The WTO's plain packaging verdict validating Australian law is a colossal setback for liberty...
The World Trade Organisation’s (WTO) recent decision to validate Australia’s tobacco plain packaging laws is a colossal setback for liberty. The plain packaging laws which were implemented in 2012, ban logos, stylised images, brands and coloured cigarette packaging in favour of a generic packet with brand names printed in small standardised fonts. The WTO concluded, without considering significant evidence of their ineffectiveness, that Australia’s plain packaging law contributed to improving public health by reducing the use of and exposure to tobacco products and rejected claims that alternative measures would be equally useful. As a result, they declared that the law was still consistent with global trade rules.
The decision to uphold plain packaging laws is an assault on the principles of liberty. Free market capitalism, personal liberty, the ownership of private property and the enjoyment of limited government are being curtailed as a result of the panel’s decision. Strong and stable legal regimes to safeguard IP rights are a cornerstone of economic prosperity, commercial certainty and a vibrant investment environment. With calls from nanny state activists and some academics to implement similar plain packaging laws to alcohol and fast food, these unfair regulations are also a victory for the fun police.
Cuba, Indonesia, Honduras and the Dominican Republic formed a coalition of nations that opposed Australia’s plain packaging laws and have recently launched an appeal against the WTO’s decision. They argued that Australia’s law unjustly impinged upon tobacco trademarks, contravened intellectual property rights, were highly trade-restrictive and affected competitive opportunities for premium brands.
The challengers also raised concerns regarding the effectiveness of the law for public health. They argued that since its implementation, the law had not materially impacted the public health objectives it purported to, such as reducing the smoking prevalence. Alternative and less trade-restrictive measures to reduce smoking rates, such as legalising proven safer alternative nicotine delivery products like e-cigarettes or vapes, were ignored despite their achievements in helping to drastically lower smoking rates in the USA, UK and across the EU where smoking prevalence has declined significantly in conjunction with the rapid uptake of these products over the last 7 years.
By contrast, the UK and France have both reported that tobacco consumption has not fallen significantly since their laws were enacted last year, and has indeed increased slightly in France. In Australia, household tobacco expenditure was higher within months of the laws taking effect than previously and the latest figures from the Australian government Institute of Health and Welfare show that we have more smokers today than we did at the start of 2013 when the laws were enacted. Can a restrictive and punitive regulation like this be justified if it has manifestly failed to improve public health?
The ASEAN Intellectual Property Association to the WTO argued that the WTO decision legitimising plain packaging laws erodes more than a century of intellectual property rights. The International Trademark Association (INTA) also called out the decision as undermining the importance of brand owners, trademark professionals and society. Both TRIPS and the Paris Convention highlight how trademark owners are permitted to use their marks .
Without IP rights, businesses are deprived of the ability to compete fairly while consumers are deprived of the ability to make informed choices. Price becomes the primary distinguishing and competing factor and producers are then forced to slash prices at the expense of a product’s quality and innovation. We saw this with tobacco plain packaging, as the Australian Association of Convenience Stores have reported that store owners are frequently asked for their ‘cheapest pack of smokes’. Unprotected intellectual property rights also raise scepticism among investors as to the reliability of investing in brands.
When brand equity is lost, the ability to market brands is restricted. The costs of managing the burden of the regulations is also another consequence of the decision. Many jobs in the UK’s packaging industry were lost in the wake of that government’s decision to implement their own laws last year. Plain packaging laws disproportionately impact underdog companies and small, local businesses that lack brand recognition and must compete through novel branding or brand image as they cannot afford to mass-produce sufficiently to challenge bigger competitors on price. In industries like craft beer, this is an especially dangerous prospect.
The WTO’s decision will potentially curtail future intellectual property rights in other industries such as alcohol, food, medicines, confectionary, sugar-sweetened beverages and cosmetics. While it is not technically binding on future laws, it nonetheless sets a precedent which will embolden nanny state activists and zealot bureaucrats to push similar regulations with less fear of reprisal. This dangerous domino-effect will harm the market and place barriers on free trade after years of trade liberalisation that has contributed to global economic prosperity and which the WTO is supposed to champion.
Compulsory plain packaging undermines personal responsibility and infantilises adults. It is yet another example of the burgeoning nanny state which is reversing the role of the State and citizen and curtailing freedoms and individual decision-making. Strong intellectual property rights are important and desirable because it limits the government’s power to wield their influence and manipulate the marketplace to select who benefits and who loses. They are not only an attack on commercial freedom, but on civil liberties too.
Anjali Nadaradjane is a Research Associate at the Australian Taxpayers' Alliance
[This article first appeared on Liberty Works]