Cuba Challenges Australian Tobacco Rules

Cuba Challenges Australian Tobacco Rules
By DAVID JOLLY
Published: May 6, 2013

PARIS — Cuba is seeking to overturn Australia's tough tobacco-labeling
rules at the World Trade Organization, the trade body said Monday, the
first time the Communist-controlled country has made use of the forum to
directly confront another nation over its commercial laws.

Cuba, the world's dominant producer of fine cigars, has filed a "request
for consultations" with Australia, Keith Rockwell, a spokesman for the
W.T.O., said from Geneva, where the organization is based.

The two nations now have 60 days to reach an agreement, he said; if they
fail to resolve their differences in that time, the next step would be
for Cuba to begin a formal challenge with the establishment of a dispute
resolution panel.

The request was filed Friday but only made public Monday, he said.

Cuba is joining Ukraine, Honduras and the Dominican Republic in
challenging Australia's tobacco-labeling laws at the W.T.O. All four
nations argue that provisions of a 2011 Australian law, the Tobacco
Plain Packaging Act, have created "technical barriers" to trade and
violate intellectual property rights.

If Australia is ultimately found to have broken W.T.O. rules, it must
either bring its laws into conformity or face retaliation in the form of
increased duties on Australian goods.

As part of a national antismoking drive, Australia has passed some of
the world's toughest laws on the labeling of cigars, cigarettes and
other tobacco products, prohibiting "the use of logos, brand imagery,
and promotional text" and strictly regulating the use of brand names.
Tobacco products in Australia are sold in standard dark green boxes with
gruesome images of people with diseases caused by smoking.

Australian and Cuban officials could not immediately be reached Monday
for comment.

Cuba, seeking to reinvigorate a stagnant economy, has in recent years
allowed more free-market activity. It joined the World Trade
Organization in 1995, soon after the group's founding, but has never
before brought a formal challenge. It has, however, been involved in
cases brought by others, including a dispute between the spirits makers
Pernod Ricard and Bacardi over U.S. rights to the Havana Club rum brand.

Cuba exported $215 million in cigars in 2011, the latest year for which
figures are available, according to the National Statistics Agency. The
cigar sales are handled by Habanos, a 50-50 joint venture between the
Cuban state tobacco company and Altidis, a unit of Imperial Tobacco.

Habanos said exports of Cuban cigars rose despite the economic slump in
Spain and France, its top two markets, as sales to China, its No. 3
market, rose 6 percent. An America embargo imposed in 1962 prohibits the
import of Cuban cigars into the United States.

Emily Morris, an expert on the Cuban economy at University College
London, said that overseas cigar sales make up only about 1.3 percent of
Cuba's total exports, and that Australia is just a small part of that.

"They're keen on trademark protection for their premium cigars," Ms.
Morris said. "A lot of the buying of cigars is based on the wonderful
packaging."

Cuba "has got a lot at stake in intellectual property now," she said,
including in the pharmaceutical sector, where it earns more than $500
million a year.

The tobacco case puts Cuba in some curious company in seeking to
overturn a democratic country's health laws in the interest of its
tobacco exports. The global tobacco industry spent millions of dollars
in an unsuccessful campaign against the Australian law, and it continues
to resist efforts by others — including the European Union — to adopt
similar laws.

Nevertheless, New Zealand officials have said they are planning to
follow Australia's packaging example by sometime next year.

Victoria Burnett contributed reporting from Havana.

http://www.nytimes.com/2013/05/07/business/global/07iht-smoke07.html?_r=0