Australia took a world first step last year in passing
legislation mandating plain packaging of tobacco products. Now,
while the Australian Government goes in to battle with tobacco
companies over the legality of its actions, New Zealand makes its
first move in the same direction.
The Australian regime requires all cigarettes, pipe tobacco and
cigar products sold in Australia to be in plain olive-brown packets
with branding, trade mark logos, colours and promotional text
removed and only the plain printed brand name featured.
The New Zealand Government has agreed in principle to introduce
a regime in line with Australia following a public consultation
process to be carried out later this year.
In Australia the legislation has faced widespread opposition
from tobacco companies. The Australian Government is currently
involved in a High Court action with major tobacco companies who
consider the legislation amounts to an appropriation of their
property by the government without the compensation required by
If the New Zealand Government proceeds with plain packaging
legislation, they are likely to face similar legal challenges from
tobacco companies claiming an illegal confiscation of proprietary
rights in their intellectual property.
However, New Zealand also has obligations under the Framework
Convention on Tobacco Control which includes policies around
packaging of tobacco products. Having committed to a goal for New
Zealand to be smoke free by 2025, the sentiment is that the
Government needs to take drastic measures to achieve this.
Nevertheless these obligations sit side by side with New
Zealand's intellectual property obligations such as those
imposed by World Trade Organisation treaties and other obligations
under free trade agreements.
New Zealand considers itself to be an exemplary free trade
citizen, a status that could be jeopardised by legal action at the
World Trade Organisation, such as that initiated against Australia,
if the decision is made to introduce similar plain packaging
New Zealand could also face multimillion dollar lawsuits
undertaken by tobacco companies under free trade agreements.
Investment chapters in free trade agreements allow companies to
initiate lawsuits themselves against Governments on the grounds
that the value or profitability of their investments are seriously
affected by new policies introduced by the Government.
Phillip Morris is currently using such agreements to challenge
the Australian tobacco legislation and while New Zealand has
different agreements in place, it is likely to fall foul of the
same fate especially in light of the proposed Trans-Pacific
Partnership Agreement which New Zealand is due to ratify later this
year and which would give those kinds of powers to US investors,
providing a more direct pathway for the tobacco companies to
Prime Minister John Key is nevertheless confident that the
Government can proceed with plain packaging if they wish to do so
on the basis of advice from Trade Ministers that there is nothing
in current trade agreements which precludes New Zealand imposing
Nevertheless, there is no doubt that tobacco companies will
fiercely push back against the legislation with every legal
argument available to them to retain their rights in highly valued
trade marks and branding.
Susan Jones, Head of Corporate and Regulatory Affairs at British
American Tobacco New Zealand has voiced what is likely to be the
shared attitude of the entire New Zealand tobacco industry which is
that they "will take every action necessary to
protect...intellectual property rights as would any other business
faced with the removal of their brands".
Even if following the proposed consultation process plain
packaging legislation is passed in New Zealand, the Australian
experience demonstrates this will only be the beginning of the
matter in terms of how successfully the legislation can be
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