July 14, 2024

Tobacco Companies Fight Australian Cigarette Bill

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

The legislation would require that tobacco products be sold in plain green packaging, limiting the brand recognition enjoyed by global tobacco names like Marlboro and Camel. The law is expected to pass with broad bipartisan support when it is formally introduced in July, and it would go 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. The government also hopes that the law will serve as a template for other countries. The possibility of a domino effect is what tobacco companies are afraid of, said Andrew Hughes, a marketing expert at Australian National University in Canberra. “What’s to stop this same law being applied in other parts of the world?” he asked.

Philip Morris Asia, which is based in Hong Kong and makes Marlboro cigarettes, said Monday that it had initiated legal action against the Australian government, contending that the new rules would violate Australia’s bilateral investment treaty with Hong Kong.

The company’s legal action, called a notice of claim, 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 are among the strictest in the world, but other countries are also pushing new initiatives to reduce smoking.

Last week, United States health officials released graphic warning labels that will cover the top half of cigarette packages beginning next year. The images will be the first major change to warning labels in more than 25 years; they 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.

Tobacco is severely taxed in Australia, where smokers spend about 16 Australian dollars, or $16.70, a pack. The packs come with pictures of maladies like mouth ulcers, cancerous lungs and gangrenous limbs.

The new packs would go one step further by trying something new: shrinking the logos down to the point at which it is difficult 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.

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 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.”

British American Tobacco Australia, also known as BATA, is Australia’s market leader and one of the world’s largest tobacco groups by revenue, with brands including Lucky Strike. It has threatened to cut prices to remain competitive.

The company has also promised a costly legal battle and has warned that the law could lead to an increase in counterfeit cigarettes.

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

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