Tobacco Industry Finds Trade Treaty Neither Free Nor Fair

By Rich DupreyFool.com

Therights of tobacco companies to seek aredress of grievances in a court of law will go up in smoke under the trade pact being championed by President Obama.

Free trade among nations is always to be encouraged, but there is good reason why theTrans-Pacific Partnership that President Obama has strived to keep out of the public eyehasraised hackles among even the most ardent supporters.

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Shrouded in secrecy even from members of Congress who have to trek to specially guarded rooms to read the text of the landmark legislation that will link together 40% of the world's economy, it seemingly has something to offend everyone.

Only recently intellectual- and property-rights advocates were scandalized to find protections previously afforded individuals abrogated in favor of multinational corporations.But it is the tobacco industry that remains the one globalbusiness that has been singularly targeted forretribution as tradenegotiators carved out exceptions prohibiting cigarette makers from seekingredress in the courts fromthe actions ofoverreaching governments.

On neutral groundCommon to most trade agreements and included in the TPP are provisions known asInvestor-State Dispute Settlements. An ISDS allows companies to petition international tribunals forrelief fromregulatory excess. They're inserted into treaties primarily to secure basic legal protections for a country's nationals who invest in foreign lands.

In 2013, the U.N. found there were 514 ISDS cases brought the year before, with fully 31% of them decided infavor of the investor

However, underTPP the tobacco industry is specifically barredfrom pursuing that avenue of due process. By doing so, governments believe they'll more easily be able toregulate cigarette makers without having to defend their actions. Because the industry has been so successful in beating back theseregulatory attacks, governments want toeliminate one of the most effective weapons tobacco companies can wield: therule of law.

The right to self-defenseRecently cigarette makers like Altria and Reynolds American resurrected a lawsuit against the Food and Drug Administration for attempting to impose onerous packaging requirements on the industry. The agency introduced newrules saying that if a tobacco company changes so much as a color on a cigarette pack's logo, it is in effect creating a whole new product and needs prior approval before printing it

The 2009 Tobacco Control Act already limits the FDA's ability to interfere with the industry's marketing and packaging. The courtsruled the agency's attempt to force cigarette makers to printgraphic anti-smoking images on their cigarette packs was an infringement of the cigarette makers' intellectual-propertyrights, and the tobacco companies contend the FDA's newrules are the same kind of violation.

Similarly, Philip Morris International is suing Australia over its packaging laws adopted in 2012, requiring all cigarettes regardless of brandbe sold in the same bland brown packaging with white lettering. Itis able to sue Australia -- and previously Namibia, Togo, the U.K., and Uruguay -- -- because of the ISDS provisions in trade pacts between the various countries.

Critics contend the trade treaty is just a mechanism to stub outtobacco companies without having to worry about them fighting back.

Now the governments are banding together through the TPP to prevent the industry from fighting back.

An unfair fightAs written, the trade treaty would give countries a virtually unfettered right to regulate tobacco as part of an effort to protect human health, and the companies would have no recourse. Tobacco is the only industry in the TPP precluded from using due process to protect itself.

And once given such authority, governments have indicated they would use itruthlessly.The Obama administration promised to "be an aggressive advocate of making sure that public health authorities inside the United States have all the authority that they need to protect the health and well-being of the American people. And that's why those rules are written the way they are."

Naturally, the tobacco companies are opposed to this singularity, and Philip Morris issued a statement condemning those who "have traded away fairness and access to justice for all investors and instead embraced discrimination against a single sector."

A portent of things to comeThe industry's pleas fall on few sympathetic ears, of course, and a number of politicians have publicly stated they view the selective enforcement as a benefit of the pact, not a flaw. It's clear that if the Trans-Pacific Partnership is adopted, the cigarette makers will find themselves bearing the brunt of the animus many hold against it. Graphic images, plain packaging, and draconian regulations are just some of the outcomes awaiting cigarette makersif the trade pact passesregardless of whether they trample on constitutionally protectedrights or not.

Because the process was so secret, and the public once again has to wait for a law to pass before finding out what's in it, it may be that many more individuals and industries will be surprised to find that protections they too oncethought were assured have instead been undermined and traded away by a treaty that seems less and less to be free or fair.

The article Tobacco Industry Finds Trade Treaty Neither Free Nor Fair originally appeared on Fool.com.

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