Australia''s ''Plain Packaging'' Stubs out Cigarette Branding, Prompting Backlash

Source from:  The Washington Post  10/30/2013

Marlboro cigarettes' red-and-white box and distinct typeface created one of the world's most powerful brands — by some estimates, one of the 10 most-recognized consumer products.

In Australia, the red chevron is now taboo. Since the start of the year, customers looking for Marlboros must get beyond the "drab" wrappers mandated for all cigarettes, the warning label at the top of the pack, and the picture of the gangrenous foot or rotting gums in the middle, to find the brand name snuggled at the very bottom, in nondescript type.

For an industry that has thrived off effective marketing, from the rugged mystique of the Marlboro Man to the women's lib appeal of Virginia Slims, Australia's new "plain packaging" rules are a further sign of how the tide has turned.

"Much of this industry is about image. It is not about tobacco," said Robert Stumberg, a Georgetown University law professor who has followed tobacco litigation and regulation around the world. For tobacco companies, Australia's rules and similar proposals "get to the heart of their ability to market their products."

With an estimated half-trillion dollars in annual sales, tobacco remains big business despite the regulatory backlash over the health impact of its use. The Australian rules are the strictest in the world, a step beyond regulations adopted in the United States and Europe and under consideration elsewhere. They dictate virtually 100 percent of the colors, images and words used in packaging cigarettes and cigars, and have become the subject of an intensifying fight by tobacco companies to hold onto some vestige of brand control.

The companies have joined with a handful of developing nations, including Indonesia and Honduras, that share an economic stake in tobacco branding and are fighting Australia's rules. If the popularity of Camels is threatened by the lack of a camel, high-end Cuban cigars may be just as much at risk if they come wrapped in grisly images instead of a classy wooden box.

That's what Australia has demanded, and it has touched off a war being fought in domestic courts, at a Geneva-based agency that enforces world trade treaties, and through obscure arbitration panels working out of organizations such as the World Bank.

Anti-smoking activists regard Australia's new rules as a bellwether in their drive to eliminate tobacco advertising and branding of all sorts. The companies have mustered an array of arguments in response: that the restrictions violate free speech, "expropriate" the value of carefully created trademarks, go against international free-trade obligations, and won't achieve the intended regulatory aim.

Phillip Morris Asia spelled out the stakes in a trade case filed by its Hong Kong branch under the terms of an investment treaty between Hong Kong and Australia.

Without its branding, "Phillip Morris' products will not be readily distinguishable to the consumer from the products of its competitors . . . . [Phillip Morris] will be reduced to the manufacturer of an effectively undifferentiated commodity."

There are other implications of the fight. The challenge brought against Australia at the World Trade Organization in Geneva will be one of the more direct instances where a nation's local health rules are attacked on the basis of its obligations under international trade treaties. Free-trade agreements often include measures meant to prevent countries from using regulations as a back-door way to limit imports. But they can also exempt rules meant to protect public health or achieve other aims. Australia is being challenged under several treaties, setting the stage for a long and highly technical battle over whether the hit taken to the intellectual property of tobacco companies is warranted in light of public health gains.

In the end, Stumberg and other legal analysts said, the case could turn on issues such as whether the plain packaging rules can be shown to reduce tobacco use or simply cause consumers to change the types of cigarettes they buy as brand identity and loyalty weakens.

The issue has also figured into U.S. trade talks with Europe and a group of Asian nations, with U.S. negotiators trying to reconcile the domestic demands of tobacco-state politicians with calls to guarantee that a national tobacco-control efforts cannot be weakened by free-trade agreements.

Anti-smoking activists say that whatever the outcome, the tobacco industry is at least buying time as the case against Australia moves through the WTO's often-slow process.

New Zealand and Britain recently delayed new packaging rules, in part to see how Australia's effort pans out. By law, the United States is supposed to introduce new packaging rules that include the same sorts of graphic images used in Australia and other countries. That step has been delayed by litigation in U.S. courts and is pending with the Food and Drug Administration.

The European Union recently doubled the size of tobacco warnings to cover 65 percent of the package, but left it up to individual countries to decide whether to make even stricter rules. Ireland has said it will do so.

The fight has set up some strange alliances. Communist Cuba finds itself on the same side as some of the world's most prominent capitalists — the major tobacco companies — in an effort to keep tobacco branding alive.

The companies are helping underwrite the legal expenses for Honduras, the Dominican Republic and others in the WTO challenge of Australia. On the other side, New York Mayor Michael R. Bloomberg (I), a prominent advocate of tougher tobacco laws, has helped pay the legal expenses for Uruguay to defend its strict packaging rules against a challenge tobacco companies have brought under an investment treaty that the country has with Switzerland.

Ukraine has filed its own WTO challenge, though it is not clear why. The country does not export tobacco products to Australia, though it does have cigarette factories owned by Philip Morris International and British American Tobacco.

Health officials, lawyers, activists and others following the cases see the industry's response as a sign of how important the packaging issue has become. Limits on tobacco advertising have expanded steadily since the 1960s, with a U.S. ban on television advertising in effect since 1971. The package itself is among the final remnants of marketing efforts that were tied closely to the rise of television and American cultural trends in the 1950s and 1960s.

In many countries, packages are already dominated by warnings and images showing the health effects of smoking, so the fight has been reduced to control over enough space to at least nominally mark the package with familiar colors and shapes.

Before this year, about two-thirds of the front of a cigarette pack in Australia was available for brand names and logos.

Now, according to documents filed at the WTO, the packages must all be "drab dark brown" and can contain "no other colors, logos, or brand features visible on the package, other than the brand . . . in a standard form and font."

And, of course, a big picture of a tumorous tongue. Enditem