Absent state intervention on their behalf, [American] tobacco companies found a new way to fight efforts to regulate tobacco marketing. They take advantage of an “investor-state” dispute options being built into more free trade agreements between countries, which allows companies to directly challenge regulations they believe discriminate against foreign products. Unlike fighting laws in domestic legislatures or through WTO disputes, which are more formal and predictable, investor-state conflicts are decided by a panel of international arbitrators with no appeal, making them more attractive to multinational corporations.
“In most cases, when tobacco companies have gone after developing countries, they’ve gone after them for the same type of regulations we have in the U.S.,” Thomas Bollyky, a former U.S. trade negotiator, says. “They have made use of the possibility to bring disputes under trade and investment agreements in a way that no other industry has, and threatened disputes against Togo and Namibia, countries that don’t really have a budget set aside to fight these disputes, let alone the personnel to do it.”