# Key Takeaways - Global constitutionalism is an approach while global constitutionalisation is a process - [[Investor-State Dispute Settlement (ISDS)]] and [[International Investment Agreements (IIAs)]] integrated the concept of global constitutionalism with veto point theory to create new veto points at which corporations may seek to block new policies aimed at protecting or enhancing public health. The multiplicity of new veto points is called [[spaghetti bowl]] where corporations can venue shop to find regulation loopholes and block/deter new regulation - The example given, tobacco control, Philip Morris used [[Technical Barriers to Trade (TBT)]] and [[Bilateral Investment Treaties (BITs)]] as veto points to block new regulation by the Australian government to introduce plain packaging of cigarette packs. - Such cases might resulted in [[chilling effect]] and deter other countries, esp. LMICs, to bring cases to the court. # Abstract The importance of trade and investment agreements for [[health is]] now widely acknowledged in the literature, with much attention now focused on the impact of [[Investor-State Dispute Settlement (ISDS)]]mechanisms. However, much of the analysis of such agreements in the health field remains largely descriptive. We theorize the implications of ISDS mechanisms for health policy by integrating the concept of global constitutionalism with veto point theory. It is argued that attempts to constitutionalize investment law, through a proliferation of [[International Investment Agreements (IIAs)]], has created a series of new veto points at which corporations may seek to block new policies aimed at protecting or enhancing public health. The multiplicity of new veto points in this global “[[spaghetti bowl]]” of IIAs creates opportunities for corporations to venue shop; that is, to exploit the agreements, and associated veto points, through which they are most likely to succeed in blocking or deterring new regulation. These concepts are illustrated with reference to two case studies of investor–state disputes involving a transnational tobacco company, but the implications of the analysis are of equal relevance for a range of other industries and health issues. # Introduction The stalling of the [[Doha Round]] of [[World Trade Organization (WTO)]] negotiations and the enduring impasse within the multilateral trade regime has led countries, principally industrialized nations, to pursue further liberalization of international trade and investment through other means, including [[Bilateral Investment Treaties (BITs)]] and [[Regional Trade Agreements (RTAs)]] The controvery around these type of agreement is that they focus on bringing their inclusion of [[Investor-State Dispute Settlement (ISDS)]] mechanism, which grant corporations standing to bring legal action directly against signatory governments in order to guarantee the rights and protections they are afforded within the agreements. In many cases, criticisms leveled at ISDS have focused specifically on the health impacts of IIAs (Jarman 2014; Khan et al. 2015; Weiss 2015). Despite these concerns, the literature in this area remains largely descriptive in nature. The current article aims to investigate some of the key issues that ISDS raises for health policy, through an engagement with two bodies of literature from international law and political science. The application of these theories deepens our understanding of both the nature and the extent of the threat posed to public health by the proliferation of ISDS clauses in IIAs. First, we place developments in the international trade and investment regime within the context of wider debates in international relations and international law about processes of constitutionalization “above” the level of the state (i.e., at the international or global level) > [[International Investment Agreements (IIAs)]], and [[Investor-State Dispute Settlement (ISDS)]] clauses in particular, institutionalize and embed the practices and assumptions central to [[neoliberalism|neoliberal]] forms of political economy, privileging the interests of transnational corporations (TNCs) over those of other actors. Second, veto point theory in political science provides a second analytical lens. The concept of veto points allows us to fully comprehend the significance of ISDS, not just for health policy, but for public policy more generally. Veto point theory explains the inherent bias toward the status quo in policy making by identifying the key points in a political system at which policy initiatives can potentially be blocked. Systems with more veto points experience greater policy inertia, while those with fewer veto points are more open to change. International trade and investment agreements place obligations on states to ensure national laws comply with the undertakings made in those agreements. In so doing, governments bind themselves and their successors to act in certain ways, and curtail their freedom to pursue certain policy agendas that may run counter to the tenets of these agreements. The enactment of these agreements opens governments up to the possibility of legal challenges, should they fail to comply. This body of agreements