On January 23, 2014 the Ireland’s Health Children Committee began public hearings on proposed Plain Packaging legislation contained in the “Public Health (Standardised packagin of Tobacco) Bill 2013. Due to its pervasive negative effects on the global economy, especially in regards to trademarks, property and intellectual property rights, the Property Rights Alliance (PRA) has submitted a paper on the Bill 2013, for the above mentioned hearing.
PRA is working to educate the global community about why Ireland’s proposed Plain Packaging legislation must not be implemented. If the proposed legislation is brought to fruition it will undermine not only the Irish economy, but also will violate several international agreements, violate trademarks of companies, and hurt sectors of the economy around the globe.
Ireland is not the first country to explore implementing plain packaging legislation regarding cigarettes. For instance, Australia implemented similar legislation in December of 2012. However, despite the belief that plain packaging will curb smoking within the population, there is little evidence to suggest its effectiveness. Furthermore, since the passing of plain packaging laws there has been, according the last KPMG report, a growing black market for counterfeit cigarettes by 154% from June 2012- June 2013 and an increase of illegal tobacco consumption (to record levels) from 11.8% to 13.3% in the same period.
Aside from the threat of increased illegal tobacco consumption and rise in non-taxable, black market cigarette sales, Ireland will face serious negative impacts on its economy. According to a study by Roland Berger Strategy Consultants, the proposed plain packaging of cigarettes in Ireland will threaten 1,900 jobs and €125 million in tax revenues (while the illicit market is expected to grow by as much as 40%). Furthermore, said job losses are not expected to occur not only in tobacco related industries. Rather, 88% of all expected job losses (1,672 jobs) are expected to occur in various interconnected sectors due to a decrease in tax revenue and stifled growth in the Irish economy.
Recently ranked by Forbes magazine as the most business friendly countries in the world, Ireland’s proposed plain packaging legislation will tarnish its business friendly reputation. Ranked 18 out of 131 countries on the International Property Rights Index, Ireland’s proposed legislation could potentially hurt its ranking because it will compromise the trademark rights of Tobacco companies, impacting jobs not only in Ireland, but the United States as well. For instance, according to a North Carolina State University study, even a 2% drop in the EU cigarette market would result in US farmers income would decline by $8 million.
Ireland, which has 115,000 workers directly employed by more than 700 US companies in Ireland, accounting for $204 billion in foreign direct investment in Ireland, must consider the negative impacts such legislation will have not only on the rise of unregulated, non-taxable, black market tobacco sales, but also the effects of jobs in an economy climbing out of recession.