Since December 1, 2012, Australia has effectively enforced its plain packaging legislation. All tobacco products sold, offered for sale, or supplied in Australia must be in plain packaging. The cigarette packs carry graphic images of diseases and health warnings.
The legislation is intended to reduce the appeal of tobacco products to consumers, particularly young people, and it is working. According to the first comprehensive evaluation of the legislation early this year, the Cancer Council of Australia said plain packaging of tobacco products is delivering on its promise to restrict the ability of the cigarette box to create appeal.
However, cigarette companies are not happy. Since the legislation kicked off, tobacco sales have dropped dramatically. Recent figures released by the Australian Bureau of Statistics (ABS) show that total consumption of tobacco and cigarettes in the first quarter of 2014 is the lowest ever recorded. Measured by estimated expenditure on tobacco products, statistics showed that from $5.135 billion in September 1959, it nosedived to $3.508 billion in December 2012 and further slipped to $3.405 billion in March 2014.
The cancer organisation said plain packaging is delivering on its promise to restrict the ability of the pack to create appeal. The first comprehensive evaluation of the legislation is published in a special supplement to the British Medical Journal. Fourteen peer-reviewed papers examined various aspects of the implementation and the impact it has on the community, including young people and adult smokers.
Cancer Council Victoria’s Professor Melanie Wakefield, whose team led the evaluation, said research shows plain packaging reduced positive perceptions of cigarette packs among teenagers and reveals that smokers were noticing and paying more attention to the graphic health warnings.
Wakefield added that the papers provide the first comprehensive set of results of real world plain packaging and they are pointing very strongly to success in achieving the legislation’s aims.
The result should give confidence to countries considering plain packaging that plain packs not only reduce appeal of tobacco products and increase the effectiveness of health warnings but also diminish the tobacco industry’s ability to use packs to mislead consumers about the harms of smoking, the professor said.
Legal suits against Australia
While Australia is hailed as the pioneer of this health-conscious legislation, law suits have been filed against the Australian government by giant tobacco companies.
Philip Morris is currently prosecuting Australia in its Hong Kong tribunals and the legal suit could cost Australia billions of dollars.
Hong Kong-based Philip Morris Asia Limited (PMA) is wholly owned by Australian affiliate, Philip Morris Limited (PML). PMA said the legislation violates Australia’s Bilateral Investment Treaty with Hong Kong. PMA claimed the forced removal of trade marks and other valuable intellectual property is a clear violation of the terms of the bilateral investment treaty between Australia and Hong Kong.
PML has a long history in Australia, manufacturing and selling cigarettes since 1954. Over the years, PML has built well-known brands such as Marlboro, Alpine, Longbeach, Peter Jackson, choice and GT. PML blasts the plain packaging legislation as it robs PML of its ability to use its well-known brands to differentiate from competitor brands, effectively turning tobacco products into a commodity.
The tobacco giant said, “plain packaging legislation bars the use of intellectual property on tobacco products and packaging, transforming PML from a manufacturer of branded products to a manufacturer of commoditized products with the consequential effect of substantially diminishing the value of [the Claimant’s] investments in Australia.”
Cigar producers challenge Australia
It is not only the cigarette giant that is targeting Australia. On May 5, 2014, the Director-General of the World Trade Organiation (WTO) appointed panellists to examine the complaints made against Australia’s plain packaging laws by Ukraine, Honduras, Dominican Republic, Cuba and Indonesia.
The complaining countries argue that Australia’s laws breach the WTO’s General Agreement on Tariffs and Trade (GATT), Agreement on Technical Barriers to Trade (TBT Agreement) and Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement), in that they are discriminatory, more trade restrictive than necessary, and unjustifiably infringe upon trademark rights.
Australia argues that its laws are a sound, well-considered measure designed to achieve a legitimate objective, the protection of public health. It is vigorously defending its actions.
It has been reported that the tobacco multinationals Philip Morris and British American Tobacco are providing support to the Dominican Republic, and Ukraine and Honduras, respectively.
Australia has become a respondent in five WTO disputes since it introduced the Tobacco Plain Packaging Act 2011 (TPPA). The disputes were lodged by Ukraine, Honduras, the Dominican Republic, Cuba and Indonesia. If Australia is ultimately found to have broken WTO rules, it must either bring its laws into conformity or face retaliation in the form of increased duties on Australian goods.