reinforces the current business-friendly policy regime and represents a potential brake that corporations with vested interests can apply to any form of public health or social policy that appears to undermine their interests. # Global Constitutionalism > Global constitutionalization refers to attempts to institutionalize and order governance processes above the level of the state through mechanisms analogous with state-level constitutions. Global constitutionalism is an approach while global constitutionalisation is a process | We define global constitutionalization here as the process of creating constitutionally based systems of law above the level of the state; while global constitutionalism is the more general approach to governance that sees constitutionalization of the global sphere as a necessary and positive process. The difference is, in the above-the-state level, there is no Supreme State or Sovereign Power to enforce the rule of law. Therefore, the state-level remains with important implications. The discourse of global constitutionalism is indicative of more fundamental shifts in the theorization and conduct of international politics in recent decades. Thompson (2012:36) describes this transition as being from an era of embedded liberalism to an era of [[neoliberalism]]. What defined the era of [[embedded liberalism]] was a reliance on political compromise and diplomatic bargaining between (almost exclusively) state actors. Companies investing overseas would ensure that their property rights were respected and contracts enforced through the political representations of their home governments (i.e., national embassies and trade delegations) within the host country. The advent of neoliberalism, ushered in by structural changes in the global economy from the 1970s, saw a gradual decoupling of the state and private actors, and the rising importance of new decision making and dispute resolution mechanisms (Thompson 2012). Interstate diplomacy was replaced by international institutions and new forms of public and private law as the primary means of dispute resolution. > Interstate diplomacy was replaced by international institutions and new forms of public and private law as the primary means of dispute resolution. ^44f64b While the era of [[embedded liberalism]] saw the rise to prominence of the [[General Agreement on Tariffs and Trade (GATT)]]—encompassing a more developed institutional architecture, expanded policy scope, and more robust forms of dispute resolution—represented a decisive shift toward neoliberal forms of governance. The stagnation of the WTO and the emergence of IIAs as the dominant form of trade and investment agreement in the first decades of the twenty-first century represents a new stage in the decoupling of state and private actors in the form of ISDS mechanisms. [[How does power came to be?]] [[Power asymmetry]] | Brown (2012: 209) argues that ==without clear lines of accountability and processes of legitimization==, we may be left with just the “illusion” of legitimate global governance through the emerging constitutional order, which masks over structural abuses of power. Processes of constitutionalization may simply lock in existing inequalities and power structures and undermine the possibility of challenging current social relations and political orthodoxies. [[Corporations may favor moves toward global constitutionalization because of the status and associated rights that constitutions afford to private actors in their capacity as legal persons]] (Thompson 2012). Political strategy—the attempt to shape the regulatory environment in which a corporation is active in order to further its underlying commercial interests—has long been recognized as a key component of corporate strategy, of equal importance to market strategy. # Veto Point Theory The focus on veto powers underlines the difficulties that exist in attempting to bring about policy change as well as the inherent bias toward the status quo that exists in complex political systems. Therefore, ==it makes more sense to think of veto point theory as an account not of policy change, but of policy stasis==, although the degree of policy stability will vary between legislative contexts and policy areas depending on the range of different policy outcomes acceptable to key actors (Tsebelis 2002: 3). [[Insights]] Think about how the USA vetoed the ceasefire in Gaza and nullify all the efforts. It leans more toward the status quo. Hence, the system right now, at least in [[UN Security Council (UNSC)]], is flawed. It favors the powerful and exacerbates the [[Power asymmetry]]. We argue that dispute resolution panels convened under the auspices of [[Investor-State Dispute Settlement (ISDS)]] mechanisms are more akin to constitutional courts, having effective primacy over national laws that must be compatible with the strictures of the treaty. With the absence of appeal or judicial review procedures, ==ISDS panels have significant power to declare national laws incompatible with treaty obligations, with little possibility for their judgements to be challenged or set aside==. While it is possible in principle to revise international treaties, just as