Indonesia was recently granted permission by the World Trade Organization to challenge Australia’s plain packaging law, making Indonesia the fifth country granted permission to challenge Australia’s controversial law. Since December of 2012, cigarette packs have been uniform consisting of green packaging, with white labels. However, while attempts by the Australian government to curb the use of cigarettes are noble, the law breaches trade and intellectual property regulations. The issue at hand is not to argue whether or not smoking is harmful to one’s health, but rather how implementing plain packaging is a compromising intellectual property rights protections, threatening sectors of the economy (included but not limited to the tobacco industry), and harmful to consumers’ health.
While plain packaging is being debated for legislation in the EU, said countries should be looking at the effectiveness (or lack thereof) of plain packaging prior to passage. In January the Property Rights Alliance’s Executive Director Lorenzo Montanari published a piece regarding the Irish Plain Packaging proposal (Bill 2013) and mentioned how there was little evidence suggesting that Australia’s plain packaging law would reduce smokers. In fact, in 2013 there was a slight increase in tobacco sales.
Failing to reduce the number of smokers, plain packaging also violates trademark rights of companies to effectively brand and differentiate themselves from competitors. Additionally the plain packaging of cigarettes also has restricting consequences, inhibiting free trade. Therefore, it is no surprise that countries are filing challenges at the WTO against the Australian government.
As if impeding free trade and compromising trademark and intellectual property rights standards internationally were not enough, there is overwhelming evidence that Australia’s plain packaging crusade has led to a dramatic spike in illicit tobacco sales, further expanding the black market. In January the Property Rights Alliance cited a study by KPMG which estimated the growth in the black market of counterfeit cigarettes was 154% from June 2012 to June 2013 and an increase of counterfeit tobacco consumption to record levels of 13.3% in the same time period.
Why are counterfeit cigarette sales growing rapidly in Australia? It is quite simple, because the plain packaging law makes all cigarette packs look practically identical, it easier to counterfeit cigarettes. These cigarettes can easily be marketed as legitimate cigarettes to stores and later passed to consumers. Because all packages look similar, there is little way for consumers to know if the cigarettes they are buying are truly legal as well.
With a rise in counterfeit cigarettes entering the market, the likelihood that consumers will consume them increases as well. The consumption of counterfeit cigarettes simply compounds the health risks associated with smoking because there is no way for consumers to truly know what is in the products they are smoking.
The evidence is out and the Australian plain packaging law has failed. Not only has the law failed to curb smoking, but it has compromised the trademarks and intellectual property rights of companies internationally. Furthermore, plain packaging has led to an unprecedented rise in black market tobacco sales, which threatens not only the legal tobacco sector internationally, but also endangers the health of consumers consuming the unregulated and potentially more harmful counterfeit cigarettes.