Tobacco sector at disadvantage with TPPA

Tobacco sector at disadvantage with TPPA
Business & Markets 2013
Written by Zatil Husna Wan Fauzi & Fatin Rasyigah Mustaza of the edgemalaysia.com
Monday, 19 August 2013 10:32

KUALA LUMPUR: The tobacco industry will be at a disadvantage in the event the government decides to include the tobacco sector in the Trans-Pacific Partnership Agreement (TPPA).

According to analysts, this would be due to the rising competition that will be ushered in by the liberalised market as promoted by the TPPA.

"Because there will be more brands coming into Malaysia (if the tobacco sector is included in the agreement), there will be more intense competition among Malaysia's tobacco players.

"The inclusion may also affect excise duty implemented on tobacco products," said an analyst.

In Malaysia, there are three notable companies that produce and manufacture tobacco products, with BRITISH AMERICAN TOBACCO (M) [] Bhd (BAT) and JTI International Bhd listed on the local bourse.

The third tobacco player is Philip Morris which is a private company and also BAT's biggest competitor.

Meanwhile, the Confederation of Malaysian Tobacco Manufacturers (CMTM) said there was no requirement in the World Health Organisation Framework Convention on Tobacco Control (FCTC) or its non-binding guidelines that would obligate any government to exclude tobacco as part of any preferential trade agreement, including the TPPA.

CMTM CEO Shahrul Azamin Abdullah said WHO had in 2010 adopted a declaration at the fourth meeting in Uruguay which recognised the need for FCTC parties to consider proposed tobacco control measures in light of their international trade and intellectual property obligation.

He also added that there was no demonstrated need to negotiate exclusions in the context of the TPPA.

"It is important to recall that trade rules which don't preclude legitimate public interest regulation, including domestic regulation on tobacco control that the Malaysian government may wish to pursue, provided such policies are consistent with pre-existing international trade treaty obligations," said Shahrul in a statement.

He added that by treating tobacco products differently in the TPPA, it would invite reciprocal exceptions, concessions and differential treatment for other products as well.

"Rather than damage the trading system that is critical to the growth of Malaysia, the TPPA should build upon the existing balance of rights and obligations reflected in the multilateral trading system," said Shahrul.



This article first appeared in The Edge Financial Daily, on August 19, 2013