairperson of the
Panel with the request that it be circulated to the Dispute Settlement Body.
_______________
Article 12.8 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
(DSU) provides that the period in which a panel shall conduct its examination, from the date that
the composition and terms of reference of the panel have been agreed upon until the date the final
report is issued to the parties to the dispute, shall, as a general rule, not exceed six months. Article 12.9 of the DSU provides that, when a panel considers that it cannot issue its report within
six months, it shall inform the Dispute Settlement Body (DSB) in writing accordingly and indicate
the reasons, together with an estimate of the period within which it will issue its report. The Panel in Australia – Certain Measures Concerning Trademarks, Geographical Indications and
Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging (WT/DS467)
was established by the DSB on 26 March 2014 and composed on 5 May 2014. The Panel expects to issue its final report to the parties not before the first half of 2016, in
accordance with the timetable adopted by the Panel on 17 June 2014 on the basis of a draft
