Australia was the first — and until very recently the only — country to introduce mandatory plain packaging for all cigarettes and tobacco products.  Australia’s Tobacco Plain Packaging Act 2011 (Cth) (Act) prohibits the use of brands, logos and colours on all cigarette and tobacco products and on packaging imported, manufactured or sold in Australia.  On 9 March 2015, Ireland followed Australia’s example and enacted similar plain packaging laws.

Since the introduction of the Australian measure, five members of the World Trade Organization (WTO) have requested dispute settlement with Australia (WT/DS 435, WT/DS 434, WT/DS 441, WT/DS 458, WT/DS 467).  Indeed, there is widespread interest in the outcome of the disputes pending at the WTO.  This is the first of a series of articles that will investigate and report on the proceedings against Australia in the WTO.

Whilst the Australian market for cigarettes is relatively small, and although the majority of tobacco products sold here are manufactured domestically and are not imported, the primary concern of the tobacco industry (and hence tobacco producing countries) is the precedential effect of Australia’s introduction of plain packaging – this has potential for global significance.  If Australia’s policy is not thwarted at the WTO (or in another dispute forum, including the Investor State Arbitration with Phillip Morris Asia), the policy may encourage a global ‘olive revolution’, with the international dissemination of drab olive coloured plain packaging with large health warnings for tobacco products.  Such a movement would deprive the tobacco industry of its last semblance of control over the advertising and marketing power upon which its profitability depends.

Why did the Australian Government introduce plain packaging?

On 1 December 2011, the Act became law in Australia.  Its purpose is to improve public health, give effect to Australia’s obligations as a party under the Framework Convention on Tobacco Control (FCTC), and to contribute to FCTC objectives by regulating the retail packaging and appearance of tobacco products (see ss 3(1)(a), (b) and 3(2) of the Act).  The Act forms part of a comprehensive strategy to reduce the rate of smoking in Australia (see National Tobacco Strategy 2012-2018).

Tobacco is the only legally available consumer product that, when used in the manner intended by the manufacturer, will kill a third to a half of all people who use it.  As such, the goal of the strategy is ‘[t]o improve the health of all Australians by reducing the prevalence of smoking and its associated health, social and economic costs, and the inequalities it causes’.  In combination with other discouraging tactics — including health warnings, taxation and prohibiting point-of-sale visibility — the Act aims to reduce smoking in Australia to ten percent of the population by 2018.  A key objective behind plain packaging is to reduce the uptake of smoking by young people, because evidence suggests their demographic is most influenced by packaging aesthetics (discussed further below).  The issue remains however, whether plain packaging is successful in contributing to the broader regime of reducing Australia’s rate of smoking, compared to other measures like increased taxes and health warnings.

Is plain packaging effective?

The Australian Government frames the public health policy quandary regarding cigarettes by stating that:

it is impractical to ban the purchase of a product that so many people find so difficult to quit, [and] governments the world over have accepted that it is unethical to encourage use of tobacco and appropriate to legislate to prevent all forms of its promotion (see National Tobacco Strategy 2012-2018).

Australia’s previous regime (including taxation and large graphic warnings) did not achieve the desired level of reduction in tobacco consumption.  The Australian Government also prohibited all forms of tobacco advertising in 1992.  Thus, plain packaging is the final avenue available to the government, other than prohibition, to achieve the required level of protection.  At the same time, the cigarette and its packaging is the last marketing tool of the tobacco industry to attract and retain customers.

Packaging differentiates brands, which is particularly important in homogenous consumer products such as cigarettes.  Tobacco companies promote their products through branding and package design, creating preferences, differentiation and identification.  Indeed, advertising and promotional activities by tobacco companies are shown to cause the onset and continuation of smoking among youth.  Hence, advertising on cigarette packets can influence one’s choice to smoke.

Research prior to the introduction of Australia’s policy shows that plain packaging, by removing most brand design elements, is successful in decreasing cigarette brand image associations.  Moreover, plain packaging can render a smoker’s image ‘less cool’ and ‘less attractive’.  Researchers also note that colouring affects sensory and hedonic ratings, signals product attributes and determines the consumer’s final perception of the product, thus influencing price and quality perceptions.  For example, white, blue and green tones of menthol cigarettes denote a refreshing and soothing product.  On the other hand, the white and red packaging of Marlboro’s chevron strengthens the consumer’s psychological association with brand identity.  Ultimately, plain packaging laws covering all aspects of cigarette design – from sticks to packaging inserts, cardboard and wrapping – standardises the appearance of all tobacco brands, greatly reducing the status-signalling role and appeal of cigarettes.

The tobacco industry presents a number of strong arguments against plain packaging.  These include that:

  • there is insufficient evidence the measure will reduce smoking;
  • the legislation will not be effective;
  • retailers’ businesses will be damaged;
  • competition will be diminished; illicit trade will be increased; and
  • international agreements concerning intellectual property will be breached.

These arguments, combined with the threat of litigation, have led all countries (except Australia and now Ireland) that had previously considered implementing plain packaging in their jurisdictions to abandon it.  Nonetheless, evidence exists to refute these arguments.

On 24 May 2011, Cancer Council Australia published a review of the evidence that finds that plain packaging reduces the uptake of smoking by young people.  Some important findings include how colouring and imagery contribute to consumers’ misperceptions that certain brands are safer than others.  Removing colours and misleading terms such as ‘smooth’, ‘gold’ and ‘silver’ reduces false beliefs about the harmfulness of cigarettes.  In addition, young people and adults perceive cigarettes in plain packs as less appealing, less palatable, less satisfying and of lower quality compared to cigarettes with branded packaging.  The study reinforces previous research that plain packaging alters perceptions about the characteristics and status of people who smoke brands.  It is also shows that the intensity of opposition by the tobacco industry against plain packaging suggests they believe such measures will reduce sales and company profits.

In addition to the growing evidence supporting plain packaging, WTO jurisprudence allows members a degree of deference in determining their own levels of protection or regulatory outcomes (see Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled And Frozen Beef, WT/DS161/AB/R WT/DS169/AB/R (11 December 2000)).  This may, in part, be in recognition of the fact that every effective public health measure started as an experiment at some stage.  WTO jurisprudence recognises that there will inevitably be gaps in scientific knowledge.  This means that health policy that is based on limited emerging evidence may still justify a departure from trade commitments to the WTO.  Jurisprudence also accepts that there may be a degree of uncertainty regarding scientific evidence (see Appellate Body Report, Canada – Continued Suspension of Obligations in the EC – Hormones Disputes, T/DS321/AB/R (14 November 2008)).  Thus, given that there is a growing evidence base supporting the efficacy of plain packaging, Australia is in a strong position to argue that there is sufficient evidence to establish that the measure contributes to its overall tobacco reduction strategy.

Pauline Wilson recently graduated from an LLM at the University of Amsterdam with a focus on international trade and investment law. Prior to that she graduated from the ANU with a combined Bachelor’s of Arts and Law.