Philip Morris International Inc.’s (PMI) (NYSE/Euronext Paris: PM) issued the following statement today regarding the New Zealand government’s announcement that it will wait to implement standardized or “plain” packaging for tobacco products until the international legal challenges pending regarding Australia’s law are decided:
"In her official statement earlier today announcing New Zealand’s plans regarding standardized packaging, Health Minister Tariana Turia said, ‘the Government will wait and see what happens with Australia’s legal cases, making it a possibility that if necessary, enactment of New Zealand legislation and/or regulations could be delayed pending those outcomes.’
This announcement demonstrates that the New Zealand government recognizes the significant international trade issues with standardized packaging and will not implement it until the pending international legal challenges to Australia’s law are resolved. There is no credible evidence that standardized packaging will lower smoking rates, but strong evidence that it will jeopardize jobs, benefit the black market for cigarettes, and is a breach of international trade rules that have already made Australia’s policy subject to WTO action.”
BackgroundThere are three avenues of litigation that have been pursued against the Australian government in relation to this legislation, one at the domestic level and two at the international level. While the domestic case has been decided, the international cases remain open and unresolved. Currently three countries have initiated proceedings against Australia before the World Trade Organization (WTO) on the ground that the standardized packaging legislation is contrary to Australia’s obligations as a WTO member. Philip Morris Asia (PMA) is also suing Australia for multiple breaches of its Bilateral Investment Treaty (BIT) with Hong Kong. Decisions in these cases are expected within two to three years. In broad terms, these cases will examine a number of issues, including:
- Whether there is any valid evidence that standardized packaging will reduce smoking rates
- Whether there are effective, less restrictive alternatives that Australia could have implemented instead
- Whether standardized packaging breaches Australia’s international trade and treaty obligations
- Whether the Australian government will need to pay compensation to PMA.