Australia introduces tough new tobacco ad bill(update)

CANBERRA: Australia's government introduced a groundbreaking bill to Parliament on Wednesday that would prevent tobacco companies from displaying their distinctive colors, brand designs and logos on cigarette packs in a bid to make smoking less attractive to the young.

Tobacco giants argue that the move illegally diminishes the value of their trademarks. They are funding a nationwide advertising campaign that brands Australia a nanny state and warns that alcohol will become the government's next target.

Australia is a relatively small tobacco market where the falling rate of smokers is 17 percent, compared with around 20 percent of American adults. But tobacco companies fear a precedent that could be adopted by more lucrative and growing markets.

Health Minister Nicola Roxon said while tobacco companies were fighting to protect their profits, her government was fighting to protect lives.

"This is a world-first initiative designed to remove the last vestige of glamor from tobacco products," she told Parliament while introducing the bill.

"Once enacted, these plain packaging laws will be the world's toughest laws on tobacco promotion," she added.

The bill requires all cigarettes to be sold in the same drab, olive green packs with brand names dwarfed by health warnings from May 20 next year.

The health warnings and often gruesome, full-color images of the consequences of smoking, such as mouth cancer and gangrenous toes, will increase in size to cover 75 percent of the packs' front. Graphic health warnings currently cover only 30 percent.

"Rather than being a marketing tool, the pack will only serve as a stark reminder of the devastating health effects of smoking," Roxon said.

Penalties that would apply from July 1, 2012, to retailers who break the rules include fines of up to 1.1 million Australian dollars ($1.2 million) for a company and AU$220,000 for an individual. Tobacco advertising is already banned in Australia at the point of sale.

The legislation appears certain to become law with the main opposition party indicating support. No timeframe has been announced for when Parliament will vote on the bill.

Hong Kong-based Philip Morris Asia Limited, which owns the Australian affiliate Philip Morris Limited, filed a notice of claim against the government in an Australian court in June arguing the legislation violates a bilateral investment treaty between Australia and Hong Kong.

Philip Morris says the treaty protects companies' property, including intellectual property such as trademarks. It says plain packaging severely diminishes the value of the company's trademark.

International Chamber of Commerce secretary general Jean-Guy Carrier has also written to the Australian government outlining his concerns that the law would strip tobacco packaging of all trademarks.

Trade Minister Craig Emerson said Carrier's argument was wrong because product names would still be permitted on cigarette packs, albeit in a standard color, position, font size and style.

"The measure will be implemented in a way that is consistent with Australia's international obligations, including in relation to trade, investment and intellectual property," Emerson said in a statement.

British American Tobacco Australia Ltd., the Australian market leader, warned that the government would have to spend millions in legal fees in numerous legal challenges to the law and potentially billions in compensation. - AP