Ukraine drops WTO action against Australian tobacco-packaging laws

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By Tom Miles

GENEVA, June 3 (Reuters) - Ukraine has suspended a case it was pursuing through the World Trade Organization aimed at overturning Australia's strict tobacco packaging laws, a WTO panel of adjudicators said in a statement published on Wednesday.

Ukraine asked the panel to suspend the proceedings on May 28 and said it will try to find a mutually agreed solution with Australia, the statement said.

Honduras, Cuba, Indonesia and Dominican Republic are also challenging Australia's tobacco packaging laws at the WTO. There was no indication that their litigation would be affected.

A growing number of countries have said they plan to follow Australia's 2010 step, banning flashy logos and distinctive-coloured cigarette packaging in favour of drab olive packets that look more like military or prison issue, with brand names printed in small standardised fonts.

Tobacco firms say the rules infringe their trademarks, and the WTO complainants say they constitute illegal barriers to trade.

Public health advocates say standardised packaging heralds a new era of tobacco control.

Both supporters and opponents say the legal battle could have consequences beyond tobacco because similar rules could be imposed on food judged unhealthy and alcohol if Australia wins.

Ukraine was the first of the five countries to challenge Australia's laws at the WTO, even though it does not export tobacco to Australia.

Health campaigners were perplexed by Ukraine's WTO suit because it is also a party to the U.N.'s Framework Convention on Tobacco Control and was one of the countries that backed guidelines on how to implement the treaty, including enforcing plain packaging.

British American Tobacco has previously said it was helping meet Ukraine's legal costs in the WTO case against Australia. Individual companies cannot pursue litigation via the WTO.

Ukraine's move follows two other potential setbacks for the tobacco industry: China's launch of a campaign to ban smoking in public in Beijing, and an Ottawa court ruling that awarded more than C$15 billion ($12 billion) in damages to Quebec smokers, which tobacco firms are appealing.

Under WTO rules, Ukraine's suspension could last 12 months. After that its right to return to the panel proceedings would lapse.

The WTO adjudication panel has previously said it expected to rule on the cases brought by the five complainants against Australia in the first half of next year. (Reporting by Tom Miles; Editing by Toby Chopra and Hugh Lawson)