As mentioned here, a number of WTO Members recently raised concerns in the TBT Committee regarding Thai liquor labeling measures:
Alcohol companies world-wide are lining up to fight a Thai plan to require graphic warning labels about alcohol on the country's domestic and imported beer, wine and liquor bottles.
The proposed labels—which would cover 30% of the bottles' surface area—include unusually explicit warnings about risks associated with alcohol use. One picture shows a shirtless man grasping a woman by the hair and raising his fist to hit her, accompanied by the words, "Alcohol consumption could harm yourself, children and family."
Another shows a pair of bare feet dangling in the air after an apparent suicide and the words, "Alcohol consumption could alter consciousness and lead to mortality." Others show diseased livers and a bloody motorbike accident.
The discussion at the TBT Committee is now available here (Word document):
(xxii) Thailand – Health warnings for alcoholic beverages (G/TBT/N/THA/332 and Add.1)
237. The representative of the European Union asked Thailand for further information with regard to the scientific evidence leading to the decision by Thai authorities not to use less trade-restrictive, less costly and burdensome alternatives to pictorial health warnings. She asked for a clarification on the scientific data justifying the assumption that the conditions described by the health warnings were generally caused by any level of alcohol consumption, even moderate ones. Furthermore, it was the EU experience that public policies aiming to modify drinking behaviour needed to be approached in a holistic manner, for instance by encompassing education campaigns to raise the awareness level of the public with regard to specific alcohol-related problems. Therefore, the European Union asked Thailand to indicate whether it was considering also other alternatives to mandatory product labelling, such as education and/or information activities.
238. The representative of the European Union noted that if the Thai authorities nevertheless decided to go ahead with the introduction of these requirements, the European Union requested more flexibility with regard to their implementation – in particular, with regard to the size and placement of the health warnings. The European Union also asked Thailand to allow for a sufficient transition period for economic operators to adapt their labels to the new requirements. Finally, the European Union reiterated its request for Thailand to clarify the relationship between the draft measure and the text notified under G/TBT/N/THA/282.
239. The representative of Mexico raised concerns about the means by which Thailand's legitimate objective of protecting human health was to be achieved and requested that Thailand consider less costly and less trade-restrictive alternatives, as well additional scientific and economic reasoning behind the provision. He pointed out that exporters would require sufficient time to be able to adapt to Thailand's proposed modifications of the regulation.
240. The representative of the United States said that the United States had difficulties understanding the scientific and technical basis Thailand had used for the language in the warning statement requirements, and would review the further information supplied by Thailand. He also expressed his delegation's concern that the proposed labelling requirement could interfere with legitimate trademarks on the bottle, as well as with the display of useful information on product labels, including information that was necessary to distinguish one product from another.
241. The US industry had informed the United States trade representative that the requirement to rotate the warning labels every thousand bottles would require a stop and a change in the production line every three to four minutes, which would be extremely difficult for suppliers to manage and very disruptive to the production process. The United States also asked that the implementation period be extended to allow time for suppliers to make the modifications that were being proposed . Finally, the United States was concerned that a Thai requirement for warning messages in media advertisements for alcoholic beverages had already been implemented, even though comments on these warning messages were still under consideration.
242. The representative of Australia asked whether Thailand had considered less trade restrictive alternatives and shared the concerns of other Members in relationship to the labels and pictorials, and rotational labels, as well as the already implemented measures with regards to warning messages in advertising for alcoholic beverages.
243. The representative of Chile was of the view that alcohol consumption in itself was not harmful, and while excessive alcohol consumption was dangerous, moderate alcohol consumption could even have beneficial effects for human health as had been demonstrated by many international studies. She noted that the consumption of alcohol and in particular of wine, had been a common practice for many centuries. The moderate consumption of alcohol had historically always been accepted, as it was not considered to be harmful. Therefore, Chile believed that only excessive consumption of alcohol should be prevented, not the consumption of alcohol per se. Furthermore, at a conceptual level, the proposal could potentially serve as a precedent for many food products which all had the potential to harm human health when consumed in excess. Chile believed that the objective of preventing excess alcohol consumption could be attained with less trade restrictive practices. Chile also was concerned by the large size of the labels proposed by the Thai authorities and proposal that warning messages should instead take up less than 15 per cent of the label space.