it is possible to revise national constitutions, or for countries to withdraw from international agreements, in practice this rarely happens. Furthermore, the proliferation of [[International Investment Agreements (IIAs)]] means that even if one agreement were revised or annulled, many more potential opportunities to challenge any given policy would be likely to remain. Processes of global and regional integration described above, as well as devolution at the subnational level, have generated a complex system of multilevel governance in which activities and decisions taken at one level impact on and restrict those made at other levels. The emergence of multilevel governance systems allows corporate political actors to engage in venue shopping; that is, attempting to shift policy decisions to the level of governance or to the decision-making forum in which they are most likely to achieve a favorable outcome. The trend toward global constitutionalism, the increased complexity of the policy-making process, and the existence of multiple decision-making forums at different levels of governance create new veto points at which policy actors can seek to halt forms of regulation they oppose. [[Open Question]] Will [[Pandemic Treaty]] add another layer of [[spaghetti bowl]] or will it untangle the convoluted agreements because the global constitution of WHO, with its legally binding treaty, reign supreme or act as the sovereign power? What is the implication to the states, especially the superpowered nations, i.e. USA, UK, Europe? > Despite the shortcomings of the [[World Trade Organization (WTO)]] process, the clear procedures and lines of accountability and the publication of materials related to WTO cases provide a stark contrast to recent developments in international arbitration under [[International Investment Agreements (IIAs)]]. [[Power asymmetry]] [[Bilateral investment treaties could undermine national health policies, particularly because there is a power disparity between powerful firms against resource-poor governments]] The proliferation of IIAs is especially significant for low- and middleincome countries (LMICs), which can ill afford to engage in (potentially multiple) long, drawn-out, and expensive legal battles. The German case cited above underlines the power of ISDS procedures to effect policy change even in the most powerful states. The threat of such a case was enough to lead the government of the world’s fourth largest economy to amend a key aspect of public policy, despite widespread public support. Given the imbalance of resources that exists between LMICs and TTCs, the ability of corporations to shape policies in these increasingly important strategic markets will be extensive. # Bilateral Investment Treaties and Tobacco Control Policy The latest phase in TTC strategy is to use legal challenges under international trade and investment agreements (and other avenues) to prevent further limitations on their ability to brand and market their products. BITs create mechanisms through which TTCs and other corporations can challenge policies that allegedly undermine the guarantees they are afforded as investors. In the cases discussed here, ==TTCs have claimed that regulation of cigarette packaging constitutes expropriation of their trademarks.== ## Philip Morris and the Switzerland-Uruguay BIT Following bans on advertising, promotion, and sponsorship, the Uruguayan government enacted a tobacco control law in 2008 to require cigarette packaging to carry health warnings and graphic images covering 50 percent of their surface area, which was increased to 80 percent of the packs by a subsequent presidential decree. This made the Uruguayan health warnings the largest in the world at the time. In 2010 the sale of multiple variants of a cigarette brand was banned in an attempt to eradicate attempts by TTCs to imply incorrectly, through descriptors or color branding, that certain variants are safer alternatives for smokers (McGrady 2012; Tobacco Tactics 2015). Under the new regulations it would be impossible for Philip Morris, for example, to offer its Marlboro brand for sale in its standard variety (sold in the brand’s signature red and white packs) alongside other brand variants such as Marlboro Menthol (sold in green and white packs) or Marlboro Lights (sold in gold and white packs and rebranded as Marlboro Gold after the banning of the “light” descriptor). A ban on multiple presentations of a given brand would curtail the marketing strategies of all TTCs, but may pose a particular threat to Philip Morris’s global marketing strategy, which has been based around Marlboro as its core premium brand (Holden et al. 2010). The new packaging requirements were challenged by affiliates of Philip Morris International (PMI) in the domestic courts in 2009 on the basis that they violated the Uruguayan constitution, but the claims were summarily dismissed by the Uruguayan Supreme Court in November 2010 (Tobacco Labelling Resource Centre 2010). While the Supreme Court ruling was still pending, two Swiss-based PMI holding companies—FTR Holdings and Philip Morris Products—which own Uruguayan subsidiary Abel Hermanos and the “Marlboro” trademark