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The deregulatory desires of the alcohol industry: a hidden health threat in the Transatlantic Trade and Investment Partnership (TTIP)

By Robert S. Pezzolesi, Diane Riibe, Emma Woodford and Donald Zeigler

Despite being globally traded products consumed by millions of people, alcoholic drinks are psychoactive substances with health harming properties, not only if over-consumed but also at relatively low levels of consumption. Since alcohol is the world’s third largest cause of preventable cancers, the WHO’s International Agency for Research on Cancer stated in the European Code Against Cancer that ‘Not drinking alcohol is better for cancer prevention.’[1] This messaging is often countered by advice that one glass of red wine per day may protect against cardiovascular problems. However, even this advice is contested[2] and, if true, appears to apply only to older (50+) people[3] with pre-existing heart conditions. The bottom line is that alcohol is a threat to our health with the WHO reporting that harmful use of alcohol is the cause of 3.3 million deaths every year.[4]

There is ample scientific evidence that alcohol-control policy measures – most notably taxation, pricing mechanisms and regulating and restricting the amount of available alcohol are cost-effective, and highly feasible. In many member states of the European Union and US states, alcohol is controlled through a variety of mechanisms such as state monopolies, limits on vending hours, bans on alcohol advertising to young people, and minimum age requirements for purchasing alcohol. Towards that end, the three-tier system in the United States was established in many states after the repeal of National Prohibition. It requiredthat all commercial alcohol pass through wholesalers before reaching retailers and consumers. According to the National Alcohol Beverage Control Association (NABCA),[5] three-tier systems provide:

  1. Regulatory benefits – through the maintenance of an orderly, transparently regulated market,
  2. Economic benefits – through assurance of excise tax collection,
  3. Commercial benefits – ensuring equal access to the marketplace (which can be threatened when large producers dominate markets) and,
  4. Public health benefits – by preventing industry concentration.

Additionally, the three-tier system effectively increases the minimum price of alcoholic drinks to control excessive alcohol use. However, many large alcohol producers and retailers – and especially multi-national corporate alcohol producers – consider the Three Tier System to be “purposefully inefficient” and deleterious to their interests.

Despite the evidence that alcohol clearly harms drinkers (and often harms those with heavy drinkers in their families and communities), there is mounting pressure on governments in both the United States and the European Union to liberalise or block alcohol control measures. For example, the Scottish government, following a legal challenge by the Scottish Whisky Association, is awaiting a decision by the European Court of Justice on whether Minimum Unit Pricing in Scotland, a policy intended to protect public health, is in contravention of European law. In the US, to get around the Three Tier System, flash wine sellers have appeared on the Internet offering customers wine directly delivered from wineries to their front door – at prices far cheaper prices than traditional retailers.

Alcohol consumption is often a personal and even cultural affair, reflecting values and beliefs about related status connected to drinking high end products that are entrenched in our societies. For example, seemingly oblivious to the growing evidence about the link between alcohol and cancer, the American Cancer Society‘s Eastern Division has held multiple fundraising events called ‘The Taste of Hope’ in partnership with the Association of Italian Wine Importers [6]. Attendees pay $175 to drink the very product for which there is no safe threshold with regard to cancer risk and thereby increases their chances of developing breast, liver, colorectal and head and neck cancers later in life.[7]

In international trade agreements, alcohol has been treated as a conventional good from the 1994 General Agreement on Trade and Tariffs (GATT) to the current day. Nations wishing to join the World Trade Organisation WTO in the 1990s had to describe all of their trade and economic policies that could have a bearing on WTO agreements. Accession to the WTO by developing countries was often allowed only if candidate countries made changes to their legislation in order to ease trading conditions. Alcohol – as well as tobacco – controls suffered in these early steps to identify regulations, standards, testing and certification as technical barriers to trade (TBT).[8] Forward wind to 2015 and the Transatlantic Trade and Investment Partnership (TTIP) which aims to increase trade between the US and the EU through the elimination of existing tariffs, technical barriers to trade (TBTs) and increased regulatory harmonisation between the two trading partners.

