Progress at the WTO on Australia’s tobacco plain packaging legislation

It is now expected that by about November 2014, the World Trade Organisation will have handed down its decision on the legality of Australia’s tobacco plain packaging legislation.

Since late 2012, all tobacco products sold in Australia have been compulsorily packaged in ‘drab’ green/brown livery with the branding reduced to a legislated font and point size at the base of the package. Prominent upon the packaging instead are graphic health warnings. A number of countries: Cuba, Ukraine, the Dominican Republic, Honduras and Indonesia – all tobacco producing countries – have each taken action at the WTO asserting that the plain packaging legislation breaches Australia’s international obligations in respect of trade mark protection. An argument was put to the High Court of Australia by one international tobacco company that the Commonwealth had acquired its trade mark rights through the legislation, and therefore needed to provide Constitutionally-mandated compensation, but this failed. The failure leaves the WTO action as the last gasp of the industry to overturn what has been regarded as draconian but necessary legislative reform. Other countries including New Zealand, the UK and Ireland reportedly are considering introducing similar legislation should the WTO action by the tobacco producing countries fail.

This week, it has been reported that in dispute resolution proceedings at the WTO, all national parties involved in the actions agreed to have their complaints heard in concert in the one proceeding, therefore allowing the process to be expedited.

There have been mixed messages about the success of the legislation in Australia. While rates of teenage tobacco consumption are dropping, there is dispute over whether the black market in tobacco has increased that the black market in tobacco has increased as a consequence of the legislation. As in the case of ‘gene patents’, this is a field of commerce in which an ethical as well as a commercial tension exists between IP rights and the public good. Regardless of the outcome, the WTO resolution will not leave everyone happy.