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Trade and litigation

Another important area of influence for the alcohol industry is trade policy. Treaties such as World Trade Organisation (WTO) and European Union (EU) agreements are a key tool for global alcohol companies in their efforts to expand globally, and in particular to market their products to developing countries. These treaties are used in two ways. First, they lower trade barriers, such as tariffs. For example, Algeria lifted a ban on alcohol imports in its efforts to join the WTO.[1]

Second, they limit the range of regulations that governments can maintain or introduce. This compounds the effect of lowering tariffs in developing economies. For example, Vietnam’s tax policies on spirits were challenged in its WTO accession negotiations. The legal impact of trade regulation is felt in developed markets as well. In the 1990s, the European Commission challenged the relatively high level of alcohol tax in the UK, Republic of Ireland and Nordic countries.[2] State monopolies on alcohol retail, used by governments to restrict availability and so alcohol harm, have also been threatened. Provincial Canadian monopolies have been required to provide greater marketing exposure to foreign products,[3] and the EU and WTO have both pressed for liberalisation of this system.[4] In 2003, the Swedish Government was required to overturn its ban on alcohol advertising in magazines.[5]

Trade law also allows alcohol companies to challenge and overturn new regulations on their products. As described previously, the SWA is using European law to challenge the Scottish Government’s introduction of MUP. Moreover, some scholars have written of the “chilling effect” of such regulations in preventing restrictions on alcohol companies from even being proposed, because of the threat of legal action and government uncertainty over what is permissible.[6] Jane Kelsey expresses concern that “The global multi-billion-dollar commercial players that dominate the alcohol and tobacco industries can afford to fund lengthy and costly arbitration to stop precedent-setting policies, even where their legal case is weak. Indeed, they cannot afford not to challenge precedent-setting innovations”.[7]

Moreover, trade law is not just an inert tool the alcohol industry can use to promote their policy interests, but one that they have influence in shaping. Trade negotiations are notoriously secretive, but representatives from affected industries, including alcohol companies, are often integrated into the process. Spirits Europe claims that it “participates in a dialogue with officials from key national delegations and the WTO Secretariat in Geneva, aimed at furthering trade liberalisation in world markets”.[8] Meanwhile, the Distilled Spirits Council of the United States (DISCUS) says that it “is working closely with the U.S. spirits industry, U.S. negotiators, and overseas partners” to ensure that current trade deals, such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership facilitate access to new markets for their members.[9]

Public health representatives, by contrast, have typically had less involvement and consultation in trade negotiations. For example, for many years industry delegates sat on the advisory committees for US trade representative on consumer goods, distribution services and intellectual property, without any countervailing public health input.[10]

Trade regulations are not the only way that the alcohol industry can use litigation to resist restrictive policies. Domestic laws are often used to undermine or challenge local government policies. Licensing decisions, for example, are regularly subject to legal threats, with many local governments unwilling to challenge major retailers for fear of provoking long and expensive legal proceedings.[11] UK Councils proposing voluntary bans on high strength beers and ciders (e.g. getting retailers to commit to de-stocking those over 6.5% ABV) have been referred to the Office for Fair Trading by trade associations[12] and the All-Party Parliamentary Beer Group.[13]

The industry and access to emerging markets

Favourable trade regulations are only one of a number of ways in which Western governments support alcohol companies in exporting to the wider world, and developing countries in particular. For example, in its 2013 Food and Drink Industry International Action Plan, the government agency UK Trade and Industry (UKTI) pledged to help the British alcohol sector “capitalise on the latest emerging opportunities”. The second stated priority of the plan is to “Increase beer, cider, wine and spirits exports”.[14] In practice, such support covers a range of activities, including arranging meetings with key local stakeholders, trade visits and providing guidance on local markets and regulations. For example, in 2012, UKTI assisted Diageo in its acquisition of the brewer Meta Abo from the Ethiopian Government. According to Diageo’s director for new business ventures, the British Government provided “access to decision makers, to opinion formers and to a wealth of experience of doing business in Ethiopia”.[15] In 2011, then foreign secretary William Hague boasted of “lobbying” the Government of Andhra Pradesh in India in conjunction with SABMiller to “remove restrictive regulations prohibiting beer sales, worth over $80m in sales to that company”.[16]