respectively, initiated investment arbitration procedures against the government on the basis that its policies violated obligations entered into under the 1988 ==Switzerland–Uruguay Bilateral Investment Treaty (SUBIT)== (FTR Holdings S.A. [Switzerland] et al. 2010). The PMI case centered on three principal claims: 1. That the ban on multiple brand offerings, and the size of warning labels required, unfairly limited the company’s ability to use its legally established trademarks; 2. that graphic warning images mandated were not designed to warn of smoking-related harms but to invoke revulsion and disgust among consumers, thereby undermining goodwill and trust toward established brands and demeaning consumers; and 3. that the measures deprived the company of its property rights, undermining the value of the company (McGrady 2012; Sabahi and Duggal 2014; Jarman 2015; Philip Morris International, n.d.-c). In July 2013, the ICSID panel ruled that it had jurisdiction to hear the case (ICSID 2013). At the time of writing, there has been no adjudication in the case and no clear indication of when such a ruling will be forthcoming. A number of aspects of this case are of relevance to the present article. ==Uruguay is one of the few cigarette markets in the world that is not dominated by the major TTCs. As a country of three million people with declining smoking prevalence, it is a small tobacco market of limited economic importance for TTCs==. However, the policies put in place by the Uruguayan government would have enormous ramifications if implemented elsewhere in larger markets dominated by brands such as Marlboro. As such, opposing these measures in Uruguay became of key strategic importance to TTCs, which feared policy contagion (Weiler 2010). [[chilling effect]] on tobacco control policies As with previous and ongoing actions to challenge tobacco control policies under the WTO dispute resolution process, ==invoking SUBIT in this way is an attempt to redefine tobacco control as a trade issue, rather than a public health issue==. Uruguay’s experience was to serve as a deterrent to other countries considering interventionist tobacco control policies (Weiler 2010). This point is made explicitly by TTCs themselves. It has been reported that at least four African countries—Namibia, Gabon, Togo, and Uganda —have received warnings from the tobacco industry that their proposed laws run afoul of international treaties, the implication being that they too may become the subject of legal proceedings such as those brought against Uruguay (Tavernise 2013). It is hard to measure the chilling effect of the Uruguay case on other countries, but cases such as this impose extraordinary costs on LMICs faced with the economic might of tobacco corporations (Fooks and Gilmore 2013; Cˆ ote ́ 2014). In 2009, the GDP of Uruguay was $32 billion compared to PMI’s global revenue of $64 billion (Tobacco Tactics 2015) ## Philip Morris, Plain Packaging, and the Australia-Hong Kong BIT Against the claim of expropriation from the tobacco industry, it was highlighted that the measures proposed by the government did not affect the ownership of the trademarks, which remained with companies. Nor did the government seek to use the trademarks, or profit from them, or to facilitate the use of (or benefit from) them by third parties. Instead, the generic packaging requirement simply removed TTCs’ right to use the trademarks they own. The High Court verdicts agreed with the public assertions of legal scholars that restrictions on use, which did not alter the ownership of trademarks, did not equate to an acquisition of property and the case was dismissed (Liberman 2013; McCabe Centre for Law and Cancer 2016). In parallel with the challenges made to the plain packaging laws under the Australian constitution and the WTO agreement, Hong Kong–based Philip Morris Asia (PMA), which wholly owns PMI’s Australian subsidiary, initiated investor dispute procedures against Australia under the Australia–Hong Kong Bilateral Investment Treaty (Australia–Hong Kong BIT) (Robinson 2011; Voon and Mitchell 2012a; Philip Morris International, n.d.-a). As with the related WTO dispute, PMA’s case centers on the importance of branding to cigarette companies. It claims the Australian law (1) is disproportionate and unnecessary in order to guarantee public health in an environment in which there are already significant tobacco control policies in place; (2) enacts protectionist measures that fail to guarantee fair and equitable treatment of nondomestic producers; (3) deprives it of its intellectual property rights and represents a form of indirect expropriation for which compensation is due; and (4) undermines the legitimate expectations that investors would have of the business environment in which they would operate, despite the long history of progressively more stringent tobacco control policies introduced in Australia (Voon and Mitchell 2012a; Liberman et al. 2013; Jarman 2015; Philip Morris International, n.d.-a). ==While Philip Morris’s challenge proved unsuccessful on this occasion, the ruling provides only partial succor to public health campaigners. The case was rejected not on the grounds that public health goals override those of investment protection but on the basis of a procedural issue around the timing of policy announcements and company decisions.