International trade rules for banning e-vapor products

In many contexts, including definitions set by the World Trade Organization, e-vapor products (EVPs) like e-cigarettes and tobacco-heated products (THPs, sometimes referred to as “heat-not-burn”) may be regarded as “like” traditional, combustible cigarettes. EVPs deliver nicotine through inhalation and often are used as a substitute because of their much lower risk profile. However, given the novelty of EVPs and the diverse perception of the harms they pose, more and more governments around the world are banning these products on a precautionary basis.

This leads to the question of whether such bans are legal under international trade law, particularly as EVPs often are subject to regulations that are more restrictive than those for conventional cigarettes. For example, currently, tobacco-heated products that contain tobacco are classified as tobacco products and therefore do not face discrimination issues. 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. Given that nondiscrimination is a primary tenet of WTO law, such measures are likely illegal under WTO agreements, especially in the absence of solid justification for such discrimination.

The WTO’s determination of discrimination is guided by a three-pronged standard of assessment:

  1. Whether the product at issue is “like” any other product traded freely on the same market (either imported or domestic);
  2. Whether the regulatory measure in question results in less-favorable treatment of the product at issue, compared to like products it resembles; and
  3. Whether the government introducing the regulation is covered by an exception from WTO rules.

This white paper offers analysis of the legality of EVP bans under international trade law, which is rooted in the WTO –an organization with 164 members at the time of publication. With virtually universal membership, the major rationale of the organization is for member governments to provide a level playing field for trading across borders, irrespective of the origin of the traded goods or services. Its goal is to address the competitive disadvantage producers may face as a result of protectionist and discriminatory regulations on the global market. Such measures are, at times, used to insulate domestic industries against “like” imported products or to grant an advantage to a specific importer over other importers in the same market. Under current WTO agreements, prohibition of like products—in this case, e-cigarettes—is illegal and should be reversed.

Image by hurricanehank


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