Most controversially, the alcohol industry has received support from the UK Government’s Department for International Development (DfID). In Sudan, DfID has contributed to funding of $1 million for SABMiller to develop local cassava for its brewing processes, while Diageo received $250,000 to replace imported barley with local sorghum in Cameroon.[17] DfID justifies these investments because of their positive impact on smallholder farmers, who are trained to improve yields. However, SAB Miller’s investor presentations suggest that such projects are intended to achieve significant cost savings for the company:[18]

 

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The alcohol industry exerts significant influence, not only in its commercial activities but also over social and political perceptions and responses to alcohol. It does so through broadly a number of different types of activity. It develops alliances, both internally through trade associations and SAPROs, but also with non-industry allies, such as think tanks. It uses corporate social responsibility programmes – not just altruistically for the social good, but as a tactical way to resist regulation, or as an additional way to promote commercial goals such as increasing awareness and positive sentiment towards their product. Academic research suggests such self-serving goals are the dominant motivation for such activities. Industry groups seek to influence research, both by funding researchers, but also by summarising and disseminating findings. They also engage directly with policymakers – shaping and responding to consultations, but also through unsolicited lobbying. In certain cases, they use economic incentives, such as employment opportunities to inform and bolster such lobbying. Trade and litigation offer a final source of influence. By shaping trade rules so that they reflect their interests, and using these regulations to challenge unfavourable laws, the alcohol industry can resist unwanted political change.

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[1] Reuters (2005), World Briefing: Africa: Algeria: An Open Door For Alcohol. New York Times. [Online]. July 19. [Accessed 18 December 2015].

[2] Zeigler, D. (2009), The alcohol industry and trade agreements: a preliminary assessment, Addiction 104 (suppl.1), pp. 13–26.

[3] Grieshaber-Otto, J. & Jernigan, D. (2001), Trade treaties, alcohol and public health, The Globe 

[4] Zeigler, op. cit.

[5] Institute of Alcohol Studies (2003), Swedish court removes ban on alcohol advertising, The Globe 

[6] Kelsey, J. (2012), New-generation free trade agreements threaten progressive tobacco and alcohol policies, Addiction 107, pp. 1,719–21.

[7] Kelsey, op. cit., 1,719.

[8] Spirits Europe Website, External trade: WTO. [Accessed 18 December 2015].

[9] Distilled Spirits Council of the United States Website, International Issues. [Accessed 18 December 2015].

[10] Zeigler, op. cit.

[11] Foster, J. (2016), The Licensing Act (2003): its uses and abuses 10 years on. London: Institute of Alcohol Studies.

[12] Quinn, I. (2014), Trade associations calls for OFT action on local high-strength booze bans. The Grocer [online]. 15 February. [Accessed 1 April 2016].

[13] Davenport, R. (2014), Reducing the Strength: MPs call for OFT clarity. Off Licence News [online]. 21 March. [Accessed 1 April 2016].

[14] UK Trade & Investment and Department for Environment Food & Rural Affairs (2014), UK Food and Drink –International Action Plan.

[15] Collin, J., Johnson, E. & Hill, S. (2014), Government support for alcohol industry: promoting exports, jeopardizing global health, BMJ 348:g3648.

[16] Hague, W. (2011), The business of diplomacy. 21 November, Confederation of British Industry.

[17] Lawrence, F. (2012), Aid for Diageo? UK’s private-sector emphasis comes under scrutiny. The Guardian [Online]. 11 December. [Accessed 18 December 2015].

[18] SAB Miller (2012), Africa quarterly divisional seminar, 10 October.