== The substantive point of law—whether tobacco control measures such as generic packaging contravene the tenets of [[International Investment Agreements (IIAs)]] such as this—remains to be tested. Consequently, legal challenges under [[Investor-State Dispute Settlement (ISDS)]] clauses are an avenue that TTCs will continue to exploit. In the meantime, the mere threat of such actions may continue to have a [[chilling effect]] on governments elsewhere considering similar measures. ## Policy Responses: Carving out Tobacco? Growing awareness of the use of ISDS and similar forms of global trade law by TTCs has led to calls by tobacco control advocates to “carve out” tobacco from trade and investment agreements (McGrady 2007; Sy and Stumberg 2014). ==Partly in response to the disputes reviewed here, Malaysia proposed a full carve-out of tobacco from the TPP ==(Sy and Stumberg 2014). The negotiating parties ultimately agreed on a text that included a carve-out of tobacco from the ISDS provisions of the agreement, although not from the agreement as a whole. Furthermore, the ==TPP text requires states to opt in to the tobacco carve-out, rather than it applying automatically to all parties to the agreement.== In other words, states will have to elect whether to exclude the tobacco sector from the protections provided by ISDS clauses in relation to investments within their territory. ==From an industry perspective this offers significant advantages over a uniform carve-out across the board. TTCs will be able to lobby individual governments not to apply the carve-out, thereby expanding the range of potential venues in which TTCs are able to bring cases.== The tobacco carve-out from the TPP’s ISDS provisions is a tacit acknowledgment that existing public health exceptions in IIAs are not sufficient to prevent TNCs from using ISDS mechanisms to impede government measures to protect health, including via the chilling effect. This raises the question about why other areas of health and social policy should be left with the protection of only existing public health exceptions while tobacco control is carved out. In this context, policy makers should consider whether the wider interests of public health are better served by the repeal of ISDS mechanisms across the board. # Conclusion This article uses the concepts of global constitutionalism and veto points to deepen our understanding of the ways in which the emerging international trade and investment regime appears to lock in the current neoliberal orthodoxy at the global level, undermining the ability of national governments to legislate to protect the health of their populations. ==ISDS clauses in IIAs create a powerful tool through which corporations can take legal action against governments that implement policies that potentially undermine their interests==. The existence of ISDS clauses within these agreements creates de facto veto points within the policy-making process that may be exploited by powerful corporations seeking to ensure favorable regulatory environments. This may be especially true in LMICs, which lack the resources to fight legal challenges under ISDS and to pay compensation to investors in cases they lose. Furthermore,[[ the increasing constitutionalization of the global trade and investment regime has created a multiplicity of potential veto points at which policy may be challenged by TNCs]]. Given the expansion in the number of IIAs in recent years, countries may be signatories to multiple agreements under which a given policy could be challenged, in addition to potential challenges under WTO and domestic laws. The global reach of TNCs, together with the complex system of multilevel governance in which they operate, creates the possibility for corporations to venue shop in their pursuit of favorable policy outcomes. In addition, the PMI–Australia case discussed above suggests that TTCs are willing to engage in highly proactive forms of venue shopping in which they use the internal organization of their businesses via a series of holding companies to take maximum advantage of the treaty obligations entered into by their host governments. TNCs may try to stymie new laws through a strategy of simultaneous challenges in multiple venues. This point is well illustrated by the actions of TTCs in challenging tobacco control legislation in both the domestic courts and via BITs in both Uruguay and Australia, and additionally by supporting multiple countries to pursue WTO disputes against Australia. While the current article focuses on health policy and the example of the tobacco industry, the analysis is relevant to other areas of public policy. It is perhaps in the areas of health, social, and environmental policy that laws are most likely to be challenged and this chilling effect be felt, with significant implications for the wellbeing and living conditions of citizens across the globe. ### Footnote TTC = Transnational Tobacco Corporations TNC = Transnational Corporations IIAs = [[International Investment Agreements (IIAs)]]