Policy study: E-vapor product bans could violate international trade rules

WASHINGTON (Aug. 15, 2017) – Despite the fact that e-cigarettes have a much lower risk profile than their combustible cousins, governments around the world increasingly are banning e-vapor products in ways that appear to violate World Trade Organization rules against discriminatory treatment, a new R Street Institute policy study concludes.

R Street Associate Fellow Marina Foltea examines the legality of such bans under international trade law and concludes that prohibition of “like” products—in this case, e-cigarettes—is illegal and should be reversed.

“Currently, tobacco-heated products that contain tobacco are classified as tobacco products and therefore do not face discrimination issues,” notes Foltea. “However, e-cigarettes, which do not contain tobacco, can be classified either as ‘recreational’ or ‘medical products and devices.’ This broader classification opens the door for their prohibition, because nicotine is a drug that also has medicinal uses. Such classification can subject products that contain nicotine to a different set of classifications in ways that appear arbitrary.”

Foltea notes that prohibitions of e-cigarettes may be found to violate both domestic and international rules of law. In order to avoid conflicting policy outcomes, she suggests three steps regulators can take with these emerging products.

  1. The regulator’s home country agencies must double-check the consistency of their proposed regulations with pre-existing legislation;
  2. They must regularly consult with e-vapor producers and retailers as sources of information and seek out scientific data relevant to proposed legislation; and
  3. WTO member governments should report any proposed measure to the WTO secretariat and allow a time period for interested parties to comment in order to test the limits of their regulations before their adoption. This would allow interested parties to convey their best knowledge, and would ultimately result in regulation that is fairer, sounder and more consistent.

“Although e-cigarettes and traditional cigarettes do not carry ‘like’ risk, these products are in competition with one another in the marketplace, writes Foltea. “There is therefore good reason to believe that, as long as traditional cigarettes are freely traded, a ban on e-cigarettes will be found discriminatory under WTO rules. Accordingly, regulators must consider such issues of legality before enacting any such prohibitive laws.”

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