On May 4, the European Commission published their proposal for Initial Provisions for Regulatory Cooperation which describes processes reminiscent of the WTO regulations whereby planned legislative acts in the EU and the US: at both Federal, State and Member State levels be listed and assessed by so-called Focal Points in the other partner’s country for their impact on transatlantic trade. The paper indicates that it would like to ‘reinforce regulatory cooperation…while pursuing a high level of … public health’. Inclusion of the term ‘public health’ in this paragraph is a minor win for the public health community in the EU who have been advocating for its inclusion. On the other hand, the phrasing is ambiguous and falls short of ensuring that legislation made in public health legislation would be exempt from the processes laid out in this proposal. It also does not protect multi-purpose legislation such as the Three Tier System.

The influence of the alcohol industry in the TTIP negotiations is barely hidden. At the 9th TTIP negotiation rounds in New York, the National Association of Beverage Importers called for the elimination of the US Three Tier System which they consider to be a barrier to trade. This would, they claim, give European traders direct access to American customers and increase wine imports for direct-to-consumer sales in the US by $2.5 billion. Even if this estimate were correct, the combined effect of the local wine market being flooded and disbanding the wholesalers would mean that prices of wine in the US would plummet and this relatively weak public health control system would be lost. It is precisely the ambiguity in the TTIP proposals and WTO regulations that make trade agreements so threatening to public health. Price controls over alcohol are not simply a way for governments to make more money from taxation, they also help to reduce the availability of cheap alcohol, and – as a robust body of research has demonstrated – the number of cases of liver disease, cancers, automobile crashes, and hospital emergency admissions. They help to reduce cases of alcohol-driven domestic violence, addiction and other societal problems. In short, they help to keep us healthy and reduce pressure on and costs of health care services. They should not be seen as technical barriers to trade.

Perhaps more dangerous in the TTIP is the proposed investor-state dispute settlement (ISDS) provision whereby an investor would have the right to take proceedings against a foreign government’s public policies without making any distinction between socially beneficial or harmful investments. Since any domestic regulation may have an economic impact on some private interests, ISDS is a formula to limit the authority of government and cripple the regulatory state.[9]

Agreements such as the TTIP in its current form currently serve to increase corporate pressure on legislation intended to control harmful products that are traded as goods, and legislated as goods which either deliberately or inadvertently protects public health. Despite their stated good intentions to increase trade and thereby income and employment, a Transatlantic Trade and Investment Partnership that includes ISDS and plans for regulatory harmonisation is potentially far more damaging to public health and health care services than has been realised by the industry-friendly trade negotiators.

Author affiliations:

Robert S. Pezzolesi is Founding Director of the New York Alcohol Policy Alliance; Diane Riibe is Chair of the  US Alcohol Policy Alliance; Emma Woodford is the Founder of the Health and Trade Network , and Donald Zeigler is at the School of Public Health, University of Illinois at Chicago.

The Health and Trade Network is a newly formed alliance of NGOs, academics and lawyers working to raise awareness about the impact on public health of free trade and free trade agreements in particular. The network brings together health advocates, academics and lawyers from across the globe working on health promotion, access to medicines and healthcare services and environmental health. For more information, please contact emma@healthandtradenetwork.org

References

[1] http://www.europeancancerleagues.org/european-code-against-cancer.html

[2] cf. Chikritzh, T, et al. “Has the leaning tower of presumed health benefits from ‘moderate’alcohol use finally collapsed?.” Addiction (2015).

[3] Wilson, T., & Temple, N. J. (2010). “Should moderate alcohol consumption be promoted?” In T. Wilson, G. A. Bray, N. J. Temple, & M. B. Struble (Eds.), Nutrition Guide for Physicians (pp. 107–113). Humana Press. Retrieved from http://link.springer.com/chapter/10.1007/978-1-60327-431-9_9

[4] Alcohol Fact Sheet. WHO. http://www.who.int/mediacentre/factsheets/fs349/en/

[5] http://www.nabca.org/assets/Docs/Research/Three_Tier_System_11_4.pdf

[6] http://www.prweb.com/releases/2015/04/prweb12678550.htm

[7] Nelson DE, Jarman DW, Rehm J et al. Alcohol-Attributable Cancer Deaths and Years of Potential Life Lost in the United States. American J Public Health. April 2013,103 (4):641-64

[8] International trade agreements challenge tobacco and alcohol control policies, Donald W. Zeigler, Drug and Alcohol Review (November 2006), 25, 567-579.

[9] Zeigler, DW. Alcohol industry interests, global trade agreements and their impact on public health. In Wiist W, ed. The Bottom Line or Public Health: Tactics Corporations Use to Influence Health and Health Policy, and What We Can Do to Counter Them. London, England: Oxford University Press (February, 2010)