244. The representative of Argentina recalled that his delegation had submitted comments and questions to Thailand four months previously, to date without response. Argentina recognized Thailand's legitimate objective to protect human health and specifically to prevent problems connected with a high consumption of alcohol among young people. Nevertheless, Argentina felt that the measure was unnecessarily costly as it deviated from the legislation of all other Members. Argentina joined other Members in requesting further information on the scientific basis underlying the proposed warning statements.
245. The representative of New Zealand acknowledged that in seeking to address the public health concern of the harmful use of alcohol, Thailand's draft Notification on labelling of alcoholic beverages was directed toward a legitimate public health objective. However, the proposed requirements could be unnecessarily trade restrictive; alternative, less trade-restrictive approaches could be available to achieve the same objective. He also noted that the new requirements would impose significant additional costs and administrative burden on exporters, which could result in a reluctance for exporters to service the Thai market and, therefore, for trade to be reduced. New Zealand was of the opinion that, in line with the "World Health Assembly Strategy on the Harmful Use of Alcohol", a proper balance between policy goals in relation to the harmful use of alcohol and other public policy goals should be achieved. Finally, New Zealand expressed its interest in learning about the background leading to the selection of the proposed labelling approach, including information on what alternatives had been considered to achieve the same objective, for example the development of public education campaigns and consideration of current international practices.
246. The representative of Thailand said that the notification had been submitted in accordance with the TBT Agreement. In accordance with Article 2.2, the measure pursued the legitimate objective of protecting human health. In accordance with Article 2.1, the regulation would apply to both domestic and imported goods without discrimination. The measure had been notified properly, and in line with Article 10.6, and Members’ had been given opportunity to comment. Thailand had initially allowed for a comment period of 60 days, as recommended by the TBT Committee, and had even extended this period by a further 30 days. All comments had been taken into account by the relevant authority, which was the Disease Control Department of the Ministry of Public Health. The measure envisaged a transition period of 180 days after its publication in the Gazette.
247. The representative of Thailand went on to state that her country did not consider alcohol to be an "ordinary" commodity due to its potential adverse effects on health, as well as on social development and economic growth. Thailand considered the choice to drink an individual right, however felt that the addressing of alcohol-related problems was a public responsibility. The consumption of alcohol had historically not been traditional in the Thai society. The two major religions Buddhism and Islam, which were followed by an estimated 99 per cent of the population, both discouraged and even prohibited the consumption of alcohol. Nevertheless, the Ministry of Public Health did not endeavour to eliminate the consumption of alcohol from Thai Society, and did not oppose drinking per se, however, it intended to combat alcohol-related problems in a cost-effective and sustainable way. To achieve this goal, the Ministry had elaborated its measure to include a mix of policy interventions.
248. The representative of Thailand explained that the ban on small-sized bottles for alcoholic drinks was intended to reduce the occurrence of underage drinking, since small bottles were attractive to minors due to both their relatively cheap price, as well the possibility to be hidden from parents and teachers. Thailand had already banned "tiny bottles" nearly a decade ago. She was of the view that all six pictorial warning messages had high contextual-relevance and were supported by both domestic and international scientific evidence. They were aware of studies indicating that moderate drinking might have health benefits for people with specific characteristics. However, they pointed out that epidemiological evidence showed that no health benefits could be measured at the aggregate level in countries with low prevalence of coronary heart diseases, especially in low and middle-income countries like Thailand. In Thailand, the occurrence of diseases attributable to alcohol consumption had increased by 40 per cent from 1999 to 2004 in terms of "Disability-Adjusted Life-Years (DALY)". The 2004 value was 10.4 per cent of the total health burden, which was twice the global average. Alcohol consumption was now considered the second greatest health risk factor to the Thai population. The market for alcohol in Thailand was characterized by increased consumption volumes, drinking frequencies, product varieties and exposure to direct and indirect alcohol marketing all leading to an increase in alcohol consumption as well as in alcohol-related problems in Thai society.
