SYDNEY — Legislation that will bar logos from appearing on cigarette packages in Australia is drawing the ire of business lobbying groups and even members of the U.S. Congress, who warn that the Australian government could be in breach of its international trade obligations.

The legislation, which is expected to sail through the Australian Parliament with broad bipartisan support when it is formally introduced in July, would require that all tobacco products be sold in plain green packaging, partly erasing the advantage of brand recognition enjoyed by global tobacco names like Marlboro and Camel. The law would come into effect at the start of next year, with a six-month transition period.

The government hopes that the bill, along with some of the world’s highest taxes on tobacco, will continue to drive down smoking rates in Australia and also serve as a template for other countries. Such a domino effect is just what tobacco companies are afraid of, said Andrew Hughes, a marketing expert at Australian National University in Canberra, because it would erode their brands and corporate value. “What’s to stop this same law being applied in other parts of the world?” he asked.

In a sign of the tobacco companies’ anxiety about the legislation, Philip Morris Asia, which is based in Hong Kong, said Monday that it had initiated legal action against the Australian government. The company contends that the planned packaging rules would violate Australia’s bilateral investment treaty with Hong Kong. Philip Morris, the producer of Marlboro cigarettes, served a notice of claim on the Australian government, which starts a mandatory three-month period for negotiations. “We believe we have a very strong legal case and will be seeking significant financial compensation for the damage to our business,” Anne Edwards, a spokeswoman for Philip Morris, said in a statement.

The Australian plans, among the strictest in the world, are part of a growing international trend to clamp down on smoking.

Last week, U.S. health officials released their final selection of nine graphic warning labels to cover the top half of cigarette packages, beginning next year. The first major change to warning labels in more than 25 years, the images will include photographs of damaged teeth and lungs and a person exhaling smoke through a tracheotomy opening in his neck.

Other governments are closely watching Australian efforts to restrict tobacco packaging. The British government, for example, has begun a consultation on ways to reduce the promotional effect of cigarette packs, which included the possibility of introducing plain packaging.

Tobacco is severely taxed in Australia, where smokers spend about 16 Australian dollars, or $16.70, a pack, complete with pictures of mouth ulcers, cancerous lungs or gangrenous limbs. But the new packs would go one step further by trying something new: shrinking the logos down to the point at which it is almost impossible to distinguish one brand of cigarettes from another. Under the law, 75 percent of the front of the packaging and 90 percent of the back would have to be covered by health warnings.

According to the most recent data from Newspoll, a market research company, 59 percent of Australian adults approve of the law as it has been proposed, while 24 percent disapprove.

The experiment has generated a roar of protest from tobacco companies and business groups like the International Chamber of Commerce, which says cigarette makers are being unfairly singled out, even though they sell legal products. “What company would stand for having its brands, which are worth billions, taken away from them?” Scott McIntyre, a spokesman for British American Tobacco Australia, said in a statement. “A large brewing company or fast food chain certainly wouldn’t and we’re no different.”

Article source: http://www.nytimes.com/2011/06/28/business/global/28ihsmoke.html?partner=rss&emc=rss