TOBACCO GIANT Philip Morris is to sue the Australian government over its introduction of mandatory plain packaging for cigarettes.
Under the legislation, which was passed today, all packing will consisted of a drab, olive-brown background, stripped of logos and replaced with graphic images of health warnings.
The new law is due to come into effect from December 2012, reports the Telegraph.
However, Philip Morris Asia (PMA) has said that the legislation would breach a bilateral investment treaty, the BBC reports.
PMA, which is based in Hong Kong, quickly served a legal notice of arbitration under an investment treaty that Hong Kong has with Australia. The company said it also intends to pursue claims under Australian law.
It says that billions of dollars of valuable trademarks and investments in Australia are at stake.
“We are left with no option,” Anne Edwards, a spokeswoman for Philip Morris Asia, said in a statement. “The government has passed this legislation despite being unable to demonstrate that it will be effective at reducing smoking and has ignored the widespread concerns raised in Australia and internationally regarding the serious legal issues associated with plain packaging.”
Health minister Roxon called passage of the law a momentous event in Australian public health history.
“Plain packaging means that the glamour is gone from smoking and cigarettes are now exposed for what they are: killer products that destroy thousands of Australian families,” Roxon said.
She said packaging is one of the last powerful marketing tools available to tobacco companies.
“Let there be no mistake, big tobacco is fighting against the government for one very simple reason — because it knows, as we do, that plain packaging will work,” Roxon said.
Tobacco advertising on billboards and in magazines has long been banned and restrictions on smoking in public places, including restaurants and bars, are common.
Smoking rates have been declining in Australia for years, but the government says cigarettes still kill 15,000 Australians a year and cost the country about $31.5 billion annually.
The government is required under the constitution to pay compensation to anyone from whom it takes or devalues property, including intellectual property such as trademarks. But opinions are divided on what the implications of those rules, and international trade laws, are in the case of cigarette packages.
Australia is following the lead of other countries. Uruguay’s government requires that 80 percent of the front and back of all cigarettes packages be devoted to warnings. In Brazil, labels feature graphic images of dead fetuses, hemorrhaging brains and gangrened feet.
In the United States, a judge recently blocked a federal requirement that cigarette packs feature graphic health warnings starting next year, saying it should be delayed until a lawsuit brought by tobacco companies is resolved.
Additional reporting by the AP
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