249. Evidence showed, according to the Thai representative, that warnings on the packages of commodities entailing potential harm were an effective means to educate the general population about risks associated with the use of the item. Furthermore, the higher the level of alcohol consumption, the higher also the level of exposure to the warning measures. Experience with tobacco packaging had shown that pictorial warnings yielded a higher impact than text-only messages. At present, Thai drinkers exhibited low levels of awareness of the text-only warnings that were currently employed. The experts believed that the location of these messages as well as their small size could be one reason for this. Therefore, the new measure required the pictorial warning messages to occupy between 30 per cent and 50 per cent of the container surface, which would still allow displaying product information in the remaining space. Pictorial messages furthermore were able to reach parts of the population with low literacy rates. Moreover, pictorial warnings would deter children from drinking alcohol. It was the view of the Thai delegation that it was technically feasible to implement a rotation of warning messages. Finally, it was pointed out that the measure was embedded in the national agenda to combat alcohol-related problems, which included an education campaign.
250. The representative of Mexico remarked that the statement by Thailand gave the impression that the decision of Thailand had already been taken without the consideration of all arguments raised, and of possible alternatives.
251. The representative of Thailand responded that the alternatives proposed so far included education campaigns in school and for the general population, which Thailand had already implemented. It was in addition to this that the new measure was being proposed; she assured delegations that all concerns would be taken into account.
A number of interesting points were raised. From countries other than Thailand:
-- is there scientific evidence that supports the measure?
-- has Thailand considered alternative, less trade restrictive measures?
-- how will the measure affect trademarks?
-- moderate consumption of alcohol is not necessarily harmful, and may even have benefits
-- does the Thai measure diverge too much from what other countries are doing on this issue?
From Thailand:
-- Thailand's religious traditions related to alcohol consumption are different from many other countries
-- the Thai measures are supported by evidence and address various issues related to the specific situation of Thailand
-- the measure is non-discriminatory
All of this makes me wonder: How would Prohibition in the U.S. (1920-1933) have been treated under WTO rules? Were there any concerns raised by U.S. trading partners back then, perhaps during the League of Nations economic conferences held during that period?
It's interesting to compare the Thai liquor labeling issue to the ongoing investment treaty case related to Uruguay's tobacco labeling law. See here, here and here for more on that case. A recent NY Times articles explains:
This year, Philip Morris International sued the government of Uruguay, saying its tobacco regulations were excessive. World Health Organization officials say the suit represents an effort by the industry to intimidate the country, as well as other nations attending the conference, that are considering strict marketing requirements for tobacco.
Uruguay’s groundbreaking law mandates that health warnings cover 80 percent of cigarette packages. It also limits each brand, like Marlboro, to one package design, so that alternate designs don’t mislead smokers into believing the products inside are less harmful.
The lawsuit against Uruguay, filed at a World Bank affiliate in Washington, seeks unspecified damages for lost profits.
“They’re using litigation to threaten low- and middle-income countries,” says Dr. Douglas Bettcher, head of the W.H.O.’s Tobacco Free Initiative. Uruguay’s gross domestic product is half the size of the company’s $66 billion in annual sales.
Peter Nixon, a vice president and spokesman for Philip Morris International, said the company was complying with every nation’s marketing laws while selling a lawful product for adult consumers.
He said the company’s lawsuits were intended to combat what it felt were “excessive” regulations, and to protect its trademark and commercial property rights.
So given the Philip Morris investment case, what are the chances of WTO Member(s) bringing a claim against the Thai liquor labeling measure? There are two obvious differences in the situations. First, unlike with investor-state, there is no private right of action at the WTO. All claims must be filtered through governments, who look at a broader set of considerations before they bring a complaint. Second, liquor is not tobacco. While it may be used in harmful ways, I think most people would agree that (a) its harms are not as great as tobacco and (b) it may actually have some benefits.
